Competing Without a Net: The Future of the Canadian Automotive Industry

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Competing Without a NetThe Future of the
CanadianAutomotive Industry

• September 11, 2008
• Elmhurst Inn, Ingersoll

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Presentation Outline

• Introduction
• Scope and objectives
• Industry analysis
• Canadas automotive outlook production and
  employment
• Technology trends and impacts
• Survey and case study results
• Summation and recommendations

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Introduction
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Industry Analysis
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Canadian Vehicle ProductionVolume (mil) and NAmn
Share () 1951-2014
Auto Pact
NAFTA Others
Source AutomotiveCompass and Wards Automotive
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Canadian Light Vehicle ProductionDetroit 3 and
Foreign-based OEMs - Volume (mil), 2000-2014
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North American Light Vehicle ProductionUS,
Canada and Mexico - Volume (mil), 2000-2014
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Exchange RateUS per Canadian - 1951-2008,
monthly
Source Statistics Canada
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Canadian Automotive Trade BalanceCdn (bil) -
1992-2007
Source Statistics Canada
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Canadian Automotive EmploymentMotor Vehicle
Manufacturing Vehicles, Truck Body Trailer,
Parts
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Employment Forecast
Source Statistics Canada and AutomotiveCompass
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Recommendations - Industry AnalysisBuilding
Sustainable Competitive Advantage
Government incentives for creating and developing
automotive innovation, including both RD and HR
innovation
Government incentives and creative solutions, for
example for plant and equipment and green
products and processes
A core framework to build sustainable competitive
advantage in Canadas automotive industry
Funding support for suppliers facing financial
constraints from traditional sources of capital
Approaches to encourage partnerships to form and
strengthen supply chains and reduce risk
Approaches to removing costly barriers (for
example, related to border issues, regulation
harmonization, etc.)
Simplification of the various government programs
available to support the automotive industry
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Technology Changes in the Canadian Automotive
Industry
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Technology Changes - Suppliers

• Competitive response to Low Cost Countries
• Adaptation of new technology, including
  roboticized systems
• Automated assembly operations
• Continued adaptation of lean systems
• Operators running multiple machines
• Implementation of TQM/TPM systems
• Cell assembly vs. line assembly
• Flexibility in job functions

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Technology Changes - Tooling

• Adaptation of Lean Systems
• Surrogate tool and die makers for many
  operations
• 5S Systems standardized operations
• Maximize utilization of machines equipment
• Multiple shifts/extended week
• Use of development software/ virtualization
• Shortage of critical skill sets has not
  materialized

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Technology Changes Bus and Truck

• New products being introduced
• More complex technology (electronics/green
  technology)
• Low volume producers looking to improve
  efficiency
• Lean production
• Computerized stock flows
• More responsibility for co-ordination on shop
  floor employees

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Technology Changes Labour Impacts

• Many new systems
• Require more involvement of workers
• Training requirements constantly increasing 5S,
  TQM, etc.
• Many new technologies and variable impact on
  workers
• Increased use of software tools and virtual
  reality
• Lean and innovative the only survival strategy

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Survey and Case Study Results
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The Study

• 12 months of field work
• March 2007-February 2008
• 22 case studies
• 322 interviews
• 1,710 employee surveys
• 146 employer surveys
• Interviews with representatives of labour and
  employers

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Technology and the Canadian Automotive Industry
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Importance of Skills Sets
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Skills Gaps (Current workforce)
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Supply of Skills (Existing Workforce)
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Supply of Skills (New Hires)
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Training Gap
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Labour Market Impacts

• Canadas automotive manufacturing employment base
  is decreasing in the assembly sector and, to a
  much greater extent, the parts sector.
• There are fundamental changes in the global
  automotive supply chain affecting jobs in the
  Canadian assembly and parts sectors.
• There is a very significant regional shift in the
  automotive manufacturing activity in Canada and,
  more specifically, in the automotive heartland of
  Ontario.
• There are macro- level economic, social and
  political factors which will greatly influence
  the future of the Canadian auto industry.
• A far greater emphasis will be placed on
  strategic skills which relate directly to
  innovation, technological and workplace change.

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Summation and Recommendations
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Action Recommendations Summary
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Final Comments

• CAHR is the intersection where vital flows of
  information and funding (both private and public)
  need coordination to improve both market
  efficiency and effectiveness
• Canadas reduced competitiveness needs to be
  reversed
• The HR recommendations put forth here are steps
  in that direction
• CAHR can facilitate the transformation of the
  Canadian automotive sector to become a formidable
  global competitor, and fulfill the CAPC goal To
  ensure that a talented, flexible and innovative
  workforce remains a core Canadian automotive
  strength.

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Competing Without a NetThe Future of the
CanadianAutomotive Industry

• The Council for Automotive Resources