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November 16, 2015

Complex vehicle production, R&D, Ontario’s ‘sweet spot’

Ontario minister of economic development, employment and infrastructure Brad Duguid sees the province's 'sweet spot' as the production of higher end, more complex vehicles, high quality and lead plant ability.

Ontario minister of economic development, employment and infrastructure Brad Duguid sees the province’s ‘sweet spot’ as the production of higher end, more complex vehicles, high quality and lead plant ability.

Speaking to just-auto on a province-hosted connected car media tour, the minister acknowledged the fall in Canada’s share of North America’s auto output – from 17% in 2007 to 12.6% in 2015, according to Des Rosiers Auto Consultants.

He said plants in Mexico and the US Deep South were getting “mandates for less complex manufacturing” but the “Ontario sweet spot is high end vehicles and more complex manufacturing”.

He acknowledged Toyota’s move – announced last week – to move Canadian Corolla production south to Mexico but said that was being offset by more RAV production and more complex variants such as the hybrid. He also said Toyota was adding more Lexus variants to Canadian production.

Duguid also stressed the quality of Ontario car plants, noting that record North American output in recent years had also been accompanied by record recalls. The number of JD Power quality awards to Ontario plants – 29 – far exceeded the two made so far to Mexican plants.

The minister said Toyota’s plant was the lead plant for the Lexus RX and Honda Alliston had led with the new Civic sedan and coupe models.

“As we move to more complex connected, hybrid and EV vehicles, Ontario is well placed to get these mandates in future,” he said. “We’re seeing a shift from ‘commodity’ to ‘value-added’ cars.”

The minister said the Ontario economy was “going really well”. He said the province had to deal with both today’s economy and “two minutes from now” – what used to be called the “next generation” – “changes are happening as we speak”.

“I’m convinced the jurisidictions that are going to do well are those determined to help drive innovation – the alternative is to be run over by it. In today’s economy, Ontario is going to do well.”

Duguid is just back from a 19-day tour of Japan and Beijing drumming up interest in inward auto investment. He cited recent $4.5bn inward investment across a range of automakers and suppliers. While abroad, he stressed Ontario’s business-friendly environment including a healthcare system that saves automakers $500 per vehicle compared with the US and Mexico, and lower corporate taxes.

There is also a massive talent base with graduates of the universities in Toronto and Waterloo now being sought after in Silicon Valley over those from MIT.

There are nine universities and 24 colleges working on auto R&D. Many are focused on clean tech and lightweighing, connected, driverless and autonomous technologies.

Duguid said Ontario was a centre of excellence for auto R&D, second only to Silicon Valley, with 19,000 ICT companies – only Silicon Valley has more.

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