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  • NOTES
  • Why are people going to SE Asia: Lower health care, lower labor cost, lower capital investment and good quality and productivity SO WHEN YOU LOOK AT VEHICLES SALES AROUND THE GLOBE AND THE FORECAST TO 2011; PROVIDED BY MY FRIENDS AT CSM YOU CAN SEE WHERE THE GROWTH IS COMING FROM AND WHY THIS GROWTH AND PROJECT GROWTH IS WHAT IS CAUSING THE HUGE SHORTAGE OF MATERIAL AVAILABILITY GLOBALLY; ITS HURTING THE AUTO INDUSTRY IN NA, EUROPE AND THE OVERALL ECONOMY; THE WORLD WASN’T READY FOR THESE EMERGING MARKETS TO USE THESE RESOURCES AS THEY DID
  • NOTES

Transcript

  • 1. “ Tuning into the BIG Picture” For Eastern Ontario Automotive Summit Belleville, Ontario October 19, 2006 Automotive Parts Manufacturers’ Association The Voice of the Automotive Original Equipment Suppliers in Canada
  • 2.
    • APMA is Canada’s national association representing OEM producers of parts, equipment, tools, supplies and services for the worldwide automotive industry.
    • APMA members and their subsidiaries account for 90% of the over $36 (CDN) billion production of automotive parts in Canada. (2005)
    Who are we?
  • 3. To engage in activities that promote the interests of automotive original equipment suppliers in Canada that enhance the economic welfare of our members and be the Voice of the Canadian automotive supply industry Mission Statement
  • 4.
    • APMA has an 18 person Board of Directors to provide industry focus and direction and to oversee operations of the association as well as standing committees to allow members to exchange information and deal with issues affecting their sector:
      • Marketing and Strategic Initiatives Committee
      • Human Resource Development Committee
      • Energy, Environment and Health & Safety Committee
      • Innovation and Technology Committee
      • Other Ad hoc Committees as needed
      • APMA has 7 full time staff members to administer the association
    How APMA operates:
  • 5. (top 10 issues condense down to 3 main topics)
    • 1. Making Vehicles Safer
    • Better electronics/user interfaces, better driver and occupant education, better traffic management systems, stronger and easier to process structural materials.
    • 2. Improving Fuel Economy & Reducing Environmental Impact
    • Lightweight materials, reducing non-renewable resource usage, hybrid powertrains (need better batteries), better transmissions (CVT’s), reducing emissions (need better catalysts).
    • 3. Re-thinking Old Methods
    • Improving supplier relationships, making assembly more efficient and safer, controlling cost to improve profitability (lower cost materials & logistics as well as design and test methods improvements).
    Source: Automotive News - April 11, 2005 Top Auto Industry Issues
  • 6. Source: CSM Worldwide Industry Model Count 2003-05 359 2006-08 385 2009-11 371 Automakers and suppliers need flexibility to assembly more models and parts for different platforms in the same plant Explosion of New Products
  • 7. Compression = Compromise = $ Shorter Life Cycles The Challenge of Compression
  • 8. North America
  • 9. 2008 Data Source: CSM Worldwide 19.7 19.5 19.2 20.5 19.3 19.8 19.6 N.A. Market Share Shift
  • 10. Number of Automotive Suppliers Based on OESA Projections Consolidation of Supply Base
  • 11. Canada
  • 12.
      • World’s 8 th largest producer of motor vehicles (> 2.6 million units). Ontario produces more vehicles than anywhere else in North America.
      • Six OEM’s: 12 active assembly plants (+1 more in 2007) + a number of engine and drivetrain part plants and support facilities. Over $7 billion has been committed to Canada in past two years.
      • 3 OEM engineering R&D centres including DaimlerChrysler Canada, General Motors Canada & International Truck & Engine-Navistar.
      • Hundreds of suppliers of parts at all tier levels including Magna, Siemens-VDO, Dofasco, Alcan, Dupont, Wescast Ind., Woodbridge, Solectron-Invotronics, NEMAK Aluminum, Ballard Power Systems, General Hydrogen, Stuart Energy Systems, Hydrogenics, Schukra, QSS, Ventra Group, AutoLIV Canada, Ventra, Delphi, Lear Canada.
