A new report from economist Carlos Gomes confirms that the Canadian auto industry is at risk because of falling investments in assembly and parts plants.
In 2011, Canadian investments will total only $1.2 billion. That’s the lowest they’ve been since the ‘80s, representing a nearly 66% drop compared to the $3.1 billion average of the last decade.
Mr. Gomes says that Canada’s share of the North American auto assembly market, which he evaluates at around 16%, is threatened by the expansion in Mexico.
Mexico seems to be attracting more and more Japanese manufacturers because of its low production costs. They see it as a perfect solution to offset the strength of the yen, which is currently decimating their profit margins.
The economist supports his claims with the fact that the auto industry invested nearly 3 billion dollars in Mexico over the last six months to expand existing plants or build new ones.
In the long run, he believes the lack of investments and the gradual exodus of the manufacturers could hurt not only parts suppliers but the entire Ontarian economy as well, where the auto industry is a major player.
It’s apparently not all bad news, however. Mr Gomes notes that Canada turned in its best performances this year since 2007, producing 2.1 million vehicles. In addition, the number of jobs in the Canadian auto industry has increased by 10% since the economic downturn of 2009.
Source: The Globe and Mail
In 2011, Canadian investments will total only $1.2 billion. That’s the lowest they’ve been since the ‘80s, representing a nearly 66% drop compared to the $3.1 billion average of the last decade.
Mr. Gomes says that Canada’s share of the North American auto assembly market, which he evaluates at around 16%, is threatened by the expansion in Mexico.
Mexico seems to be attracting more and more Japanese manufacturers because of its low production costs. They see it as a perfect solution to offset the strength of the yen, which is currently decimating their profit margins.
The economist supports his claims with the fact that the auto industry invested nearly 3 billion dollars in Mexico over the last six months to expand existing plants or build new ones.
In the long run, he believes the lack of investments and the gradual exodus of the manufacturers could hurt not only parts suppliers but the entire Ontarian economy as well, where the auto industry is a major player.
It’s apparently not all bad news, however. Mr Gomes notes that Canada turned in its best performances this year since 2007, producing 2.1 million vehicles. In addition, the number of jobs in the Canadian auto industry has increased by 10% since the economic downturn of 2009.
Source: The Globe and Mail