2. jerry suyavong canada auto industry 2013 - for pro export colombia

1

The Canadian Automotive SectorOverview and Competitive Advantages

Jerry Suyavong President, M.E. International Inc.Vice President, Linear Transfer Automation Inc.ProExport Colombia Seminar July 23, 2013

2© 2013 Jerry Suyavong – Confidential Disclosure or duplication without consent is prohibited.

TABLE OF CONTENTS

1.Canada Automotive Industry Overview

2.Competitive Advantage

3.Automotive R&D Centre

4.Next Generation Vehicles

5.Outlook, Challenges and Opportunities


Snapshot of Canada’s Auto Sector

● Manufacturing – Canada produces passenger and commercial vehicles, auto parts and systems, truck bodies and trailers, as well as machines-tools-dies-moulds (MTDM) and tires

● Automotive is the largest manufacturing sector in Canada. In 2012 it accounted for:

• 10% of manufacturing GDP

• $80.4 billion in revenues

• 115,025 in direct employment

• 21% of merchandise trade

• 16% of NAFTA vehicle production (2.45 million units)

● Highly concentrated in Ontario; also in Quebec, Manitoba and B.C.

● Very export intensive (three-quarters of annual output)


• Assembly: 19 passenger and commercial vehicle plants, 37,155 employed

• 87% exported,16.5% of North American vehicle production over the last 5 years

• 2.45M vehicles produced in 2012

• Auto parts: ~10% of North American parts shipments

• ~350 automotive parts plants, including leading Canadian parts supplier and large Multinationals

• ~300 Tool, Die and Mould makers

• 1,240 facilities, 64,305 employed, $27.5 billion revenues, 46% exported

• Key Inputs & Services: Reliable access to raw materials, such as, steel, metals, plastics, alternative materials, as well as business services and automotive sales and service

Snapshot of Canada’s Auto Sector


Vehicle Assembly Locations


Parent Plant / Location Products

Chrysler[FIAT]

Brampton Assembly Plant (Brampton ON)Chrysler 300/300C; Dodge Charger and Challenger; Lancia Thema

Windsor Assembly Plant (Windsor ON)Chrysler Town & Country; Dodge Grand Caravan; Lancia Voyager; Ram Cargo Van

Ford Oakville Assembly Complex (Oakville ON) Ford Edge and Flex; Lincoln MKX and MKT

GMCAMI Automotive (Ingersoll ON) Chevrolet Equinox (2010MY) and GMC Terrain (2010MY)

Oshawa Car Plants 1-2 (Oshawa ON)Buick Regal and Regal eAssist; Cadillac XTS; Chevrolet Camaro, Equinox and Impala

Honda HCM Plants 1-2 (Alliston ON) Acura MDX and ZDX; Honda Civic and CR-V

ToyotaNorth and South Plants (Cambridge ON) Toyota Corolla and Matrix; Lexus RX 350

West Plant (Woodstock ON) Toyota RAV4 and RAV4 EV

Assembly Plants in Canada

Parent Plant / Location ProductsBlue Bird Micro Bird (Drummondville PQ) Type A school buses

Hino [Toyota] Hino Motors Canada (Woodstock ON) Class 4-7 trucks (CKD)

Lion Bus Lion Bus Inc. (St. Jerome PQ) Type C school buses

MCI MCI International (Winnipeg MB) intercity buses

New Flyer New Flyer Industries Canada (Winnipeg MB) urban transit buses

PACCAR PACCAR of Canada (Ste. Therese PQ) Class 6-7 trucks

Volvo BusNova Bus Corporation (St. Eustache PQ) urban transit buses

Prévost Car (Ste. Claire PQ) intercity buses

Lig

ht

Veh

icle

sH

eavy

Tru

cks

and

Bu

ses


Exceptional Quality and Productivity

J.D. Power Plant Quality Awards1990 Toyota Cambridge (Gold)

1991 Toyota Cambridge (Gold)

1992 Toyota Cambridge (Silver)

1993 Toyota Cambridge (Bronze)

1994 Ford St. Thomas (Silver)


1996 Toyota Cambridge (Gold), Honda Alliston (Silver)

1998 Ford St. Thomas (Gold)

1999 GM Oshawa 1 (Bronze)

2000 Toyota Cambridge (Bronze)


2002 GM Oshawa 2 (Gold)

2003 GM Oshawa 1 (Gold)

2005 GM Oshawa 2 (Gold), GM Oshawa 1 (Silver)

2006 GM Oshawa 2 (Gold), Chrysler Windsor (Silver)

2007 GM Oshawa 2 (Silver)

2009 GM Oshawa 1 (Silver)


2011 Toyota Cambridge (Platinum)

2012 Toyota Cambridge (Gold) + Woodstock (Bronze)

● The J.D. Power & Associates Initial Quality Awards are the auto industry’s benchmark for new vehicle quality manufacturing

