Lost Hope for Canadian Auto-Industry
New Canadian labour contracts secured by the Detroit Three automakers this week are unlikely to lower costs enough to persuade the industry to make fresh investments in the country and reverse a decade-long contraction.
The Canadian automaker industry has suffered a decade long contraction and the new Canadian labour contracts secured by the Detroit Three automakers are unlikely to be of help. The strong external value of the Canadian dollar and cheap foreign labour remain the major reasons behind discouraging Ford Motors, Fiat – SpA Chrysler Group LLC, and Generals Motors Co from making new commitments to manufacture vehicles in Canada.
Canadian Auto Workers union predicts that without an expected economic resurgency in the continent, there is little hope for the industry to grow and recuperate over the next four years. It is likely to maintain current production levels with minimal expansion. At the same time, the country will likely lose more market share to Mexico and the southern United States, where output is expected to rise.
Kristin Dziczek, direct of of the labour and industry group at the Center of Automotive Research claims that: “The sector in Canada is really suffering greatly. Not at the hands of the CAW, but at the hands of the loonie,” referring to the Canadian dollar by its colloquial name.
References:
http://www.bnn.ca/News/2012/9/28/Contracts-buy-Canada-auto-workers-time-not-expansion.aspx