The Canadian Automotive Sector

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Nov 13, 2013 (3 years and 8 months ago)

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1

The Canadian Automotive Sector

Overview and Competitive Advantages

Jerry Suyavong

President, M.E. International Inc.

Vice President, Linear Transfer Automation Inc.

ProExport

Colombia Seminar July 23, 2013

2

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


TABLE OF CONTENTS

1.
Canada Automotive Industry Overview

2.
Competitive Advantage

3.
Automotive R&D Centre

4.
Next Generation Vehicles

5.
Outlook, Challenges and Opportunities


3

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Snapshot of Canada’s Auto Sector


Manufacturing



Canada produces passenger and
commercial vehicles, auto parts and systems, truck bodies
and trailers, as well as machines
-
tools
-
dies
-
moulds (MTDM)
and tires


Automotive is the largest manufacturing sector in Canada.
In
2012
it accounted for:


10%
of manufacturing GDP


$80.4
billion in revenues


115,025
in direct employment


21%
of merchandise trade


16% of NAFTA vehicle production (
2.45
million units)


Highly concentrated in Ontario; also in Quebec, Manitoba
and B.C.


Very export intensive (three
-
quarters of annual output
)

4

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.





Assembly: 19 passenger and commercial vehicle plants, 37,155 employed


87% exported,
16.5% of North American vehicle production over the last 5 years


2.45M vehicles produced in 2012




Auto parts:
~10% of North American parts shipments


~
350 automotive parts plants, including leading Canadian parts supplier and
large Multinationals




~300
Tool, Die and Mould
makers


1,240 facilities, 64,305 employed, $27.5 billion revenues, 46% exported



Key
Inputs & Services: Reliable access to raw materials, such as, steel, metals,
plastics, alternative materials, as well as business services and automotive sales
and
service

Snapshot of Canada’s Auto Sector

5

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Vehicle Assembly Locations

6

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.



Parent

Plant / Location

Products

Chrysler

[FIAT]

Brampton Assembly Plant (Brampton ON)

Chrysler 300/300C; Dodge Charger and Challenger;
Lancia Thema

Windsor Assembly Plant (Windsor ON)

Chrysler Town & Country; Dodge Grand Caravan; Lancia
Voyager; Ram Cargo Van

Ford

Oakville Assembly Complex (Oakville ON)

Ford Edge and Flex; Lincoln MKX and MKT

GM

CAMI Automotive (Ingersoll ON)

Chevrolet Equinox (2010MY) and GMC Terrain (2010MY)

Oshawa Car Plants 1
-
2 (Oshawa ON)

Buick Regal and Regal eAssist; Cadillac XTS; Chevrolet
Camaro, Equinox and Impala

Honda

HCM Plants 1
-
2 (Alliston ON)

Acura MDX and ZDX; Honda Civic and CR
-
V

Toyota

North and South Plants (Cambridge ON)

Toyota Corolla and Matrix; Lexus RX 350

West Plant (Woodstock ON)

Toyota RAV4 and RAV4 EV

Assembly Plants in Canada


Parent

Plant / Location

Products

Blue Bird

Micro Bird (Drummondville PQ)

Type A school buses

Hino [Toyota]

Hino Motors Canada (Woodstock ON)

Class 4
-
7 trucks (CKD)

Lion Bus

Lion Bus Inc. (St. Jerome PQ)

Type C school buses

MCI

MCI International (Winnipeg MB)

intercity buses

New Flyer

New Flyer Industries Canada (Winnipeg MB)

urban transit buses

PACCAR

PACCAR of Canada (Ste. Therese PQ)

Class 6
-
7 trucks

Volvo Bus

Nova Bus Corporation (St. Eustache PQ)

urban transit buses

Prévost Car (Ste. Claire PQ)

intercity buses

Light Vehicles

Heavy Trucks

and Buses

7

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Exceptional Quality and Productivity

J.D. Power Plant Quality Awards

1990

Toyota Cambridge (Gold)

1991

Toyota Cambridge (Gold)

1992

Toyota Cambridge (Silver)

1993

Toyota Cambridge (Bronze)

1994

Ford St. Thomas (Silver)

1995

Toyota Cambridge (Gold)

1996

Toyota Cambridge (Gold), Honda Alliston (Silver)

1998

Ford St. Thomas (Gold)

1999

GM Oshawa 1 (Bronze)

2000

Toyota Cambridge (Bronze)

2001

Toyota Cambridge (Gold)

2002

GM Oshawa 2 (Gold)

2003

GM Oshawa 1 (Gold)

2005

GM Oshawa 2 (Gold), GM Oshawa 1 (Silver)

2006

GM Oshawa 2 (Gold), Chrysler Windsor (Silver)

2007

GM Oshawa 2 (Silver)

2009

GM Oshawa 1 (Silver)

2010

Toyota Cambridge (Gold)

2011

Toyota Cambridge (Platinum)

2012

Toyota Cambridge (Gold) + Woodstock (Bronze)


The J.D. Power & Associates Initial Quality
Awards are the auto industry’s benchmark
for new vehicle quality manufacturing



Canadian assembly plants have won one
-
third of all J.D. Power plant quality awards
for North America, which is double Canada’s
share of regional production



Twenty
-
one J.D. Power & Associates Initial
Quality Awards have been presented to
Ontario plants since 1990



The only Toyota plant outside Japan to
produce Lexus vehicles is in Canada




Also home to the production of luxury
vehicles by Acura, Cadillac and Lincoln.

