automotive industry in canada

8/11/2019 Automotive Industry in Canada

1/13The Automotive Industry in Canada 1

The Automotive Industry in Canada.Opportunities for Swiss Companies.

March 2012

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Content Leader:

Georey S. L. Green, P.Eng.

President, Pegasus Global Initiatives

[email protected]

Swiss Business Hub Canada uses primary, secondary sources and tertiary sources of

information to produce a variety of reports on the Canadian market for small to medium

sized Swiss enterprises. For further information on our services, please contact:

Elias Bardouniotis,MSc, MBA

Director

Switzerland Trade and Investment Promotion

Swiss Business Hub Canada

154 University Avenue, Suite 601

Toronto, ON M5H 3Y9, Canada

Tel. : +1 416 593 5288

Fax : +1 416 593 5083

[email protected]

While this report is intended to provide an overview of this specic market and its

opportunities at the time of its edition, each individual manufacturer, exporter or company

may have to conduct their own analysis to get a better understanding of the possibilities

and opportunities available to them. You are encouraged to explore and develop your

opportunities based on research and in-depth analysis. Readers should take note that

the Government of Switzerland does not guarantee the accuracy of any of the information

contained in this report, nor does it necessarily endorse the organizations, associations,

companies and individuals listed herein. Readers of this report should verify the accuracy

and reliability of the information contained herein before making a business decision.

Swiss Business Hub Canada 2012



The AutomotiveIndustry in Canada.

This article has been written to familiarize Swiss companies with the Canadian Automotive

industry and to examine opportunities for trade and investment with Canada.

Canada is a giant in the production of automobiles and automobile components for NorthAmerica and is the largest producer of vehicles in North America. Total revenues in 2007

were $96.7 billion, while export revenues were $70.5 billion. Total employment is in excess

of 90,000 and 84 percent of the vehicles built in Canada are exported. Capital investment

has averaged $3.5 Billion over the past ten years. Table A compares production of vehicles

in key States and Provinces.

Table A. North American Vehicle manufacturing by locations

Province/State Production Percentage of Total Production

Ontario, Canada 2.5 Million 22%

Michigan, United States 2.25 Million 19.8%

Ohio, United States 1.6 Million 14.1%

Kentucky, United States 1 Million 9%

Total Production (North America) 11.36 Million 100%

Canada is the third largest exporter of automotive products after Japan and the United

States. The total industry employs about 170,000 in over 1000 companies in manufacturing

and an additional 300,000 in distribution.

There are a number of reasons for Canadas success:

A 6.4% cost advantage over the United States.

The calculation of the estimated annual labour costs for a typical automotive.

component manufacturing operation shows that Canadian locations oer competitive

cost levels compared to many U.S. counterparts.

An important contributor to Canadas competitive labour is the lower costs of providing

employee benets. Under Canadas national healthcare system, most medical

insurance costs are publicly funded, rather than paid by the employer.

Better productivity than plants in the United States and Mexico.

The second lowest corporate tax rate among the worlds top ten automotive countries.

High Research and Development spending. This is supported by tax credits.

Capital investment of $3.5 billion per year.

Availability of qualied engineers and skilled workers.



The highest quality of life among the top ten automotive countries.

Integrated into NAFTA (i.e. Canada, U.S., Mexico).

Globally competitive.

The eighth largest automotive sector in the world.

One of the dominant factors contributing to the ongoing success of the industry in Canada

is research and development. The main areas of research include:

Metal processing

Advanced materials Advanced design

Visualization and manufacturing

Information and communications technology

The research and development activities are conducted across Canada, although there is

a concentration in Ontario. Annual investment in research and development exceeds $0.5

Billion per year.

The activities are conducted on a broad front and include:

University based research

McMaster University

University of Waterloo

University of Toronto

Industrial Research

The major suppliers are working to develop next generation products.

The major automotive assemblers are working in partnership with suppliers and

universities to meet their future needs.

Focused research facilities.

AUTO21 supports more than 300 researchers across Canada.

