“Tuning into the BIG Picture”
For
Eastern Ontario Automotive Summit
Belleville, OntarioOctober 19, 2006
Automotive Parts Manufacturers’ Association
The Voice of the Automotive Original Equipment Suppliers
in Canada
• APMA is Canada’s national association representing OEM producers of parts, equipment, tools, supplies and services for the worldwide automotive industry.
• APMA members and their subsidiaries account for 90% of the over $36 (CDN) billion production of automotive parts in Canada. (2005)
Who are we?
To engage in activities that promote the interests of automotive original equipment suppliers in Canada
that enhance the economic welfare of our members and
be the Voice of the Canadian automotive supply industry
Mission Statement
APMA has an 18 person Board of Directors to provide industry focus and direction and to oversee operations of the association as well as standing committees to allow members to exchange information and deal with issues affecting their sector:
•Marketing and Strategic Initiatives Committee
•Human Resource Development Committee
•Energy, Environment and Health & Safety Committee
•Innovation and Technology Committee
•Other Ad hoc Committees as needed
•APMA has 7 full time staff members to administer the association
How APMA operates:
(top 10 issues condense down to 3 main topics)
1. Making Vehicles Safer
Better electronics/user interfaces, better driver and occupant education, better traffic management systems, stronger and easier to process structural materials.
2. Improving Fuel Economy & Reducing Environmental Impact
Lightweight materials, reducing non-renewable resource usage, hybrid powertrains (need better batteries), better transmissions (CVT’s), reducing emissions (need better catalysts).
3. Re-thinking Old Methods
Improving supplier relationships, making assembly more efficient and safer, controlling cost to improve profitability (lower cost materials & logistics as well as design and test methods improvements).
Source: Automotive News - April 11, 2005
Top Auto Industry Issues
91
8377
6167
64
4348 47
2934 34
17 17 18
3134 33
1418 20
0
20
40
60
80
100
Mo
de
l C
ou
nt
GM Ford DCX Toyota Honda R/N Hyundai
2003-05 2006-08 2009-11
Source: CSM Worldwide
Industry
Model Count
2003-05 3592006-08 3852009-11 371
Automakers and suppliers need flexibility to assembly moremodels and parts for different platforms in the same plant
Explosion of New Products
2008 Data Source: CSM Worldwide
65.2
25.3
2.76.9
63.2
26.6
3.66.5
61.8
27.6
3.86.8
59.4
28.9
3.87.9
58.2
30.3
47.5
56.9
32.2
4.36.5
52
37
4.56.5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2008
Europe
Korea
Japan
Big 3
19.7 19.5 19.2 20.519.319.8 19.6
N.A. Market Share Shift
• World’s 8th largest producer of motor vehicles (> 2.6 million units). Ontario produces more vehicles than anywhere else in North America.
• Six OEM’s: 12 active assembly plants (+1 more in 2007) + a number of engine and drivetrain part plants and support facilities. Over $7 billion has been committed to Canada in past two years.
• 3 OEM engineering R&D centres including DaimlerChrysler Canada, General Motors Canada & International Truck & Engine-Navistar.
• Hundreds of suppliers of parts at all tier levels including Magna, Siemens-VDO, Dofasco, Alcan, Dupont, Wescast Ind., Woodbridge, Solectron-Invotronics, NEMAK Aluminum, Ballard Power Systems, General Hydrogen, Stuart Energy Systems, Hydrogenics, Schukra, QSS, Ventra Group, AutoLIV Canada, Ventra, Delphi, Lear Canada.
• Over 500,000 Canadians work in the auto industry - 1/7 jobs and 1/6 in Ontario. Workers here are highly skilled!
• The auto sector generates 12-13% of Canada’s manufacturing gross domestic product and is the largest source of foreign exchange.