8

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Canadian Vehicle Production

OEM

2007

2008

2009

2010

2011

2012

GM

964,239

589,323

347,363

529,568

661,884

683,058

Chrysler

534,774

479,046

314,504

475,382

496,081

585,923

Toyota

302,749

287,395

319,547

458,729

412,829

519,215

Honda

390,580

383,011

259,796

278,366

254,051

409,849

Ford

349,808

306,764

237,952

320,608

320,396

255,924

Total

2,542,150

2,045,539

1,479,162

2,062,653

2,145,241

2,453,969

Country

2007

2008

2009

2010

2011

2012

NORTH AMERICA

15,102,752

12,616,916

8,626,384

11,954,843

13,153,240

15,449,563

Canada

2,542,150

2,045,539

1,479,162

2,062,653

2,145,241

2,453,969

Mexico

2,006,871

2,060,921

1,526,257

2,257,617

2,551,771

2,874,460

United States

10,553,731

8,510,456

5,620,966

7,634,573

8,476,228

10,121,034

9

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Ontario
has been NAFTA’s Leading Sub
-
National
Jurisdiction for Vehicle Assembly since 2004

Vehicle Production by Top 6 Sub-National NAFTA Jurisdiction
(units)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: Wards Automotive

Ontario

Michigan

Ohio

Indiana

Kentucky

Alabama

10

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Part of a Huge North American Market

0
5
10
15
20
25
2007
2008
2009
2010
2011f
2012f
2013f
2014f
2015f
2016f
2017f
Mexico
U.S.
Canada
Motor Vehicle Sales in North America

(in millions of units)

Forecast

Source: Industry Canada, from IHS | CSM Worldwide

Note: Figures include passenger and commercial vehicles


Canada is part of a fully integrated North
American market with annual sales of 20
million units, normally



Although the U.S. market collapsed in
2008
-
09, sales have started to recover and
should return to peak levels by 2013



Lost production is being restored, and North
America should remain one of the world’s
largest and most lucrative automotive
markets



The N.A. Free Trade Agreement (NAFTA)
ensures duty
-
free trade for originating
goods throughout the region

11

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Top 15 Countries

Light Vehicle Production & Global Ranking

Country
2012
Rank
Country
2017
Rank
China
18,298,986
1
China
27,001,903
1
United States
10,121,034
2
United States
11,563,208
2
Japan
9,544,740
3
Japan
8,774,997
3
Germany
5,586,276
4
India
6,000,000
4
South Korea
4,480,015
5
Germany
5,429,028
5
India
3,851,575
6
South Korea
4,475,000
6
Brazil
3,172,783
7
Brazil
4,376,875
7
Mexico
2,886,788
8
Mexico
3,651,916
8
Canada
2,454,069
9
Thailand
3,000,000
9
Thailand
2,312,489
10
Russia
2,569,699
10
Russia
2,078,368
11
Spain
2,261,628
11
Spain
1,939,352
12
Canada
2,084,876
12
France
1,926,863
13
France
2,007,828
13
United Kingdom
1,563,734
14
United Kingdom
1,548,521
14
Czech Republic
1,113,559
15
Czech Republic
1,323,577
15
Top 15 Total
71,330,631
Top 15 Total
86,069,056
Major Market Total
78,556,570
Major Market Total
94,730,000
Top 15 %
90.8
Top 15 %
90.9
BRIC
27,401,712
BRIC
39,948,477
BRIC %
34.9
BRIC %
42.2
Source


Wards/AMIP/
AutomotiveCompass

(Brazil, Russia, India, China)

12

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Top 15
Global Brands

Light Vehicle Production & Global Ranking

Brand Owner
2012
Rank
Brand Owner
2017
Rank
Volkswagen
9,218,940
1
Volkswagen
10,497,562
1
Toyota Motor
8,648,879
2
Renault/Nissan
9,481,705
2
General Motors
8,127,929
3
Toyota Motor
9,238,350
3
Renault/Nissan
7,654,459
4
General Motors
8,914,736
4
Hyundai Motor
7,177,294
5
Hyundai Motor
7,709,046
5
Ford Motor
5,613,074
6
Ford Motor
7,039,180
6
Fiat-Chrysler
4,249,527
7
Honda Motor
5,090,754
7
Honda Motor
3,913,446
8
Fiat-Chrysler
4,968,593
8
PSA/Peugeot-Citroen
2,820,247
9
PSA/Peugeot-Citroen
3,296,780
9
BMW
1,864,422
10
BMW
2,115,224
10
Daimler
1,851,783
11
Daimler
2,111,693
11
SAIC-GM-Wuling
1,471,397
12
Maruti Suzuki
1,698,155
12
Mazda Motor
1,314,700
13
SAIC-GM-Wuling
1,641,764
13
Suzuki Motor
1,265,603
14
Mazda Motor
1,625,226
14
Maruti Suzuki
1,220,408
15
Suzuki Motor
1,605,369
15
Top 15 Brands
66,412,108
Top 15 Brands
77,034,137
Major Market Total
78,556,570
Major Market Total
94,730,000
Top 15 %
84.5
Top 15 %
81.3
Source


Wards/AMIP/AutomotiveCompass

13

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


COMPETITIVE
ADVANTAGE

14

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.



The N.A. Free Trade
Agreement integrates Canada
into a market with annual sales
of 20 million vehicles.



No tariffs on OE parts imported
into Canada (vs 2.5% tariff in
the U.S.)



Canada and the U.S. are
actively expanding border
capacity.

Los Angeles

Detroit/
Windsor

Chicago

Atlanta

Seattle

Miami

Mexico City

800 km

400 km

CANADA

U.S.A.

MEXICO

Montreal

Toronto

Part of an Integrated North American Market

15

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Canada is Strategically Located

© Automotive News


There are 37 high
-
volume assembly
plants within a 500 km radius of the
Windsor
-
Detroit border. These plants
produced
7.2
million vehicles in
2012.



Canada is also close to all major
automotive R&D centres in Michigan
and Ohio.

16

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


139 Million Consumers within a Day’s Drive

Daily Two
-
way Goods Trade between Ontario
-
USA for 2011 Valued at C$716 million

Sources: Industry Canada, Statistics Canada and US Census Bureau

17

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2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Low Import Tariffs

Source:

Finance Canada. The Federal Budget, and World Trade Organization. Trade Profiles.

$2.8
$1.9
$3.0
$1.7
$1.2
$4.3
$0.0
$0.0
$0.0
Transport equipment

Electrical machinery

Non
-
electrical machinery

Average Applied MFN Tariffs On $100 Million In Imports

$ millions

18

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2013 Jerry Suyavong


Confidential

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or duplication without consent is
prohibited.


