Auto sector touts the upside of ‘disruption’
Despite Donald Trump’s tough talk on new import tariffs, thickening up borders and renegotiating the North American Free Trade Agreement, all with the stated purpose of protecting U.S. jobs, members of Canada’s important auto parts manufacturing sector were urged Wednesday to just chill out.
A number of speakers at the annual conference of the Automotive Parts Manufacturers’ Association held at Caesars Windsor cautioned corporate decision-makers not to nervously react by expanding operations in the United States.
Export Development Canada chief economist Peter Hall told the 440 conference delegates that Trump has already shown a willingness to pull U-turns on campaign promises that he now recognizes, as U.S. president, might negatively affect American jobs.
Canadians shouldn’t be fretting over how Trump’s protectionist policies might hurt his northern neighbour. “America doesn’t really care if Canada whines,” said Hall, adding the real effort by Canada should focus on showing how millions of American jobs are tied to open trade across the border.
“If anyone wants to make America great again, they need to protect those nine million American jobs that depend on a strong open-border relationship with Canada,” Brad Duguid, Ontario’s minister of economic development and growth, said during a keynote address.
Brexit was another “hugely disruptive” recent political jolt, but disruption, and the opportunities it can present, was the theme of this year’s APMA conference, where delegates were given an upbeat message about the future of North America’s automotive sector.
“Great change is coming to the industry,” said Mustafa Mohatarem, chief economist with General Motors. “While change can be scary, it also creates opportunity,” he added.
Auto production and sales are at record levels, and Mohatarem and others said there’s no reason that growth can’t continue.
Millennials, until recently thought to be turning away from vehicle ownership, are now finding employment in North America and becoming the fastest-growing segment of vehicle consumers.
Global efforts have lifted hundreds of millions of people out of poverty, and countries like China and India are seeing big increases in vehicle ownership, according to Hall.
Joe McCabe, president and CEO of AutoForecast Solutions LLC, said three new Chinese auto manufacturers joined the million-unit club last year. Auto production in China was equivalent to North America in 2010 but is forecast to be double the North American figure by 2024, McCabe said.
But the global auto sector, regardless of where the vehicles are being built or sold, will continue to seek out the technical know-how and research innovation in which Canada excels, delegates were told, and Windsor is at the centre of those offerings.
“Disruption is an attitude — if you’re actively disruptive, you’re more likely to dictate the terms to your competition, rather than the other way around,” APMA president Flavio Volpe told the Windsor Star. “The Canadian supply sector has the intellectual know-how to be those disrupters.”
GM’s Mohataram described four “game-changers” as chief among the auto sector’s disrupters, each of them subject to “very rapid” change:
Connectivity. Vehicles are becoming digital platforms and drivers don’t even have to be in them.
Sharing. Ride sharing “is changing the industry” and redefining mobility, especially in urban centres.
Alternative propulsion. Canadian universities and companies are leading some of the research.
Autonomous vehicles. Soon, seniors won’t be eventually forced to surrender their licences as their vehicle does all the driving for them.
Ontario, home to the bulk of the 96,000 Canadians employed in the auto parts manufacturing sector, is currently doing well, “but we live in a fiercely competitive and fastchanging global economy.”
Duguid acknowledged the presence in the conference hall of some of the fiercest critics to his Liberal government’s just-announced labour reforms, including boosting Ontario’s minimum wage to $15.
To help offset those new costs, albeit indirectly, Duguid used his APMA appearance to unveil in public for the first time the province’s “most ambitious red-tape reduction plan in generations.” He said legislation is coming in the fall designed to change the culture in how the province treats small business and expected to save Ontario businesses “hundreds of millions of dollars.”
The goal is to “make Ontario the easiest place in the world to do business.” Duguid said he’s particularly keen on seeing Canadian and international standards being brought in line with each other, a streamlining that could potentially save companies billions of dollars.