The Canadian vehicle parts industry will cut 36,000 jobs this year as companies respond to the sharp decline in vehicle production, the Conference Board of Canada said on Thursday in its twice yearly outlook for the industry.
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The companies are also expected to lose C$173m (US$153m) this year as production drops 39% after a C$109 loss last year, the board said, according to a Reuters report.
Canada’s parts makers will cut costs by 34% this year, which will include reducing staffing by one-third, in response to the weaker volumes as the global recession slashes sales of cars and light trucks, the report said.
“Conditions will be undeniably difficult in 2009, and many small and medium-sized firms could potentially go out of business,” Sabrina Browarski, a Conference Board economist, and author of the outlook, was quoted as saying.
“The larger manufacturers, however, stand to increase their global market share when US demand for automobiles starts to recover in 2010.”
The industry is expected to return to profitability beginning next year with a profit of C$222 million. By 2013, the board said, profit margins are expected to return to historical norms.
The board said its medium-term outlook for the industry was based on the assumption that GM would successfully exit bankruptcy protection and Chrysler would be restructured under a stable partnership with Fiat.