35.8%
34.8%
34.4%
32.9%
31.5%
28.0%
25.0%
37.4%
36.9%
36.6%
36.2%
36.0%
36.1%
Indiana
Ohio
Great Lakes States
Illinois
Tennessee
Kentucky
Georgia
Michigan
Alabama
Texas
Ontario (2008)
Ontario (in 2010)
Ontario (in 2012)
2010 Combined Federal and State/Provincial

Competitive Corporate Taxes on Manufacturing

19

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2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Corporate Income Tax Rates on Manufacturing



2011

2012

Federal

16.5%

15.0%

Ontario

10.0%

10.0%

Combined

26.5%

25.0%

20

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2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Accelerated Capital Cost Allowance


Manufacturing and Processing Equipment (M&P):


Since
2007, the depreciation rate for eligible M&P equipment
has been temporarily increased to a 50% straight line rate
(Class 29 as defined by the Canada Revenue Agency) for
eligible machinery and equipment purchased after March 18,
2007 and before 2014.



Companies who locate in Ontario can take advantage of this
generous rate of write
-
off for capital expenditures in
manufacturing or processing machinery and equipment each
year up to the end of 2013.



ACCA claims can be deferred indefinitely to subsequent years.

21

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2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Accelerated Capital Cost Allowance

Asset Class

Eligible Allowance

Depreciation Rate

Depreciation Method

“Half
-
Year” Rule

43

Capital Cost Allowance
(CCA)

30%

Declining Balance

Yes

29

Accelerated Capital
Cost Allowance
(ACCA)

50%

Straight Line

Yes

ACCA Benefits


Allows business to completely depreciate qualified capital cost over a three year period.


Provides additional cash flow in the three years following the capital expenditure by
reducing the taxable income.


Provides higher return on capital in the long term.

22

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.





The Ontario government offers Training Tax Credits to
encourage employers to hire and train apprentices and
workers in specific skilled trades
.



Ministry
of Training, Colleges and Universities:


Apprenticeship Training Tax Credit: Maximum $10,000 per apprentice over 48 months.


Employer Signing Bonus: $2,000 signing bonus if a new apprentice is registered.


Employment Ontario: Wage incentives and other recruitment support.


Ontario Youth Apprenticeship: School to work transition program
.



Ministry
of Finance:


Co
-
op Education Tax Credit: Refundable tax credit of up to $3,000 per placement.

Training Tax
Credits in Ontario

23

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.



Corporate Tax Reform
: The government’s comprehensive tax package is providing $4.8
billion in overall tax relief over three years, including CIT cuts that started July

1,

2010:

-

The
general Corporate Income Tax (CIT) rate was lowered from 14

per cent to 12

per
cent

-

The
CIT rate for manufacturing and processing was lowered from 12

per cent to 10

per cent


Infrastructure Investment
: Support for Detroit
-
Windsor gateway, including the Detroit River
International Crossing and the Windsor
-
Essex Parkway to ensure people and
goods move
safely and efficiently through the US
-
Canada border

Tax Rates & Other Support for the Auto Industry

24

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


US
55%
China
6%
France
5%
UK
4%
Japan
4%
Other
19%
Germany
7%
Foreign direct investment projects in Ontario, by source country, 2011

Source:
FDI
Intelligence, March 2012

For example, Ontario
Attracts Investors from
Many Countries

25

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2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


AND ... Ontario
is Home to the Majority of
Foreign
-
Controlled
Head Offices in Canada

Foreign Head Office Distribution in Canada, 2011

Rest of
Canada
40%
Ontario
60%
Source: Statistics Canada

26

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


AUTOMOTIVE INTERIORS

ABC Group

AGS Automotive Systems

Aisin Canada

ArcelorMittal Tubular

Bend All

Brose Canada

Canadian General
-
Tower Limited

Commercial Spring and Tool Co.

DBG

Enstel Manufacturing Inc.

Exco Technologies Limited

Falcon Tool & Die (1979) Ltd.

Freeway Washer Limited

H. Paulin & Co. Ltd.

Hayashi Canada Inc.

Hematite Manufacturing

Invotronics

JYCO Sealing Technology

Lear Canada

Magna International Inc.

Martinrea International Inc.

Marwood Metal Fabrication

Matcor Automotive Inc.

MetriCan Stamping Co. Inc.

Mitchell Plastics

Omron Dualtec Automotive Inc.

Papp Plastics

PlasmaTreat North America Inc.

Salflex Polymers Ltd.

Samuel Automotive

Schukra Of North America Ltd.

Sealed Air (Canada) Co./Cie.

Stahlschmidt Cable Systems

The NARMCO Group

The Woodbridge Group

Tiercon

TG Minto Corp.

Toyota Boshoku Canada

TS Tech

Van
-
Rob Inc.

Vari
-
Form

Velcro Canada Inc.

Windsor Mold Group

Woodstock Stampings Inc.

PRODUCTION HANDLING

ABB Inc.

Marwood Metal Fabrication

ODG Group

Panasonic Canada Inc.

Schaefer Systems Inc.

Schenker DB Logistics

Sealed Air (Canada) Co./Cie.

SEW Eurodrive

The NARMCO Group

Valiant Tool & Mold Inc.

AUTOMOTIVE EXTERIORS

3M

ABC Group

AGS Automotive Systems

Amino North America Corp.

Essar Steel Algoma Inc.

ArcelorMittal

ArcelorMittal Tubular

Enstel Manufacturing Inc.

Canadian General
-
Tower Ltd.

Commercial Spring and Tool Co.

DBG

Delhi
-
Solac Inc.

Exco Technologies Limited

F&P Manufacturing Inc.

Falcon Tool & Die (1979) Ltd.

Flex N Gate

Freeway Washer Limited

H. Paulin & Co. Ltd.

Henkel Canada Corporation

KSR International Inc.

Lanex Manufacturing Inc.

Magna International Inc.

Martinrea International Inc.

Marwood Metal Fabrication

Matcor Automotive Inc.