National Research Council (NRC).

Canadian Areas of Expertise.The Canadian industry excels in a number of areas as detailed below:

Metal Processing:

Advanced casting of light metals

Cutting and machining

Sheet and tube forming

Welding and joining

Powder metallurgy



Advanced Materials

Lightweight materials

Nano materials

Bio-materials

Advanced Design, Visualization & Manufacturing

Inspection and vision systems

Laser imaging

Tooling and robotics

Stereo-lithography, laser deposition Virtual design

Advanced Technologies

Mechatronics

Powertrain engineering

Hydroforming

Clean diesels

Fuel cells, hydrogen & alternative fuels

Manufacturing in Canada.In Canada, there are ten automobile assembly plants, which produce almost 2.5 Million

vehicles per year. All of these plants are located in Ontario. Table B shows the automotive

assembly plants in Ontario, with details of locations, models produced, ownership and

employment:

Table B. Assembly Plants in Canada

Company Locations Models Produced Ownership Employment

Toyota Cambridge, Ontario

Woodstock, Ontario

Toyota Corolla, Matrix, RAV 4, Lexus

RX 350

Japan 6,000

Honda Alliston, Ontario (2 plants) Honda Civic, Acura CSX/MDX/ZDX Japan 4,300

General Motors Oshawa, Ontario (2 plants)

Ingersoll, Ontario

Chevrolet Impala, Camaro, Equinox,

GMC Terrain

United States 10,000

Chrysler Brampton, Ontario

Windsor, Ontario

Chrysler 300, Town and Country

Dodge Charger, Grand Caravan

VW Routan

United States 9,000

Ford Oakville, Ontario Ford Edge, Flex, Lincoln MKT, MKX United States 14,000



Production of Vehicles.Below is a summary of the level of activity in the automotive sector in Canada.

Table C. Overall Production of Automobile and Trucks

Passenger Vehicle

Assembly

Heavy Duty Vehicle

Assembly

Motor Vehicle Parts Truck Body and

Trailer Production

Employment 35615 61193 12304

Number of Plants 55 41 944 237

Production Units 1, 479, 161 11321 NA NA

Shipments ($ Billion) 33.1 2.00 19.1 2.6

Exports (Billions) 26.7 1.4 10.2 0.9

Canadian

Consumption

6.4 0.6 8.9 1.5

Export Ratio 81 72 53 35

Automotive ComponentManufacturers.

As shown in Table D, the industry includes many international companies as well as

Canadian companies. The manufacturing of components covers the full spectrum of parts

required to assemble the vehicles. These plants range from manufacturing plastic parts to

stampings and castings.

The supply chain for the automotive industry is global. In order to compete, a high level ofautomation is included in the manufacturing processes. The majority of this automation is

designed and built in Canada.

Leading Manufacturers in Canada include:

CAMI Automotive Inc. (GM-Suzuki)

Chrysler Canada Inc.

Continental AG (formerly Siemens VDO)

Denso Corporation

Ford Motor Company of Canada Ltd.

General Motors of Canada Ltd.

Honda Canada Inc. Johnson Controls Inc.



Linamar Corporation

Magna International Inc.

Martinrea International Inc.

Toyota Canada Inc.

TRW Inc.

These are the largest companies, but with over 1000 companies in the industry, there is the

excellence and capability to produce parts with zero defects, with on-time delivery to meet

the schedules of the assembly plants, both in Canada and the United States.