      • Over 500,000 Canadians work in the auto industry - 1/7 jobs and 1/6 in Ontario. Workers here are highly skilled!
      • The auto sector generates 12-13% of Canada’s manufacturing gross domestic product and is the largest source of foreign exchange.
    Canada’s Automotive Sector
  • 13. Canadian Vehicle Production VS. Canadian Automotive Parts Shipments Canadian Vehicle Production (units) Canadian Automotive Parts Shipments (CDN $)
  • 14. Motor Vehicle Assembly Manufacturing vs. Motor Vehicles Parts Manufacturing Statistics Canada Total Employment
  • 15. Oshawa Oakville Brampton Alliston Cambridge Windsor St. Thomas Ingersoll Canadian Assembly Plant Locations Woodstock (opening 2008)
  • 16.
    • Vehicles Key to the North American Market
    Canadian Assembly Plants * Solely Ontario Sourced ** New Vehicle Launch Lincoln MKX (2007) Ford Edge (2007) Fairlane (2008) Suzuki XL-7 ASSEMBLER PRODUCTS CAMI Chevrolet Equinox * Pontiac Torrent DAIMLER CHRYSLER Chrysler 300 * Dodge Magnum * Dodge Grand Caravan/Chrysler Towne & Country Dodge Charger * ** Chrysler Pacifica * FORD Freestar Crown Victoria / Grand Marquis / Town Car (2008) GM Buick Allure Chevrolet Impala Chevrolet Monte Carlo Chevrolet Silverado GMC Sierra Pontiac Grand Prix Camaro (2009) HONDA Acura CSX * /Honda Civic Hatchback Acura MDX * Honda Pilot * Honda Ridgeline * ** TOYOTA Toyota Corolla Toyota Matrix Lexus RX 350 Hino RAV 4 (2008)
  • 17. Automotive Parts Manufacturers are mainly located in Ontario and Quebec Quebec Ontario Source: Ontario Ministry of Economic Development and Trade Source: Québec Ministry of Economic Development, Innovation and Export Trade Auto Part Sites by region 01 Bas St-Laurent (1) 02 Saguenay / Lac St-Jean (3) 03 Capitale Nationale (10) 04 Mauricie (4) 05 Estrie (22) 06 Montréal (38) 12 Chaudière-Appalaches (8) 14 Lanaudière (1) 15 Laurentides (10) 16 Montérégie (28) 17 Centre du Québec (4) ( ) number of companies located in each region Chicoutimi Québec Trois-Rivières Drummondville Montréal Sherbrooke Hull
  • 18. Canada has world-class auto assembly and parts manufacturing operations. Powertrain, systems and assemblies Stackpole Machined components, modules, systems Linamar Stamped and hydroformed parts F&P Mfg. Brakes, suspension components, controls Arvin Meritor Steering, suspension components TRW Canada Chassis components Dana Canada Plastics, blow and injection molded ABC Group Air Conditioners Denso Canada Molded foam, interior trim, seating The Woodbridge Group Weather-stripping Waterville TG Die Castings Burlington Technologies Stamping, interior and exterior trim, powertrain components Magna International Parts Product Lines Some of the 550 Auto Parts Plants Auto Assembly - 12 Plants -
  • 19. The Nature of the North American Automotive Industry Trade Flow
    • $60.0 B cars and trucks
    • $20.3 B parts, engines
    • Total: $80.3 B
    • $23.1 B cars and trucks
    • $33.2 B parts, engines
    • Total: $56.3 B
    Source: Statistics Canada
  • 20. Issues Facing the Automotive Original Equipment Supply Industry in Canada
    • Developing a diversified customer base
    • Securing a fair share of automotive investment in Canada
    • Globalization
    • Seamless passage at the Canada – United States borders
    • Maintaining competitiveness through innovation
  • 21. 1. Developing a diversified customer base
    • Market shares continue to change. Suppliers, must aim to have their customer make up mirror that of the new vehicle market shares and be able to quickly respond to:
      • Rapid model/vehicle changes
      • Lower volumes per platform but more platforms to supply
      • Rapid market demand changes – vehicle segment fluctuations
      • Global competitive variables-F/X, input costs (raw material, labour, etc.), foreign competition for your business
    • How does APMA help? Events from 2004 to date
    • Trade Missions:
    • Toyota Engineering Centre (Michigan)
    • Honda, Toyota, Nissan, Tokyo Motor Show (Japan)
    • Shanghai GM, Volkswagen, Tier I companies (China)
    • Nissan Technical Centre (Michigan)
    • Audi, Volkswagen, Hyundai/Kia (Central Europe)
    • Honda Of America (Ohio)
    • BMW North America (South Carolina) (3 times)
    • China (Shanghai, Beijing, Hong Kong)
    • One-on-One Mission & Tokyo Motor Show (Japan)
    • Many incoming missions
    • APMA Events and Publications
    • APMA’s Annual Conference & Exhibition) for education and networking
    • Publications to help you stay current
  • 22.