Maxtech Manufacturing Inc.

MetriCan Stamping Co. Inc.

ODG Group

PlasmaTreat North America Inc.

PPG Canada

Quality Safety Systems Company

Salflex Polymers Ltd.

Samuel Automotive

Sealed Air (Canada) Co./Cie.

Sinteris

The Butcher Engineering Limited

The NARMCO Group

The Woodbridge Group

Tiercon

Trimont Manufacturing Inc.

Van
-
Rob Inc.

Vari
-
Form

Warren Industries

WEGU Manufacturing

Windsor Mold Group

Woodstock Stampings Inc.

HVAC

ABC Group

ArcelorMittal Tubular

Burlington Technologies Inc.

Commercial Spring and Tool Co.

DANA Corporation

H. Paulin & Co. Ltd.

Linamar Corporation

Magna International Inc.

Martinrea International Inc.

Nichirin Incorporated

Omron Dualtec Automotive Inc.

COMFORT & CONVENIENCE

ABC Group

AGS Automotive Systems

ArcelorMittal Tubular

DBG

Exco Technologies Limited

Magna International Inc.

Matcor Automotive Inc.

QNX Software Systems

Van
-
Rob Inc.

Vari
-
Form

Windsor Mold Group

PRODUCTION CONTROL EQUIPMENT

AUTOMATION & DESIGN

ABC Group

ABB Inc.

Altair Engineering Canada, Ltd.

Applied Precision Inc.

ArcelorMittal Tubular

Armada Toolworks Ltd.

Bend All

Cannon Automotive Solutions

Centreline

Clover Tool Mfg. Ltd.

DBG

Engineered Solutions Corp. (ESC)

Exco Technologies Limited

Falcon Tool & Die (1979) Ltd.

FANUC Robotics Canada Ltd.

Giffels Associates Limited/IBI Group

Henkel Canada Corporation

Husky Injection Molding

Huzura Manufacturing Ltd.

Logikor

Magna International Inc.

Marwood Metal Fabrication

ODG Group

OES, Inc.

Omega Tool

Panasonic Canada Inc.

PlasmaTreat North America Inc.

PricewaterhouseCoopers LLP

QNX Software Systems

RWDI AIR Inc.

Sanyo Canadian Machine Works

Schenker DB Logistics

Siemens PLM Software (CA) Ltd.

Solarsoft Business Systems

Stahlschmidt Cable Systems

Tech Con Automation

The NARMCO Group

Tutelar Technologies

Valiant Tool & Mold Inc.

Van
-
Rob Inc.

Vari
-
Form

Windsor Mold Group

CHASSIS

ABC Group

AGS Automotive Systems

ArcelorMittal Tubular

Armada Toolworks Ltd.

Bend All

Enstel Manufacturing Inc.

Burlington Technologies Inc.

Canadian Autoparts Toyota Inc.

DANA Corporation

DBG

DYNA
-
MIG Manufacturing Inc.

Electromac Group

F&P Manufacturing Inc.

Falcon Tool & Die (1979) Ltd.

Flex N Gate

Global Technologies

H. Paulin & Co. Ltd.

Jefferson Elora Corporation

Kautex
-
Textron

Kumi Canada Corp.

Linamar Corporation

Magna International Inc.

Martinrea International Inc.

Matcor Automotive Inc.

MetriCan Stamping Co. Inc.

MMSC Canada

Musashi Auto Parts Canada Inc.

Nichirin Incorporated

ODG Group

Sanoh Canada Ltd.

Showa Canada Inc.

Sinteris

Toyotetsu Canada Inc.

The NARMCO Group

Van
-
Rob Inc.

Vari
-
Form

Wescast Industries Inc.

Windsor Machine & Stamping

Windsor Mold Group

Woodbine Tool & Die

Woodstock Stampings Inc.

BRAKING

CTS Systems

DANA Corporation

DYNA
-
MIG Manufacturing Inc.

F&P Manufacturing Inc.

KSR International Inc.

Linamar Corporation

Martinrea International Inc.

Maxtech Manufacturing Inc.

Nichirin Incorporated

Sinteris

COMMUNICATION

& INFORMATION

ABC Group

AGS Automotive Systems

ArcelorMittal Tubular

DBG

Exco Technologies Limited

Magna International Inc.

Matcor Automotive Inc.

Omron Dualtec Automotive Inc.

QNX Software Systems

Tutelar Technologies

Van
-
Rob Inc.

Vari
-
Form

Windsor Mold Group

POWERTRAIN

ABC Group

AGS Automotive Systems

ArcelorMittal Tubular

Bend All

Burlington Technologies Inc.

Commercial Spring and Tool Co.

D & V Electronics Ltd.

DANA Corporation

DBG

Electrovaya

Exco Technologies Limited

F&P Manufacturing Inc.

Freudenberg
-
NOK Inc.

H. Paulin & Co. Ltd.

Invotronics

Linamar Corporation

Magna International Inc.

Martinrea International Inc.

Musashi Auto Parts Canada Inc.

Nichirin Incorporated

NTN Bearing Mfg Canada

Sinteris

The NARMCO Group

UltraFit Manufacturing

Van
-
Rob Inc.

Vari
-
Form

Zenn Motor Company

AIR INTAKE / EXHAUST SYSTEMS

ABC Group

Enstel Manufacturing Inc.

Commercial Spring and Tool Co.

DBG

Falcon Tool & Die (1979) Ltd.

H. Paulin & Co. Ltd.

Huarong Purification Inc.

Linamar Corporation

Magna International Inc.

Martinrea International Inc.

Marwood Metal Fabrication

THE NARMCO GROUP

Van
-
Rob Inc.

Wescast Industries Inc.

Windsor Mold Group

Woodstock Stampings Inc.

ENGINE MANAGEMENT

Invotronics

Magna International Inc.

Omron Dualtec Automotive Inc.

Zenn Motor Company

TRAINING

ABB Inc.

Engineered Solutions Corp. (ESC)

Exco Technologies Limited

Henkel Canada Corporation

HumberCollege

Magna International Inc.

