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article imageCanadian auto manufacturing to decline 25% by 2020

By Ken Hanly     Oct 4, 2013 in Business
Oshawa - Joe McCabe, president of the auto consulting firm Automotive Compass LLC, claims that vehicle production in Canada is predicted to decline by as much as 25 percent by 2020.
McCabe says that although auto makers in Canada produced 2.454 million vehicles this year that could decline by 600,000 to 1.823 million in 2020. Global auto manufacturers are investing in other areas that are lower cost such as Mexico, parts of the US and emerging markets. McCabe said that in North America: "Michigan, the southern U.S. and Mexico are winning at the expense of Canada", Data earlier this year showed that Canada won only 5 per cent of $42 billion US investment by auto makers between 2010 and 2012. The auto industry at present represents about 2.5 percent of Ontario's gross domestic product. A 25 percent drop in production would drop Canada from number 9 to number 14 in global auto production.
McCabe's forecast shows large production declines at GM and Chrysler Group facilities in Canada. GM production is forecast to drop by 314,000 vehicles by 2020 and Chrysler, by 440,000 units. One assembly plant in GM's Oshawa complex is scheduled to be shut down next year. Impalas and Camaros, Buick Regals and Cadillacs are now assembled in Oshawa but production is to be shifted to Detroit with no word on what will happen to the other Oshawa plants. Ironically McCabe's predictions came just as GM Canada was holding an internal presentation in an Oshawa plant slated for closure, to recognize its winning an award by J.D. Power and Associates for new vehicle quality.
Chrysler has to determine what the future of its Windsor plant will be. It now manufactures Dodge Caravan and Town and Country minivans. However, this market is slumping and the Caravan is now an aging model, though historically a huge success. Chrysler intends to eliminate the Caravan from its lineup.
By 2020 production in Mexico is slated to grow by 48 percent. Even luxury manufacturers Audi and the Infiniti division of Nissan are expected to assemble vehicles in Mexico by 2020. Statscan figures also show that Canadian auto production was already on the decline: Recent sales and exports growth have not been accompanied by substantial job growth or capital spending growth. Automotive industries employed, in 2012, 25 per cent less people than in 2007, and 33 per cent less people than in 2000. Growth in real output from 2009 to 2012 outpaced growth in hours worked, as labour productivity increased 23 percent. Capital spending by automotive industries has not advanced from declines during the recession, and in 2012 remained about 62 percent below 2007 levels.
An earlier report this year also confirms the decline.
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