Canada’s Automotive Sector
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
40
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
$ billion
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Canadian Vehicle Production VS. Canadian Automotive Parts Shipments
Canadian Vehicle Production (units)
Canadian Automotive Parts Shipments (CDN $)
Motor Vehicle Assembly Manufacturing vs. Motor Vehicles Parts Manufacturing
0
20000
40000
60000
80000
100000
120000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
AssemblyManufacturing
PartsManufacturing
Statistics Canada
Total Employment
Oshawa
OakvilleBrampton
Alliston
Cambridge
Windsor St. ThomasIngersoll
Canadian Assembly Plant Locations
Woodstock (opening 2008)
Vehicles Key to the North American Market
Canadian Assembly Plants
ASSEMBLER PRODUCTS
CAMI Chevrolet Equinox *Pontiac Torrent
DAIMLER CHRYSLER Chrysler 300 *Dodge Magnum *Dodge Grand Caravan/Chrysler Towne & CountryDodge Charger * **
Chrysler Pacifica *
FORD FreestarCrown Victoria / Grand Marquis / Town Car (2008)
GM Buick AllureChevrolet ImpalaChevrolet Monte CarloChevrolet SilveradoGMC Sierra
Pontiac Grand PrixCamaro (2009)
HONDA Acura CSX * /Honda Civic HatchbackAcura MDX *
Honda Pilot *Honda Ridgeline * **
TOYOTA Toyota CorollaToyota Matrix
Lexus RX 350 HinoRAV 4 (2008)
* Solely Ontario Sourced
** New Vehicle Launch
Lincoln MKX (2007)Ford Edge (2007)Fairlane (2008)
Suzuki XL-7
Auto Part Sites by region
01 Bas St-Laurent (1)
02 Saguenay / Lac St-Jean (3)
03 Capitale Nationale (10)
04 Mauricie (4)
05 Estrie (22)
06 Montréal (38)
12 Chaudière-Appalaches (8)
14 Lanaudière (1)
15 Laurentides (10)
16 Montérégie (28)
17 Centre du Québec (4)
( ) number of companies located in each region
Chicoutimi
Québec
Trois-Rivières
DrummondvilleMontréal Sherbrook
e
Hull
Automotive Parts Manufacturers are mainly located in Ontario and Quebec
Quebec
Ontario
Source: Ontario Ministry of Economic Development and Trade
Source: Québec Ministry of Economic Development, Innovation and Export Trade
Canada has world-class auto assembly and parts manufacturing operations.
Powertrain, systems and assembliesStackpole
Machined components, modules, systems
Linamar
Stamped and hydroformed partsF&P Mfg.
Brakes, suspension components, controls
Arvin Meritor
Steering, suspension componentsTRW Canada
Chassis componentsDana Canada
Plastics, blow and injection moldedABC Group
Air ConditionersDenso Canada
Molded foam, interior trim, seatingThe Woodbridge Group
Weather-strippingWaterville TG
Die CastingsBurlington Technologies
Stamping, interior and exterior trim, powertrain components
Magna International
Parts
Product Lines
Some of the 550 Auto Parts Plants
Auto Assembly
- 12 Plants -
The Nature of the North American Automotive Industry Trade Flow
• $60.0 B cars and trucks
• $20.3 B parts, engines
Total: $80.3 B
• $23.1 B cars and trucks
• $33.2 B parts, engines
Total: $56.3 B
Source: Statistics Canada
Issues Facing the Automotive Original Equipment Supply Industry in Canada
1. Developing a diversified customer base
2. Securing a fair share of automotive investment in Canada
3. Globalization
4. Seamless passage at the Canada – United States borders
5. Maintaining competitiveness through innovation
1. Developing a diversified customer base
• Market shares continue to change. Suppliers, must aim to have their customer make up mirror that of the new vehicle market shares and be able to quickly respond to:
•Rapid model/vehicle changes
•Lower volumes per platform but more platforms to supply
•Rapid market demand changes – vehicle segment fluctuations
•Global competitive variables-F/X, input costs (raw material, labour, etc.), foreign competition for your business
How does APMA help? Events from 2004 to dateTrade Missions:•Toyota Engineering Centre (Michigan)•Honda, Toyota, Nissan, Tokyo Motor Show (Japan)•Shanghai GM, Volkswagen, Tier I companies (China)•Nissan Technical Centre (Michigan)•Audi, Volkswagen, Hyundai/Kia (Central Europe)•Honda Of America (Ohio)•BMW North America (South Carolina) (3 times)•China (Shanghai, Beijing, Hong Kong)•One-on-One Mission & Tokyo Motor Show (Japan)•Many incoming missions
APMA Events and Publications•APMA’s Annual Conference & Exhibition) for education and networking•Publications to help you stay current
• Investments by foreign governments helped other jurisdictions. We had no new Assembly plants in Canada for last 19 out of 20.