Ontario Centres of Excellence

The PIC Group

PlasmaTreat North America Inc.

RWDI AIR Inc.

ECONOMIC DEVELOPMENT

Canada's Automotive Corridor

Canada's Technology Triangle Inc.

City of Brantford

City of Hamilton

Durham Region

Greater Toronto Marketing Alliance

London Economic Development Corp.

Municipality of Chatham
-
Kent

Niagara Economic Development Corp.

Regional Municipality of Halton

Sarnia
-
Lambton Economic Partnership

South Western Ontario Marketing Alliance

WindsorEssex Economic Development

EDUCATION & RESEARCH

Advanced Design &

Manufacturing Institute (ADMI)

AUTO21 Inc.

CON*NECT

Conestoga College

Georgian College

Humber College

McMaster University
-
MAC Auto

Mohawk College

Ontario Centres of Excellence

Seneca College of Applied Arts &
Technology

University of Waterloo
-

WatCAR

University of Windsor

MANUFACTURING MACHINERY,

TOOLS & EQUIPMENT

ABB Inc.

ArcelorMittal Tubular

Burlington Technologies Inc.

DBG

Electromac Group

Falcon Tool & Die (1979) Ltd.

Flex N Gate

Magna International Inc.

The NARMCO Group

ODG Group

Stahlschmidt Cable Systems

Valiant Tool & Mold Inc.

Van
-
Rob Inc.

Exco Technologies Limited

PlasmaTreat North America Inc.

J.P. Bowman Limited

ABC Group

Anchor Danly

Husky Injection Molding

Vari
-
Form

Windsor Mold Group

FANUC Robotics Canada Ltd.

Nachi Robotic Systems Inc.

Yaskawa Motoman Canada Ltd.

TRW

ENGINE COOLING

Bend All

Brose Canada

Denso Manufacturing

Magna International Inc.

Martinrea International Inc.

The NARMCO Group

Vari
-
Form

BODY SYSTEMS

ABC Group

AGS Automotive Systems

ArcelorMittal Tubular

Armada Toolworks Ltd.

Cannon Automotive Solutions

Commercial Spring and Tool Co.

DBG

Enstel Manufacturing Inc.

Exco Technologies Limited

F&P Manufacturing Inc.

Falcon Tool & Die (1979) Ltd.

Flex N Gate

Freeway Washer Limited

H. Paulin & Co. Ltd.

Hematite Manufacturing

Huzura Manufacturing Ltd.

KSR International Inc.

Lanex Manufacturing Inc.

Magna International Inc.

Martinrea International Inc.

Marwood Metal Fabrication

Matcor Automotive Inc.

Maxtech Manufacturing Inc.

MetriCan Stamping Co. Inc.

Multimatic

ODG Group

Omega Tool

Omron Dualtec Automotive Inc.

Samuel Automotive

Sinteris

The NARMCO Group

The Woodbridge Group

Tiercon

Van
-
Rob Inc.

Vari
-
Form

Warren Industries

WEGU Manufacturing

Windsor Mold Group

Woodstock Stampings Inc.

Yachiyo of Ontario Manufacturing

SAFETY

ABC Group

Intertec Systems

Magna International Inc.

Quality Safety Systems Co.

Tyco Electronics Canada Ltd.

ELECTRICAL & ELECTRONICS

Commercial Spring and Tool Co.

D&V Electronics Ltd.

DBG

Denso Manufacturing Canada

Digital Dash

Intertec Systems

Invotronics

Kasai Canada Inc.

KSR International Inc.

Magna International Inc.

Omron Dualtec Automotive Inc.

QNX Software Systems

Schukra Of North America Ltd.

Spatial View

Tyco Electronics Canada Ltd.

Van
-
Rob Inc.

Windsor Mold Group

Canada has Suppliers
in Every Product Category

27

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Canada Supply
Base is Second to None

Top OEM Suppliers

with Plants in Canada

Global Rank 2011

#2

Denso (Japan)

#3

Continental (Germany)

#4

Magna International (Canada)

#5

Aisin Seiki (Japan)

#6

Faurecia (France)

#7

Johnson Controls (U.S.)

#10

Delphi (U.S.)

#12

TRW (U.S.)

#13

Lear (U.S.)

#17

Toyota Boshoku (Japan)

#20

Autoliv (Sweden)

#22

Visteon (U.S.)

#35

Toyoda Gosei (Japan)

#37

Brose (Germany)

#54

Nemak (Mexico)

#56

Flex
-
n
-
Gate (U.S.)

#76

Linamar (Canada)

#78

Martinrea (Canada)

Source: Automotive News


Many of the largest global suppliers have
facilities in Canada, along with steel and other
material producers



Some of the biggest and most capable
suppliers are Canadian
-
based including ABC
Group, AGS Automotive, Linamar, Magna,
Martinrea, Multimatic, Valiant, Wescast and
Woodbridge Foam



Other Canadian companies


such as Ballard,
QNX Software and Westport Innovations


are recognized global leaders in their field



Assemblers and Tier 1s in Canada also have
access to supply chains in the U.S. and
Mexico

28

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For Example, Ontario
is a Significant Player in
the NAFTA Auto Parts Industry

Share of NAFTA Parts Shipments, 2009

Source: Statistics Canada, US Bureau of Economic Analysis



Ontario parts firms are leaders in the
development of innovative components, such
as,
stamping
s, modules and systems, &
lightweight and composite materials


19.4%
10.7%
9.9%
9.8%
6.5%
6.1%
3.9%
3.9%
3.4%
3.4%
Michigan
Ohio
Ontario
Indiana
Tennessee
Kentucky
Alabama
North Carolina
South Carolina
California
29

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Areas of Automotive Expertise

Information and Communications
Technology


Software engineering


Navigation and positioning


Wireless technologies and networks


Microchip design, system
-
on
-
chip, engineering


Semi
-
conductor technologies (MEMS, RF)


Telematics, communications


Micromachining


Intelligent systems


Photonics and optoelectronics


Nanotechnology


Enhanced synthetic vision

Advanced Design, Visualization and
Manufacturing


Inspection and vision systems


Laser imaging


Tooling and robotics


Stereo
-
lithography, laser deposition


Virtual design

Metal Processing


Advanced casting of light metals


Cutting and machining


Sheet and tube forming


Welding and joining


Powder metallurgy

Advanced Materials


Lightweight materials


Nano
-
materials


Bio
-
materials

Advanced Technologies


Mechatronics


Powertrain engineering


Clean diesels


Homogenous charge compression ignition


Fuel cells, hydrogen and alternative fuels

30

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Canada Has Highly Educated
and
Multicultural
Workforce

1

OECD.
Education at a Glance 2009

2

International Institute of Management Development. World
Competitiveness Yearbook 2010.