Table D. Component Manufacturers

Company Location Specialization Ownership Website

Denso Ontario HVAC Japan http://www.globaldenso.com

Johnson Controls Ontario Electronics United

States

http://www.johnsoncontrols.

com

Linamar Corporation Ontario Precision metallic components for vehicle

transmission and driveline systems

Canada http://www.linamar.com

Magna International Inc. Ontario Automotive systems

AssembliesModules

Components

Canada http://www.magna.com

Martinrea International Inc. Multiple components for:

Engine & transmission

Power Steering and Brakes

Fuel System

HVAC

Body & Chassis

Exhaust components

Canada http://www.martinrea.com

TRW Canada Ltd. Ontario Electronic systems

Braking Systems

United

States

http://www.trw.com

Woodbridge Group Ontario Seat Cushions

Seat Frame Components

Occupant Safety Components

Noise/vibration/Harshness Solutions

Composite Sheet Foam products

Cargo Management Components

Canada http://www.

woodbridgegroup.com

The industry has conrmed Ontario as one of the premier locations in the world to research,

design, develop and manufacture vehicles and component parts. Ontario shipments

totalled $26.14 Billion or 95% of total Canadian output.



The automobile assembly plants are supported by a components industry that comprises

over 400 Canadian companies and supplies the assembly plants in Canada, the United

States and internationally.

The industrys export market is largely the United States. This is because an agreement

was signed between the two countries in 1965. The Automotive Pact provided the sale

of automobiles and parts to be made without duty at the border. This agreement was the

foundation of the automotive industry as it is today. It provided access to the US markets,

but in addition, it was the catalyst to create a major industry.

The agreement had a broad impact. Not only did it present an opportunity; it was the

foundation of a very competitive industry that has been built from that initial agreement.

As a result, Canada began to produce far fewer dierent models of cars and much larger

branch plants producing only one model for all of North America were constructed. In 1964,

seven percent of vehicles made in Canada were sent to the United States, but by 1968, the

gure was sixty percent. By the same date, forty percent of cars purchased in Canada were

made in the United States and automobile and parts production quickly became Canadas

most important industry.

The Pact was replaced in 1988 by the Free Trade Agreement between the United States

and Canada and by the North American Free Trade Agreement (NAFTA) in 1994. This tri-

lateral agreement was signed by Canada, the United States and Mexico and is still in eect.

The Ontario automotive corridor extends from Oshawa to Windsor. The main centres and

the number of plants are detailed below:

Burlington 29

Chatham 37

Guelph 36

Hamilton 27

Kitchener-Waterloo 61

Mississauga 137

Oshawa 26

St. Catherines 45

St. Thomas 20

Stratford 22

Toronto 169

Windsor 107

Woodstock 35

Windsor has a large automotive industry because of its proximity to Detroit and the US

Market. With the changes in the industry, the tendency has been for the plants to be

located in the proximity of the assembly plants that they serve. Whereas, Windsor had a

number of assembly plants, now that number has been reduced because of outsourcing

and rationalization. Nevertheless, Windsor remains a centre for the industry.



This article deals with the manufacture of automobiles, but it is necessary to share the full

spectrum of the automotive manufacturing industry in Canada. Therefore the other areas

will be discussed but not in the same depth.

There is no question that the industry in North America is driven by the US market and by

US corporations. But now, due to the economic situation in the United States, Canada is

the location of choice for international companies that want to develop or expand their

markets in North America. Some of the reasons were detailed earlier in this article. But now

one of the main factors is the scal security in Canada, which reduces the risks for thesecompanies.

Other AutomotiveSector Activities.In Table E, there is a breakdown by Province of the other main sectors within the industry.

It can be seen that there is signicant activity in these industries and the manufacturers are

in clusters to promote their supply chain eciency. The companies are located mainly in

Ontario, Quebec and Manitoba.

Table E. Main Sub-Sectors by Province

Aftermarket Manufacturers

and Rebuilders

Trucks Buses

Province # of Companies Employment # of Companies Employment # of Companies Employment

Ontario 84 10,500 209 18200 14 3100

Quebec 56 5,000 96 8000 10 1300

British Columbia * * 62 2700 5 800

Alberta * * 71 7800 * *

Manitoba * * 25 2400 17 5400

*Blanks indicate low activity



Geographic Breakdown ofIndustry Activity in Canada.Ontario

Automotive assemblers and parts manufacturers are making major investments, positioning

Ontario as one of the world leaders in the manufacture of vehicles and component parts.

