Flexible Production Tackles Lack Of Competitiveness
While the Canadian auto sector has been criticised in recent years for its lack of competitiveness, Ford Motor has announced investment of US$700mn in its Oakville plant, to introduce its flexible production strategy as a way of responding better to market behaviour. BMI believes there is still much to be done to address the competitiveness issue enough to attract more projects, but the ability to change production to suit the market is one way of tackling it head on.
The upgrade work will be complete by the end of 2014, providing a boost to a production segment, which has been lagging its North American peers. Canadian light vehicle output was down 7% y ear -o n -y ear (y-o-y) in H113, while production in the US and Mexico was up 6% y-o-y and 5% y-o-y respectively. While this can be partly attributed to plant closures and the fluctuating popularity of the models produced in the country, it is the result of a disparity in regional investment, which has been gradually worsening.
According to a report from the Michigan-based Centre for Automotive Research, of US$43bn invested in North American by autos firms between 2010 and 2012, only 5% (around US$2.3bn) went to Canada. Southern US states claimed US$4.9bn and Mexico US$7.8bn. Carmakers have cited high labour costs and the strong Canadian dollar as reasons for holding back investment.
|Total Vehicle Production By Country (CBUs)|