3
World Economic Forum.
Global Competitiveness Report 2010
-
2011

Canada ranks #2
in the G7 in terms of the
availability of qualified engineers in its
workforce, according to the IMD
3

The WEF ranks
Canada #3

in a 139
-
country study on the quality of
management schools
2

Canada ranks
#1
in the OECD for its college
completion rates (23.6% of working
-
age
Canadians have graduated from college)
1

31

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Ontario has a Highly Educated Population

64
62
50
44
41
38
35
30
17
Ontario
Canada
Ireland
Japan
United States
United Kingdom
Germany
France
Mexico
Post
-
secondary Educational Attainment (%), Select Markets, 2010

(Age 25
-
64)

Overall, 64% of
Ontario’s

population has
completed

post
-
secondary

education

University: 30%

College: 27%

Apprenticeship
:
7%

Note: Not all jurisdictions count apprenticeship as post
-
secondary education

Sources: Statistics Canada and OECD, 2012

32

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Ontario is a Leader in Recruiting and Retaining
a Highly Skilled Workforce

Rank

City

1

New York City

2

Toronto

3

Singapore

4

Montreal

4

London

6

Los Angeles

7

Boston

8

Chicago

9

Vancouver

9

Copenhagen

9

Hong Kong

Out of 131 global cities examined,
Toronto ranked second for low risks
associated with employment and
redeployment.


Canada’s strengths are derived from
strict enforcement of equal
opportunity laws, clear government
-
mandated health and retirement
benefits, low levels of corruption, and
the high quality and broad availability
of training facilities.

Overall People
-
Risk Rankings, 2012

Source: AON Consulting, 2012

33

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Among major auto producing
nations*, Canada:


has the highest quality of life;


has the second lowest cost of
living and the lowest apartment
rents;


is among the safest places to
live and do business; and


is among the least afflicted by
pollution.



Other Canadian advantages include:


high
-
quality, low
-
cost education;


universal health care;


cosmopolitan cities; and


Multi cultural society

* US, Canada, UK, France, Germany, Spain, Korea, Japan, Mexico, China

World Rank
-

Quality of Life Factors

8th

25th


15th

12th

10th

20

19th

17th


54th

18th

27th

Source: IMD, World Competitiveness Yearbook 2006

US=1.00

Canada is a Great Place to Live!

34

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RESEARCH & DEVELOPMENT

35

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Snapshot of Automotive R&D in Canada


Annual R&D spending in the motor
vehicle and parts industry averaged $
450
million in the last decade



Over 1,400 auto
-
related patents granted
to inventors based in Canada.


Expertise in light weighting, biomaterials and
composites, advanced safety systems,
software and the “connected car”, alternative
fuels (particularly EVs), vehicle testing, and
more



Focus on private and collaborative R&D

Climatic wind tunnel at UOIT
-
ACE

$0
$100
$200
$300
$400
$500
$600
$700
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: Statistics Canada

Automotive R&D Expenditures

(in CAD$ millions)

average

$
450M/year

36

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Automotive OEM R&D Centres

Ford Motor Company of Canada Ltd.


Ford Manitoba Extreme Cold Weather Test Facility (Thompson MB)


Ford Powertrain Engineering Research & Development Centre (Windsor ON)

Chrysler Canada Inc.


Automotive Research & Development Centre (Windsor ON)

General Motors of Canada Ltd.


GM Canadian Regional Engineering Centre (Oshawa ON)


GM Cold Weather Development Centre (Kapuskasing ON)

Honda
R&D Americas Inc. (Canada)


Environmental testing laboratory (Dartmouth NS)

Toyota Canada Inc.


Toyota Canada Cold Weather Research Centre (Timmins ON)

37

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Generous R&D Tax Credits/Programs

Scientific Research & Experimental Design


SR&ED is a generous federal tax credit which encourages businesses in
all sectors to conduct R&D in Canada


SR&ED is worth $3 billion/year for the manufacturing sector


Industrial Research Assistance Program


IRAP helps support innovative R&D and commercialization of new
products and services by small
-

and medium
-
sized firms


Automotive Partnership Canada


APC is a five
-
year, $145 million program that supports collaborative
university
-
industry in four areas: environmental performance, the cognitive
car, next
-
generation manufacturing, and social sciences


Automotive Innovation Fund


AIF is a 10
-
year, $500 million program designed to lever large ($75M or
more) investments in vehicle assembly, powertrain and R&D operations
that focus on innovation and environmental technologies

38

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World
-
class R&D Institutes/Universities

National Research Council
-

Automotive


Network of 20 research institutes, many specializing in automotive
-
related disciplines such as light materials, aerodynamics, alternative
propulsion, sensors and telematics


CanmetMATRIALS


National laboratory (Hamilton and Calgary) run by Natural Resources
Canada for metals, materials and processing research in support of
manufacturing innovation


AUTO21


National network of centres of excellence for automotive R&D,
regroups 200 researchers from 46 universities to conduct applied
R&D in partnership with private companies


Magna
-
NRC Composites Centre of
Excellence


Research centre to develop
co
E
mposite
technology for the Canadian
and global automotive industries

39

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World
-
class R&D Institutes/Universities

Fraunhofer Project Centre @ Western


Research centre and industrial
-
scale test facility focused on composite
technologies for weight reduction at Western University (London ON)


MacAUTO


McMaster University Institute for Automotive Research and Technology
(Hamilton ON
):
The University’s numerous automotive
-
related research
institutes and centres work with industry, government and academic partners in
developing and commercializing new technologies and materials that will
ensure the global competitiveness of Canada’s auto industry.


