Profits at Canadian autoparts makers are seen declining to their lowest level in almost a decade of data collection.

An 18% drop in production will translate into a 38% decline in profits, the Canadian Conference Board said in a report.

"Canadian auto parts manufacturers continue to see their production contracts slashed because of weaker demand for new vehicles in the United States," said economist Sabrina Browarski.

"However, massive cost cutting of more than C$4bn will enable the auto parts industry as a whole to stay in the black this year."

Profits in Canada's motor vehicle parts industry are expected to decline to about $1bn this year, their lowest level since profit data were first collected in 1999. Further declines in profit levels are expected in 2009.

After shedding 12,800 jobs in 2007, the industry is expected to cut another 10,800 jobs in 2008 and 2009 combined.

A fourth consecutive year of decreased output is expected in 2009. An anticipated recovery in US demand beginning in 2010 would allow for an eventual rebound in auto parts production.

The board's medium-term outlook assumes sustained production by the Detroit Three automakers, all of whom have plants in the province of Ontario.

GM has said it would cut its first-quarter production by 60% while Chrysler plans to idle its plants for at least a month.

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