Auto parts manufacturing shipments in Ontario totalled $26.14 billion in 2007, or 94.6

percent of total Canadian output. Ontario assembly plants are highly ranked by J.D.Powers among facilities in North America.

Ontarios workforce competes favourably in terms of quality and cost against the best in the

world, consistently winning the initial quality survey from J.D. Powers and the Harbour Report

productivity survey. As a region, Ontario has more qualied engineers per capita than any G7

country. Of Ontarios roughly 135,000 highly- skilled autoworkers, 43 percent have a post-

secondary education, and on average they stay with an employer for nine years.

Throughout Ontario, world-leading companies collaborate with more than 150 university,

college and public research centres to bring new technology, new products and processes

from the laboratory to the marketplace.

Ontario is the largest producer of light vehicles and components in Canada, with over

1000 plants. There is a manufacturing corridor from Oshawa to Windsor, where most of the

component plants and assembly plants are located. The Ontario component manufacturers

supply assembly plants which are located in Ontario and the United States. Ontario exports

most of the production to the US, so whether it is assembled vehicles or component parts,

delivery to the US has to be ecient. The consolidation in the industry in Ontario has resulted in

the infrastructure necessary to provide fast access to US assembly plants.

Quebec

The Quebec automotive sector comprises over 250 companies and employs approximately

15,000 people in two main market segments: the original equipment market (OEM), and thesecondary market, comprising of replacement parts and accessories.

The automotive sector brings together internationally renowned companies in Greater

Montral, including Rio Tinto Alcan, Mecachrome and Raufoss Automobile Components

Canada. Montrals strong expertise in light metals represents a competitive advantage

with large, cutting-edge research facilities such as the Industrial Materials Institute (IMI),

the Center for Applied Research on Polymers (CREPEC) at the cole Polytechnique, and

Concordia Universitys Center for Composites.

Manitoba

The automotive industry in Manitoba is centred in Winnipeg. The cluster of companies

specializes in the bus market. Over one third of the North American market is supplied fromthis group. The main companies are Motorcoach Industries and New Flyer Industries which

are supported by a diversied supplier network.

In addition, there are about forty companies building other types of vehicles, including

motor homes, re engines, etc.



BritishColumbia

The British Columbia Fuel Cell cluster is the largest in the world, in terms of the number of

companies and employment. The Automotive Fuel Cell Cooperation (AFCC) was formed

in 2008 as a joint venture between Daimler, Ford and Ballard and is now responsible for

the research and product development of automotive fuel cells. The AFCC employs

approximately 200 people to commercialize this technology in automotive applications.

There is a cluster of supplier companies supporting these eorts.

Summary.We have looked at the Canadian automotive industry and seen that there is a capable

supply chain. But the industry demand is signicant to a number of other industries:

37% of steel foundry production

17% of rubber production

14% of processed Aluminum

13% of wire goods

9% of carpeting and fabric

8% of glass

This demonstrates the opportunities, not only for conventional automotive parts, but for

other products and technologies that can be applied to present and future automotive

products. The industry is open to new products and technologies that can support it to

become more competitive, better meet environmental requirements, and become greener

and cleaner. This includes the development of hybrid and electric cars (including fuel cells).

The development of these technologies is underway but there are many opportunities for

international companies to participate.

The industry provides a broad spectrum of opportunities for Swiss companies to take

part in its growth. The industry is already international, but there are many opportunities

to expand into Canada for the supply of the North American market. These opportunitiesextend beyond components and into new technology and products that can be

incorporated in vehicles in the future. The technology can range from new power systems

such as Fuel Cells to environmental technology and the production of greener vehicles.



More information is available through the websites listed below:

Invest in Canada

http://investincanada.gc.ca/eng/industry-sectors/automotive.aspx

Industry Canada

www.ic.gc.ca/eic/site/gvc-cvm.nsf/eng/00026.html

Ontario: North Americas Automotive Powerhouse

www.ontario.ca/economy

Manufacturers Association

www.apma.ca

AUTO21

www.auto21.ca


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