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In the past four years, investment to increase capacity in Canada has amounted to $180- million for a single project in 2012, compared with $46.9-billion pumped into China and $6.3-billion spent in Mexico. (Fred Lum/The Globe and Mail)
In the past four years, investment to increase capacity in Canada has amounted to $180- million for a single project in 2012, compared with $46.9-billion pumped into China and $6.3-billion spent in Mexico. (Fred Lum/The Globe and Mail)

Canadian auto investment stalls Add to ...

Auto makers spent $17.6-billion (U.S.) around the world in 2013 to increase vehicle-making capacity, but not a dime of that money was invested in Canada.

It’s the third year in the past four that Canada has been shut out of investment in new plants or expansions that lead to increased production, according to an annual study done by the Office of Automotive and Vehicle Research at the University of Windsor.

In the past four years, investment to increase capacity in Canada has amounted to $180- million for a single project in 2012, compared with $46.9-billion pumped into China and $6.3-billion spent in Mexico.

The tide of investment that is flowing into other auto-making countries is helping to erode Canada’s position as a global auto-making powerhouse. Vehicle output fell 4 per cent in Canada in 2013 despite record sales in the Canadian market and a buoyant recovery in the U.S. market, which is the destination for more than 80 per cent of cars, minivans and crossovers assembled Canada.

“Canada was once the fourth-largest automotive assembly country in the world – it is now 10th,” the study says.

The failure of the federal and Ontario governments to entice auto makers to increase capacity in Canada – and the high-paying jobs created by those investments – underlines the importance of retaining existing factories if the country is to remain an important auto-making nation.

The failure of the federal and Ontario governments to entice auto makers to increase capacity in Canada – and the high-paying jobs created by those investments – underlines the importance of retaining existing factories if the country is to remain an important auto-making nation.

“We can’t afford to lose what we’ve got,” said Pete Mateja, co-director of the Office of Automotive and Vehicle Research. “The Chrysler Windsor plant, we definitely need to hold on to it or it’s going to be devastating for Windsor. Same thing with General Motors in Oshawa.” The long-term future of the Chrysler minivan plant in Windsor is in doubt after Chrysler Group LLC walked away from negotiations with the federal and Ontario governments on a $3.6-billion investment in Canada that included a proposal to spend $2.3-billion at the minivan operation.

The report also points out how money is flowing to emerging markets such as China, Mexico and Brazil, while stagnant markets with high labour costs are shut out. Auto makers made no investments to increase capacity in Germany in the past four years and just $128-million in Japan.

Mr. Mateja noted that the recent decline in the value of the Canadian dollar should make Canada more attractive, but it’s not enough to compete with the billions of dollars being offered to auto makers by Mexico and southern U.S. states.

The release of the report coincides with actions some U.S. auto-producing states are taking to try to lure more auto investment.

The biggest, of course, is Michigan, which unveiled a new strategy Tuesday that is designed to maintain its position as the largest auto-making state or province.

Michigan needs to adjust to a global shift to smaller and lighter vehicles that will occur during the next 30 years, Nigel Francis, senior vice-president in Michigan Economic Development’s Automotive Industry Office, told the annual convention of the Society of Automotive Engineers in Detroit on Tuesday.

“Michigan’s vehicle development and output must reflect these global marketplace changes or risk becoming less globally relevant,” Mr. Francis said.

Meanwhile, Kentucky Governor Steve Beshear said Tuesday that he plans to establish a 12-member Kentucky Automotive Industry Association to attract more auto jobs to a state that now boasts Ford Motor Co., General Motors Corp. and Toyota Motor Corp. factories.

The Kentucky group is similar to the Canadian Automotive Partnership Council, an organization composed of auto industry, union and government representatives that has been advising the federal, Ontario and Quebec governments for more than a decade. Several key initiatives proposed by the group, such as the construction of a new bridge between Windsor, Ont., and Detroit, are still on the drawing board.

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