UOIT
-
ACE


Automotive Centre of Excellence at the University of Ontario Institute of
Technology (Oshawa ON)


WatCAR


University of Waterloo Centre for Automotive Research (Waterloo ON)


University of Windsor


Automotive engineering specialization and research partnerships, such as
AUTO21 and Chrysler’s ARDC

40

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Government Supported R&D Centres Located
throughout Ontario

41

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Ontario’s R&D Cost Advantage

-1.1
-5.4
-23.4
5.2
9.1
9.1
0.0
0.4
10.7
12.7
Netherlands
Canada
France
Ontario
UK
Germany
US
Italy
Australia
Japan
R&D Cost Advantage (%)

After
-
Tax Cost of $100 R&D Expenditure,
Small and
Medium Sized Manufacturers
,
2012

R&D
expenditure

(general)

R&D expenditure

(at eligible Ontario
research institutes)

Gross expenditure

$100.00

$100.00

Actual after
-
tax
expenditure

$51.57


$40.11


Note: data as of April 13, 2012.

Sources: Ontario Ministry of Finance and Canada Revenue Agency

Ontario has a
9.1% cost
advantage
relative to the
US

Source
: MEDI analysis, prepared using CompetitiveAlternatives.com Cost
Model, 2012 version, accessed on March 30, 2012.

42

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Benefits of Collaboration


Mitigates the risk of innovation


Allows the inclusion of expertise outside a companies
historic strengths


Widens the reach of expertise


Provides access to a wider scope of funding


Takes advantage of embedded relationships and contacts


Expands the scope of available facilities and equipment


Both sides benefit from new ideas

43

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NEXT
GENERATION
VEHICLES

44

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Position
to Take a Leading Role in the
Development of the Next Generation of Vehicles


Automakers are developing a broad spectrum of alternative, environmentally friendly
vehicles, especially electric vehicles (EV), among other technologies i.e. advanced
hybrids, CNG, fuel cells etc
.


The
government has partnered with a number of firms in order to position the province to
take a leading role in vehicle electrification and lightweighting, including:


$16.7 million for Electrovaya of Mississauga (Ontario) to develop and manufacture
lithium
-
ion batteries


$48.4 million for Magna International and Magna E
-
Car to develop advanced
lightweighting technology, electrification of vehicle components and battery
development.


$2 million for Dana Canada to develop ‘Thermal Management Systems’ for hybrids
and electric vehicles


$70.8 million to Toyota Motor Manufacturing of Canada on a spectrum of initiatives,
including
production of the RAV4 EV

45

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At The
Forefront
Of
Next Generation Vehicle
Technologies Research


Researchers in Ontario’s network of universities and specialized institutions are
conducting leading research in advanced manufacturing and alternative
energy
:


McMaster Automotive Resource Centre (MARC)

is leading hub of advanced automotive
research and development. Ali Emadi, director of MacAUTO is the holder of the $10
-
million Canada Excellence Research Chair in Hybrid Powertrain and is one of the
world’s foremost developers of electric and hybrid powertrain technologies


AUTO21

partners with the public and private sectors and supports more than 300
researchers across Canada in a variety of auto
-
related research projects


WatCAR
, an automotive research centre at the University of Waterloo, is focused on
leading
-
edge studies to enhance automotive innovation and competitiveness


University of Ontario Institute of Technology’s General Motors of Canada Automotive
Centre of Excellence
is a state
-
of
-
the
-
art research facility (including a climatic wind
tunnel) created to further R&D in the Canadian automotive industry


Magna
-
NRC Composite Centers of Excellence
, supports the Canadian automotive
industry in developing next
-
generation vehicles with lighter, more durable parts, that are
safe, affordable, environmentally friendly, and fuel
efficient

46

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Government
Actively Supports the Auto
Industry


Ontario has made important investments to support the auto
sector and to improve the overall business environment in
the province, including
:


Strategic Investments:

In 2011 Ontario invested $121.2 million in innovative
automotive initiatives with Dana, Magna International, Magna E
-
Car and
Toyota


Ontario Automotive Investment Strategy (OAIS)
: A $500 million, 5
-
year fund
leveraged about $7.8B in total investment in the sector


Restructuring of GM and Chrysler
: Ontario committed $4.8 billion to the
restructuring of GM and Chrysler


Next Generation of Jobs Fund
: Provided support to a number of automotive
firms, such as Ford, Electrovaya, Mitchell Plastics and Alcohol Counter
Measures



47

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Commitment
to fight climate change and improve air
quality


The
Ontario government aims to have one out of every 20 vehicles driven in
Ontario to be electrically powered by 2020, this would support the
greenhouse gas emissions target for 2020 set out in our Go Green Action
plan. Contribution may be up to 0.6 MT (600,000 tonnes) of GHG savings by
2020


Reducing
the environmental impact of the Ontario government’s
operations


Commitment
to purchase 500 electric vehicles for the Ontario Public Service
(OPS) passenger fleet by
2020


Contributes
to the OPS goal of an annual 5% reduction in fuel consumption


Supporting alignment and direction of Ontario’s auto
sector


‘Greener
’, more sustainable and more competitive with a strong focus on
high value
-

added development and production of innovative auto parts and
technologies


Supporting the government’s research and innovation
agenda


Programs
applicable to the research, development and commercialization of
electric vehicles and their components parts


Government Commitments

48

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The
Government of Ontario has been active in encouraging consumer
adoption of Electric Vehicles (EVs).