    • Investments by foreign governments helped other jurisdictions. We had no new Assembly plants in Canada for last 19 out of 20.
    • Our governments’ investments re-leveled the playing field and we have since had good “hits” with virtually all vehicle manufacturers in Canada.
    2. Securing a fair share of Automotive Investment in Canada
    • Results:
    • Ford flexible manufacturing - $1 Billion
    • GM’s Beacon project - $ 2.5 Billion-Camaro $740 million
    • International Truck plant
    • Toyota plant 7 – Woodstock for RAV4 - $800 million
    • DaimlerChrysler expansions
    • Hino (Toyota subsidiary) new truck plant in Woodstock
    • Over $7 Billion committed resulting from Government’s $1 Billion investment
  • 23. 3. Globalization
    • Not a new concept – for our sector, the AutoPact of 1965 was the start.
    • FTA (late 80s)
    • NAFTA (mid 90s) – big change. High labour content (i.e. wiring harnesses, windshield wiper assemblies) went to Mexico. Benefits of NAFTA are not yet fully realized by the auto industry (non-tariff barriers, harmonization of regulations, border crossing logistics, etc.)
    • Need to find what our core competencies are and develop from there
  • 24. 3. Globalization
    • Asian manufacturing costs are lower – pressure for Asian pricing in North America
    • More goods will come from Asia and Central Europe-Mexico may be most at risk!
        • To be economic and travel 10,000 kilometers, auto parts:
        • Cannot be on JIT process
        • Must travel well (ie. Difficult to damage)
        • Must stack well (high value per container) No value in shipping air
    • China is hot now for goods, but India will be close behind.
    • Look to China, India, and Central Europe countries for more competition
  • 25. 4. Seamless passage at the border
    • Under NAFTA, goods are to flow freely between countries, but at the border; we know this isn’t always the case.
    • Implement Intelligent Technology Systems (ITS) to help control border congestion
    • Encourage use of advanced paperless customs and security systems for the pre-clearance for low risk goods
    • Can we learn from the European Union, which provides
    • uninterrupted travel (commercial) between 25 countries?
  • 26. 5. Maintaining competitiveness through innovation, research and commercialization
    • AUTO21 – Federal Centres of Excellence across the country
    • * 39 Universities participate
    • NRC – Aluminum Technology Centre in Chicoutimi
    • Centre for Automotive Research and Education and Automotive Engineering Program at the University of Windsor
    • Centre for Automotive Parts Expertise at Georgian College (CAPE)
    • University of Windsor/International Truck Diesel Emissions and Manufacturing Process Improvement
    Highly qualified skilled trades are essential to a successful auto industry. Advanced research and commercialization of its outputs is equally important. These are our Competitive Advantages !
  • 27. In summary, the future includes:
    • Manufacturers rebalancing and diversifying their customer base – ideal is customer base should mirror customer market share
    • Rapid response: Changes/demands will come in many forms
    • Low cost country components will be part of the supply chain – use it to your advantage
    • Canada must continue to improve trade infrastructure with US – our biggest customer for the foreseeable future
    • Canada must continue to remain globally competitive through enhanced R & D, fostering innovation and attracting new investment
    • Embracing globalization-not running from it. It provides great opportunities for those willing to reach for it!
    • and
    • Investments in human resources aka “The Human Element”
  • 28. Gerry Fedchun [email_address] (416) 620-4220 Fax (416) 620-9730 The Voice of the Automotive Original Equipment Suppliers in Canada