Dollars going to Canadian production in 2012 far behind Mexico.
March 1, 2013
by PLANT STAFF
Flexible manufacturing at Ford’s Michigan plant. Photo: Ford
WINDSOR, Ont. — Global automotive investments were down by almost a third in 2012, with Canada far behind Mexico in terms of adding new capacity, according to a University of Windsor report.
The Annual Automotive Assembler Investment Report prepared by the university’s Office of Automotive and Vehicle Research (OAVR) at the Odette School of Business shows $16.1 billion in auto assembler investments were announced last year, a 32.5% decrease from the $24.1 billion reported in 2011.
Canada’s assembler investments amounted to $180 million, coming exclusively from Toyota for expansion of production capacity at its Woodstock and Cambridge, Ont. plants.
Investments in Mexico total almost $2.7 billion.
The OAVR report notes that although Canada’s production grew by 15.4% to 2.4 million units, there are ongoing concerns over the competitiveness of the automotive industry.
“Higher Canadian dollar, coupled with higher labour costs and the high incentives offered by the US and Mexican governments make it difficult to attract OEM investments,” say the report’s authors.
China and Mexico were the ranked highest for OEM investment, accounting for 75.9% of the total. China accounted for 59.6%.
The Detroit 3 put much of its money into China, Mexico and Russia.
The report forecasts a return to pre-downturn production volumes by 2015. Most of the new capacity will be come from New North American Manufacturers (NNAMs), not the Detroit 3, and is destined for the southern US and Mexico.
Significant production will occur in the Asia/Pacific region (especially in China, India, Indonesia and Thailand), in Eastern Europe (especially Russia, the Czech Republic, Poland, Romania and the Ukraine), and in South America (Brazil and Argentina). Parts production will also grow in these markets.
The report says North American parts makers must look to the Chinese and Indian automotive markets and assemblers for growth. Major assemblers such as Geely, Chery, Great Wall Automobile, Nanjing Automobile, Changfeng, ChangAn, Tata, Mahindra & Mahindra and others will be growing their parts purchasing in China, India, Eastern Europe, Latin America and, in the not too distant future, North America.
As for the Detroit 3, the OAVR says they will be looking for future growth outside of North America.
Click here for a copy of Major Automotive Assembler Investment Announcements.