Japanese-brand OEMs continue to offer stability and growth in Canada, according to a report prepared for the Japan Automobile Manufacturers Association of Canada (JAMA).
The report reveals that Japanese OEMs employed 40 per cent of the Canadian auto industry workforce in 2018, equivalent to more than 94,000 people in the country: 14,560 in vehicle manufacturing, 17,776 in parts manufacturing, and 58,343 (37 per cent) in Japanese-brand new vehicle dealerships. Japanese OEMs also produced 47 per cent of light vehicles built in Canada during this period.
“For dealers the good news stories is that, as the sales have been increasing, there has been a need for more expansion of the dealers as well (in terms of sales and stores),” said David Worts, Executive Director of JAMA Canada, in an interview with Canadian auto dealer. “And overall, the number of people who have well-paying jobs, in our sector and including the auto industry in Canada in general — dealerships represent a significant part of that employment base.”
JAMA’s report is an update of a previous report, meant to identify what has changed over the last couple of years — particularly in the context of the broader auto industry in Canada, while also considering issues around the uncertainties of trade.
The information in the report should be good news for dealers, who have had to deal with U.S. steel and aluminum tariffs, the threat of auto and auto parts tariffs, and the uncertainty of a trade agreement that may or may not make it to a vote in the U.S. Congress by year’s end.
“A lot of what we build in Canada, including Honda and Toyota, about 75 per cent of what we are producing, is exported primarily to the U.S.,” said Worts. “But we also rely on imports of vehicles built in the U.S. and Mexico because of NAFTA, and that has been increasing” over the years, particularly as Japanese automakers had set up production in the mid-80s.
Worts said the trade deal has always been an attractive part of the reason vehicles are being built in Canada, due to a highly integrated process and also access to a much larger total market in the NAFTA region as a result of liberalized trade.
“I think the news cycle has been sort of dominated by bad news stories, if you will — GM’s restructuring and the implications that’s having for Oshawa, and with Fiat Chrysler announcing a reduction of one of its shifts in Windsor,” said Worts. “I think we are in a period too of disruptive change; technology is in gestation and it’s having a lot of impact on the (auto) sector.”
But Worts also points to the positive around all of these changes, including the promise of what connected and autonomous technology will bring to the market. Electrification, a regulatory environment helping to push this forward with incentives or mandates, and the need for reduced carbon emissions, may also bring new opportunities.
“The industry is definitely in a period of change and this is likely going to go on for a while,” said Worts.
Despite these changes, Worts points to the report’s findings — that the economic contribution of Japanese-brand OEMs, new car dealerships and Japanese-owned auto parts and tire manufacturers have increased “considerably” between 2001-2018 — 77.4 per cent from 2001, in terms of job support and contributions. A sharp contrast to other OEMs.
As the report puts it: “Japanese-brand automotive OEMs are thus unique in that they have consistently delivered growth and stability within an environment of economic uncertainty and change.”
