Parts producers optimistic, but Europe, CAW negotiations and competition hampering sector growth amid recovery.
WINDSOR, Ont.: Canada’s automotive parts producers need to flex their innovative muscles to improve competitiveness in an increasingly global supply chain, at least according to industry leaders speaking at this year’s Automotive Parts Manufacturers’ Association (APMA) conference in Windsor, Ont.
This year’s event was headlined by Magna International CEO Don Walker, and Toyota Canada’s managing director and president of Canadian manufacturing, Ray Tanguay.
Among other things, both called for Canada’s producers to use innovation and global markets to improve the country’s competitiveness.
“It won’t do to stick to Canada,” said Tanguay. “To succeed today, you have to go global.”
Those sentiments were echoed by APMA president, Steve Rodgers.
“It will be innovation that will get us through the tough times,” he said.
The mood at this year’s show, while optimistic, was cautiously so because of the on-going economic concerns in Europe, the recent GM announcement of a plant closure in Oshawa, Ont., and upcoming union negotiations with the Canadian Auto Workers (CAW) union, which analysts are saying could lay the foundation for the sector’s success in the next five years.
There is also a call for producers to be prepared for quicker supplier cycles as more OEMs move towards multi-platform operations handling several vehicle segments.
“Economies of scale are no longer vertical,” said Robinet, suggesting that vehicle producers are upping efforts on cross-segment modularity to cut production costs.
“Tightening emissions regulations have tightened platform development,” he added.
Ultimately this will create a situation where production today won’t match the good old days, according to Kim Korth, CEO of IRN Inc., a Grand Rapids, Mich.-based automotive consultancy.
“Market share doesn’t equal market power,” she said. “The North American market is too big.”
Going global, however, won’t be as simple as getting into emerging markets like the BRIC countries, the experts warned. Europe is also a cause for concern. China’s growth has slowed because of weakened import power by the Asian super-economy’s largest trade partner.
“Emerging markets aren’t growing as fast as they were,” said Alexander. “China was hit by the European crisis, the US is only recovering slowly.”
There wasn’t a lot of complaining directed at federal government for not providing enough of a boost to Canada’s manufacturing sector. Talks, instead, focused on what the industry could do to collaborate and what it would take to make the industry more global.
“Canada’s parts industry will survive by following customers, but that doesn’t mean packing up and leaving,” said Alexander. “The goal should be to keep as much as possible in Canada, but in today’s market, success equates to a global supply chain.”
Stay tuned for more coverage from the 2012 APMA Conference and Exhibition, including the impact of CAW negotiations, Canada’s most significant threat, and technologies from the exhibition.