Although there’s still much concern regarding the economy, specifically the global economy, given the ongoing debt crisis in Europe, in North America at least, there are signs of recovery.
New vehicle sales are expected to continue growing, so far there’s been a 15 per cent increase in car and truck production this year. And with more vehicles comes the need for more parts; as a result, suppliers are also reaping the benefits.
Canada’s “big three” auto parts manufacturers, namely Linamar Corp, Magna International and Martinrea International have all seen steady gains in growth since 2009, Magna witnessing a bump of 15 per cent in the value of its shares, while Linamar stock is worth roughly 10 times what it was three years ago.
Detroit’s “big three” automakers, still represent a sizeable chunk of business for the major Canadian suppliers and stronger than anticipated vehicle production schedules are helping to improve the overall economic outlook.
While there are some analysts who believe both automakers and suppliers need to diversify to prevent a repeat of the 2008-09 recession; so far the problems in Europe aren’t appearing to have much of an impact on vehicle demand in North America.
That said, a smaller global percentage of vehicle production concentrated in the U.S. and Canada than in years past, plus persisting unemployment and sluggish economic growth south of the border are still presenting significant challenges and it is likely that in order to remain successful, Canadian suppliers will likely need to tap into low-cost, emerging markets, particularly those in Latin America.
“Canadian automotive suppliers are waking up to this,” said Steve Rodgers, head of the Automotive Parts Manufacturers Association based in Toronto, “though we need to pay attention.”
