Employment in the Canadian auto parts sector is rebounding, just as suppliers report backlash from the Canadian government’s failure to back the U.S. war with Iraq.

Canadian auto parts makers employed 98,114 in 2002, a 3.2% increase over the 95,060 employed in 2001, according to DesRosiers Automotive Consultants of Richmond Hill, Ont., Canada. It falls just shy of the 98,154 who worked for suppliers in 2000.

The picture is not as rosy on the vehicle assembly side in Canada, which accounted for 50,985 jobs in 2002 – a 0.9% decrease from year-prior. It also is a far cry from the 57,712 assembly jobs in 1998.

A return to that level may never be attained. General Motors Corp. closed its Ste. Therese, Que., Camaro/Firebird plant in 2002. Chrysler Group will shutter its fullsize van plant in Windsor, Ont., this summer, laying off 1,100, many of whom are being absorbed into the neighboring minivan plant that has added production of the all-new ’04 Chrysler Pacifica. International Truck and Engine Corp. is preparing to shutter its Navistar facility in Chatham, Ont. Meanwhile, Ford Motor Co. will close its Ontario Truck facility in Oakville, Ont., in July 2004 and shift F-150 pickup production to Dearborn, MI.

A potential bright spot is a proposal by Chrysler to build a greenfield vehicle assembly plant in Windsor for production in 2005, employing 2,500.

But that project awaits Canadian government assistance. The auto maker hoped to green light the plant by the end of March, and there was talk of an initial, aggressive target of production as early as January 2005.

But the Canadian Auto Workers union has been told the decision on whether to proceed with the plant, expected to make the Dodge M80 compact pickup, will not be made before the end of June. That timeframe pushes production startup to the deadline of fourth-quarter 2005, as outlined in provisions in the CAW master labor agreement. And it calls for construction to begin soon.

Meanwhile, Statistics Canada forecasts a decrease in new capital expenditures as well as repair-focused capital expenditures in Canada in 2003. Despite the dip, spending continues at a relatively strong level, as it has for the last decade.

Total automotive sector capital expenditures for 2003 are forecast C$2.78 billion ($1.89 billion) – with the bulk allocated to machinery and equipment and C$143.9 million ($97.6 million) earmarked for construction. Preliminary figures for 2002 show C$3.17 billion ($2.15 billion) spent in 2002, up from C$2.96 billion ($2.01 billion) in 2001. The largest spending spree was C$4.14 billion ($2.81 billion) in 1997. As for repair-focused capital expenditures, the latest available figure is C$4.2 billion ($2.8 billion) in 2001.

The vehicle assembly industry is forecast to spend C$2.17 billion ($1.47 billion) in Canada in 2003, down slightly from preliminary 2002 figures of C$2.34 billion ($1.59 billion). The high, in 1997, was C$3.0 billion ($2.0 billion). Spending on repair capital was C$2.8 million ($1.9 billion) in 2001.

The trend over the last decade, and little or no softness in recent years, suggests auto makers still view Canada as a good place to assemble vehicles and will continue to re-invest to do so.

The same cannot be said for the parts sector, which is forecast to spend C$560.6 million ($380.4 million) in 2003, down from the C$796.2 million ($540.3 million) that suppliers spent in 2002, according to preliminary figures. In 2001, spending was C$635.7 million ($431.4 million). Add to that C$1.29 billion ($875 million) in repair expenditures in 2001. The figures are a far cry from the big years for supplier investment: 1993-’94, at C$1.78 billion ($1.21 billion) and C$1.58 billion ($1.07 billion), respectively.

The weakness in spending by the parts sector is troubling as it employs twice as many workers as the assembly sector.

In another indicator of economic health, Canada’s trade surplus in automotive products took a 29.6% freefall, down about C$5 billion ($3.4 billion) in 2002, according to DesRosiers figures.

It is a reflection of a soft U.S. market for Canadian-made vehicles, notably Chrysler and Ford minivans, Chrysler and Ford large sedans and the compact Chevy and Suzuki SUVs from CAMI Automotive Inc.

Canadian exports were up only 4.5% in 2002 to C$92.9 billion ($63.0 billion), while imports were up 12.2% to C$81.4 billion ($55.2 billion). While this resulted in a trade surplus of C$11.6 billion, ($7.9 billion), it is a drop from the 2002 surplus of C$16.4 billion ($11.1 billion).

Vehicle imports grew by 19.4%, while exports rose only 2.7%. As a result, Canada’s surplus in assembled vehicles declined from C$34 billion ($23 billion) to C$29.6 billion ($20.1 billion). The parts deficit rose slightly to C$18.0 billion ($12.2 billion), from C$22 billion ($14.9 billion) in 1999.

Canada’s surplus with the U.S. declined from C$29.4 billion ($19.9 billion) to C$26.9 billion ($18.2 billion) and the deficit with countries other than the U.S. increased from C$13.0 billion ($8.8 billion) to C$15.3 billion ($10.4 billion).