Canada’s supplier community is “approaching a crisis” as the resilient Canadian dollar erodes pre-recession margins the nation’s auto industry once enjoyed, warns the president of the Automotive Parts Manufacturers’ Assn.
Canada’s suppliers must take action to maintain their competiveness, Steve Rodgers tells Ward’s, adding change can be expected across the board, from productivity improvement to increased use of 3D modeling to wage cuts.
“But we don’t want to ever say that it comes down to simply going back to workers (for concessions),” he says.
Rodgers’ warning comes as the Canadian Auto Workers union protests against the prospect of wage cuts. Under the banner, “Enough is Enough,” demonstrations are staged Wednesday at some 100 plants across Ontario, center of the nation’s auto industry.
While economists say Canada is riding out the recession better than most countries, the downturn “continues to hammer Canada’s manufacturing sector,” the CAW says in a statement.
“Parts makers didn’t cause these problems, and there is no way that cutting our wages and pensions, adopting 2-tier wage structures and outsourcing our work will ever solve them,” the union adds.
The Canadian dollar has been hovering near parity with the U.S. greenback since 2007, ending nearly three decades that saw the loonie lag the American dollar by more than $0.40.
Against this backdrop, suppliers are struggling. Rodgers says he can’t quantify losses in terms of plant closings or lost business because “every situation is different.”
But, he maintains, Canadian suppliers are “approaching a crisis” and hopes “there are opportunities to work with unions.”
The CAW already has shown a willingness to adjust labor agreements to ensure employers maintain their competitiveness.
Also this week, Peter Van Loan, Canada’s Minster of Intergovernmental Affairs, tells the 2010 International District Export Council Conference in Detroit the U.S. and Canadian economies are intrinsically intertwined.
“You simply cannot talk about current or future economic strength in Canada or the United States without talking about our trade relationship,” Van Loan says, adding Canadian companies “have a big stake in the U.S. economy and a key role to play as this country continues to recover.”
The Detroit border-crossing, alone, accommodates $100 million of auto-industry trade per day, according to data distributed by the Canadian Consulate General’s office in Detroit.