• Our governments’ investments re-leveled the playing field and we have since had good “hits” with virtually all vehicle manufacturers in Canada.
2. Securing a fair share of Automotive Investment in Canada
Results:
•Ford flexible manufacturing - $1 Billion
•GM’s Beacon project - $ 2.5 Billion-Camaro $740 million
•International Truck plant
•Toyota plant 7 – Woodstock for RAV4 - $800 million
•DaimlerChrysler expansions
•Hino (Toyota subsidiary) new truck plant in Woodstock
Over $7 Billion committed resulting from Government’s $1 Billion investment
3. Globalization
1. Not a new concept – for our sector, the AutoPact of 1965 was the start.
2. FTA (late 80s)
3. NAFTA (mid 90s) – big change. High labour content (i.e. wiring harnesses, windshield wiper assemblies) went to Mexico. Benefits of NAFTA are not yet fully realized by the auto industry (non-tariff barriers, harmonization of regulations, border crossing logistics, etc.)
4. Need to find what our core competencies are and develop from there
3. Globalization
1. Asian manufacturing costs are lower – pressure for Asian
pricing in North America
2. More goods will come from Asia and Central Europe-Mexico
may be most at risk!
To be economic and travel 10,000 kilometers, auto parts:
• Cannot be on JIT process
• Must travel well (ie. Difficult to damage)
• Must stack well (high value per container) No value in
shipping air
3. China is hot now for goods, but India will be close behind.
4. Look to China, India, and Central Europe countries for more
competition
4. Seamless passage at the border
• Under NAFTA, goods are to flow freely between countries, but at the border; we know this isn’t always the case.
• Implement Intelligent Technology Systems (ITS) to help control border congestion
• Encourage use of advanced paperless customs and security systems for the pre-clearance for low risk goods
• Can we learn from the European Union, which provides uninterrupted travel (commercial) between 25 countries?
5. Maintaining competitiveness through innovation, research and commercialization
• AUTO21 – Federal Centres of Excellence across the country
* 39 Universities participate
• NRC – Aluminum Technology Centre in Chicoutimi
• Centre for Automotive Research and Education and Automotive Engineering Program at the University of Windsor
• Centre for Automotive Parts Expertise at Georgian College (CAPE)
• University of Windsor/International Truck Diesel Emissions and Manufacturing Process Improvement
Highly qualified skilled trades are essential to a successful auto industry. Advanced research and commercialization of its outputs is equally important. These are our Competitive Advantages!
In summary, the future includes:
• Manufacturers rebalancing and diversifying their customer base – ideal is customer base should mirror customer market share
• Rapid response: Changes/demands will come in many forms
• Low cost country components will be part of the supply chain – use it to your advantage
• Canada must continue to improve trade infrastructure with US – our biggest customer for the foreseeable future
• Canada must continue to remain globally competitive through enhanced R & D, fostering innovation and attracting new investment
• Embracing globalization-not running from it. It provides great opportunities for those willing to reach for it!
and
• Investments in human resources aka “The Human Element”
Gerry Fedchun
(416) 620-4220 Fax (416) 620-9730
The Voice of the Automotive Original Equipment Suppliers
in Canada