Mexico is set to displace Canada as the second largest vehicle producing country in North America early in the next decade according to a just published study.
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The Globe and Mail newspaper said that’s one of the key conclusions of a study called Competing Without a Net, which was undertaken by the Council for Automotive Human Resources (CAHR).
The report comes on top of an industry already battered by an appreciating Canadian dollar and a slide in sales in the US market, which soaks up more than 80% of Canada’s vehicle production, the newspaper notes.
“Viewed in a global or regional context, Canada’s competitive position continues to decline,” the report says. “In fact, the long-term viability of the Canadian automotive industry is in question.”
Employment at light-vehicle assembly plants and parts makers has already tumbled 12 per cent from the peak reached in 2000 and is forecast to drop at least another 8 per cent in the 2010-14 period, the report says.
The auto sector has deteriorated in Canada even since the study was begun in early 2007, the report notes, pointing to the dollar, U.S. labour agreements that substantially reduced costs in that country and increased investment in small-car manufacturing in Mexico caused by the requirement that light vehicles sold in the United States average 35 miles per gallon by 2020.
“It’s a realistic view of what the situation is out there,” said John Mavrak, executive director of CAHR, which was established in 2004 to create a human resources strategy for the industry.
Vehicles will still be assembled in Canada, noted CAHR chairman Mark Nantais, but “it’s going to be a very different industry, that’s for sure.”
Output in Mexico will jump to 2,615,793 vehicles by 2011 while Canadian production will be static at about 2,507,038, said William Pochiluk, president of consulting firm AutomotiveCompass LLC and one of the co-authors of the study.
