| | |  Business News | December 2008 
Mexico Bumps Canada to No. 3 Car Maker
 Greg Keenan & Karen Howlett - The Globe and Mail
go to original
Mexico has knocked Ontario off its perch as North America's pre-eminent auto-producing area, raising the stakes for Canadian governments as they weigh a multibillion-dollar bailout package for the Detroit Three aimed at maintaining the province as an automotive powerhouse.
The tipping point came in October when vehicle production in Mexico hit 1.796 million for the first 10 months of the year, compared with 1.779 million in Ontario. While the difference was a mere 17,000 vehicles, it allowed Mexico to supplant Ontario as the No. 1 car-making jurisdiction and undermine Premier Dalton McGuinty's oft-repeated boast that the province has vaulted ahead of Michigan as the largest producer of vehicles in North America. Mexico's rise means that for the first time ever, Canada has declined to No. 3 behind the U.S., which leads, and Mexico.
"While we were worrying about Michigan, Mexico has quietly cleaned the clocks of both Ontario and Michigan," said industry analyst Dennis DesRosiers of DesRosiers Automotive Consultants Inc.
The change comes as the Ontario and Canadian governments consider a $6-billion rescue package with the Detroit Three auto makers.
Chrysler Canada Inc. and General Motors of Canada Ltd. are seeking $2.4-billion before the end of the year, while a $14-billion (U.S.) emergency bailout of their parent companies ran into a snag in the U.S. Senate. Auto producers in Mexico are seeking $3-billion in loans from the Mexican government to spur vehicle sales.
In the U.S., Senate Republicans expressed grave concerns about a proposed deal between congressional Democrats and the White House. Nevertheless, the proposed bailout puts the Canadian governments under enormous pressure to craft their own rescue plan. Ontario Economic Development Minister Michael Bryant said Canadian officials plan to work with their counterparts in the United States on a "diplomatic solution" that would treat North America as one auto market.
The dramatic downturn in auto sales in North America has hurt not just the Detroit Three car makers but also Canadian auto parts suppliers. Mr. Bryant made it clear yesterday that protecting their interests is a key priority.
"The tentacles of the auto makers in Detroit reach into Canada in a number of ways, firstly the auto makers, secondly the dealers and thirdly, and very importantly, the suppliers," Mr. Bryant said. "We have to ensure that every supplier and every part of the supply chain is recognized in the North American solution."
To that end, one of the conditions Ottawa and Ontario will attach to any loans for the Canadian arms of the Detroit Three is that they use the funds to pay their suppliers, Mr. Bryant said.
The suppliers have stepped up the pace of lobbying to support a financial package for the Detroit Three. Linamar Corp. CEO Linda Hasenfratz met Prime Minister Stephen Harper this week to push for the bailout. Ms. Hasenfratz would not discuss the meeting, but said parts industry officials have been lobbying the governments, in part to make sure they don't forget about parts suppliers, which employ about 80,000 Canadians.
"Many suppliers are in a very, very difficult financial position at the moment with very poor liquidity because of years of production reductions in North America, capped off this year by some pretty extreme reductions in volume," she said.
Keeping the Detroit Three alive is one way to help suppliers survive, she said, but Ottawa and Ontario could extend additional financing to the three auto makers with the stipulation that it be used to pay suppliers within 20 days instead of the current 60 days.
Auto parts firm Burlington Technologies Inc. filed for court protection yesterday. It is also closing a plant in Brantford, Ont., putting 85 workers who have been embroiled in a labour dispute since last month, out of a job.
Mr. McGuinty said yesterday there will be further job losses because no amount of aid can make up for the fact that Americans are buying fewer cars. But he said his primary interest is protecting the 400,000 "flesh and blood" people in Ontario who count on the sector, not some "disembodied corporate entity." |
|
| |
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us