Developments include:


Consumer Incentives
: Rebates of $5,000
-

$8,500 offered to consumers to
purchase electric vehicles


EV Infrastructure Fund
: On May 4
th

2012, Ontario released a Request for
Information (RFI) on electric vehicle infrastructure, including home and public
charging. The RFI closed on June 4
th

2012. The RFI results are currently being
analyzed


Access to High Occupancy Vehicle (HOV) Lanes
: EVs are provided “green”
license plates for EVs to drive in commuter lanes (HOV) with one occupant


Ontario is establishing a series of charging locations at GO commuter train
stations in the Greater Toronto Area (Aurora, Lincolnville, Whitby in 2011 and
Ajax, Erindale, Oakville, Burlington in 2012)

Commitment
to Getting Electric Vehicles
(EVs) on the Road

49

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OUTLOOK, CHALLENGES AND
OPPORTUNITIES

50

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Light Vehicle Sales

Canada and NAFTA, 1990
-

2013

0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
16
18
20
Canada
NAFTA
Canada %

1999
-
2007:

19
-
20 mil. unit NAFTA market
for new light vehicle sales;
Canada @ 8% of NAFTA LV
sales



2008
-
2011:

Canada outperformed NAFTA
as overall sales collapsed;
Canada @ 11% of NAFTA light
vehicle demand



2012
-
2013+:


Recovery and organic growth
(Mexico and Canada)


Unit Sales (Mil)

Canada % of NAFTA

Source


Wards/AMIP/AutomotiveCompass

51

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Light Vehicle Production

Canada and NAFTA, 1990
-

2019

0
2
4
6
8
10
12
14
16
18
20
0
2
4
6
8
10
12
14
16
18
20
Canada
NAFTA
Canada %
Unit Production (Mil)

Canada % of NAFTA

Source


Wards/AMIP/AutomotiveCompass

52

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NAFTA LV Production by Jurisdiction

Ontario, Michigan, Mexico Volume Trends (Mil), 2000
-
2019


Mexico

B
-
car/CUV growth from
Ford, GM, Nissan, Honda, Toyota,
Mazda; C
-
car and CUV from
Volkswagen


Michigan

B/C/D/E/F/S, CUV and
SUV growth from GM, Ford,
Chrysler

Mexico (2008+) and Michigan
(2014+) auto output (new
investment driven) growing
sharply as Ontario declines

Unit Production (Mil)

Source


Wards/AMIP/AutomotiveCompass

53

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Top 10
Auto Supplier Trends

6. Supply
-
Chain


Transformation


1. Customer


Facing Focus




Increasing

the Value

of the

Business








10. Core


Competencies

9. Systems &


Modules


8. Globalization

7. Resource


Pressure

2. Growth

3. Cost


Reduction

4. Technology

5. Brand


Management

54

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Sources of Automotive Growth

Products

Key Sources of Growth

Recovery

Geography

New/Replacement Products

New/Replacement Processes

Vertical Integration

M&A

JVs

Marketing

Global

Crises

55

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Megatrends

New NAFTA Environmental Regulations



Smaller, lighter vehicles, with upgraded fuel
-
efficient powertrains



Will people want to drive much smaller vehicles? Will vehicle profit
be high enough to justify investment?



2017
-
2025 standards require a 65% improvement in fuel economy
over current levels.



Higher consumer ownership and operating cost.



Will consumers accept paying more … possibly much more … for
transportation?



How do we as suppliers support global platforms and still look after
local business opportunities?

56

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NAFTA Auto Outlook


Key drivers, enablers and constraints








2013

2014
-
16


Employment/Income
Growth


Driving
Age
Population Growth


Age
of
Fleet


Ownership and
Operating Cost


Affluence/Financial Stability


Technology


Fuel Economy Regs


Supply
Chain
Constraints


Source: AutomotiveCompass

57

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Challenges for Canada


High Exchange Rate


Low investment in new production facilities


Fiscally conservative governments at all levels


High infrastructure costs


energy, environment


A Southern production migration


Adaptation of global platforms


A conservative attitude


Lack of overall confidence

58

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Canadian Advantages


Health care costs


Stable, business
-
oriented environment


Productivity


Quality


Resources


Infrastructure


Tax structure


Highly skilled labour/well
-
educated workforce; positive work ethic


Strong product and technology mix


Strong supply
-
base


Modern and flexible manufacturing facilities

59

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Bridging the Innovation
Gap


Innovation is the key to long term success


Applies to products, processes, tooling, systems


It implies a commitment to product excellence


OEM pulling technology rather than suppliers pushing


Key Organizations that make it happen (private,
associations & government)


A commitment that the Automotive Industry is an
essential and critical industry that always receives
primary attention

60

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Collaboration with Academia


Unprecedented amount of technical change in the next
10
-
12 years


Industry cannot get there on its own


Collaboration is the only alternative


Must have access to advanced research capabilities


It will create an unprecedented demand for HQP (highly
qualified personnel) and Technological Capability


Opportunities for new manufacturing processes and
procedures are abundant


Manufacturing shapes our future!!!

61

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Challenges for Industry


Protecting Intellectual Property


Protecting manufacturing and product “secret
sauce”


The publish or perish imperative


Adhering to automotive industry timing
requirements


Adhering to cost containment issues


Location of facilities in proximity to manufacturing
or engineering sites

62

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Episode IV


A New Hope


Innovation must be our priority


Encouraging progress that supports this initiative


MARC Engineering Center


CANMET Hamilton


WatCAR Engineering Center


UOIT Wind Tunnel and Facilities


Embrace a new model that encourages public private
partnerships (P
3
) that will drive innovation


Be open to learning from around the world


Be great partners


the commitment to excellence


A unique Canadian Identity


63

©
2013 Jerry Suyavong


Confidential

Disclosure
or duplication without consent is
prohibited.


Connected
Vehicle

CUTA

Canadian Urban
Transit Association

ITS Canada

Intelligent Transportation
Systems

APMA

Automotive Parts
Manufacturers

Academia

University
Researchers

Government

Federal & Provincial

CTA


OTA

Canadian & Ontario
Trucking Associations

EMC

Electric Mobility
Canada

First Responders

Police/ Fire/

Ambulance

The Connected
Vehicle
-

Canadian
Stakeholders

64

THANK

YOU !

JERRY SUYAVONG

Email: jerry.suyavong@gmail.com

Skype: jerry.suyavong

Mobile: +1 (647) 709
-
7122