This is part of the reason why manufacturing got decimated in the Great Recession. The reality is that the Canadian auto manufacturing recession had started in 2006 as the tier 1 auto cartel contributed to the suffocation of their tier 2 suppliers. After all, the price of steel was going through the roof because of Arcelor-Mittal’s persistence in buying operational steel mills and their insistence on shutting many of them down. This effectively reduced the market supply of steel and increased its market price.
The tier 1s had all the leverage in the world on the tier 2s because of their overwhelming control of money flow through the market. On top of this, the tier 1 automakers were increasingly moving facilities to China and India from Canada and, believe it or not, Mexico. This after having spent considerable amounts of investment to replace Canadian facilities with Mexican ones.
The third major factor in the real reason for the automotive manufacturing crash was the Canadian dollar reaching parity. Canadian automotive manufacturing thrives on an exchange rate between 60 and 80 cents US. The dollar reaching parity killed the Canadian dollar gains by virtue of having an export favourable exchange rate.
These were the main pieces to the chaos that ensued in that market. And if anyone tells you that chaos is randomness, tell them to get a clue. Nothing there had occurred randomly.
Detroit — The Detroit Three maintain Canada remains the most expensive place in the world to build their cars and trucks despite the concessions that were wrested from the Canadian Auto Workers in their round of labour talks in the fall.
This has raised some concerns that the cost of doing business in Canada will continue to see automakers move assembly work out of Canada to lower-cost areas, including in the United States and Mexico.
There’s no mistake that Canada continues to be the highest-cost producer for General Motors anywhere
Last month, General Motors of Canada Ltd. announced it would shift production of the Camaro from its Oshawa, Ont., plant when its current model expires, expected to be in 2015, in a move GM said was aimed at consolidating its rear-wheel-drive vehicles at the Lansing Grand River plant in Michigan. It was just the latest blow to the auto-assembly sector…
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