Despite the Canadian Auto Workers’ union having successfully renegotiated contracts with Detroit’s three automakers, industry analyst Dennis DesRosiers says that Canada’s auto manufacturing sector as well as that in the Northern U.S. are vulnerable to future economic pressures. Speaking at the University of Windsor, DesRosiers says he expects vehicle demand to push North American manufacturing to record levels by 2016. However, he also cautions that ultimately, the biggest winners in this boost will be southern U.S. states and Mexico, which are likely to attract more investment from automakers due to lower labour costs and lower tax rates.
As a result, when the time comes for both UAW and CAW members to renegotiate their contracts, the economics and mindset could be significantly different than at present. With sales slowing in the world’s single largest vehicle market, and demand in the U.S. and Europe not likely to increase, at least in the near future, there’s every chance automakers will look for concessions in the coming years in order to maintain and increase profitability, with the greatest likely to come from those areas which offer lower labour and setup costs.
This could spell a bumpy road ahead for Canada, even though Honda and Toyota have invested significantly in manufacturing here in the last few decades, plus the fact that during the recent CAW contract talks, General Motors and Ford said they are committed to creating new Canadian manufacturing jobs over the next several years.