● Canadian assembly plants have won one-third of all J.D. Power plant quality awards for North America, which is double Canada’s share of regional production

● Twenty-one J.D. Power & Associates Initial Quality Awards have been presented to Ontario plants since 1990

● The only Toyota plant outside Japan to produce Lexus vehicles is in Canada

● Also home to the production of luxury vehicles by Acura, Cadillac and Lincoln.


Canadian Vehicle Production

OEM 2007 2008 2009 2010 2011 2012

GM 964,239 589,323 347,363 529,568 661,884 683,058

Chrysler 534,774 479,046 314,504 475,382 496,081 585,923

Toyota 302,749 287,395 319,547 458,729 412,829 519,215

Honda 390,580 383,011 259,796 278,366 254,051 409,849

Ford 349,808 306,764 237,952 320,608 320,396 255,924

Total 2,542,150 2,045,539 1,479,162 2,062,653 2,145,241 2,453,969

Country 2007 2008 2009 2010 2011 2012

NORTH AMERICA 15,102,752 12,616,916 8,626,384 11,954,843 13,153,240 15,449,563

Canada 2,542,150 2,045,539 1,479,162 2,062,653 2,145,241 2,453,969

Mexico 2,006,871 2,060,921 1,526,257 2,257,617 2,551,771 2,874,460

United States 10,553,731 8,510,456 5,620,966 7,634,573 8,476,228 10,121,034


Ontario has been NAFTA’s Leading Sub-National Jurisdiction for Vehicle Assembly since 2004

Vehicle Production by Top 6 Sub-National NAFTA Jurisdiction (units)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,00020

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Source: Wards Automotive

Ontario

Michigan

Ohio

Indiana

Kentucky

Alabama


Part of a Huge North American Market

2007 2008 2009 2010 2011f 2012f 2013f 2014f 2015f 2016f 2017f0

5

10

15

20

25

Mexico

U.S.

Canada

Motor Vehicle Sales in North America(in millions of units)

Forecast

Source: Industry Canada, from IHS | CSM WorldwideNote: Figures include passenger and commercial vehicles

● Canada is part of a fully integrated North American market with annual sales of 20 million units, normally

● Although the U.S. market collapsed in 2008-09, sales have started to recover and should return to peak levels by 2013

● Lost production is being restored, and North America should remain one of the world’s largest and most lucrative automotive markets

● The N.A. Free Trade Agreement (NAFTA) ensures duty-free trade for originating goods throughout the region


Top 15 CountriesLight Vehicle Production & Global Ranking

Country 2012 Rank Country 2017 RankChina 18,298,986 1 China 27,001,903 1

United States 10,121,034 2 United States 11,563,208 2Japan 9,544,740 3 Japan 8,774,997 3

Germany 5,586,276 4 India 6,000,000 4South Korea 4,480,015 5 Germany 5,429,028 5

India 3,851,575 6 South Korea 4,475,000 6Brazil 3,172,783 7 Brazil 4,376,875 7

Mexico 2,886,788 8 Mexico 3,651,916 8Canada 2,454,069 9 Thailand 3,000,000 9Thailand 2,312,489 10 Russia 2,569,699 10

Russia 2,078,368 11 Spain 2,261,628 11Spain 1,939,352 12 Canada 2,084,876 12

France 1,926,863 13 France 2,007,828 13United Kingdom 1,563,734 14 United Kingdom 1,548,521 14Czech Republic 1,113,559 15 Czech Republic 1,323,577 15

Top 15 Total 71,330,631 Top 15 Total 86,069,056Major Market Total 78,556,570 Major Market Total 94,730,000

Top 15 % 90.8 Top 15 % 90.9

BRIC 27,401,712 BRIC 39,948,477BRIC % 34.9 BRIC % 42.2

Source – Wards/AMIP/AutomotiveCompass (Brazil, Russia, India, China)


Top 15 Global BrandsLight Vehicle Production & Global Ranking

Brand Owner 2012 Rank Brand Owner 2017 RankVolkswagen 9,218,940 1 Volkswagen 10,497,562 1Toyota Motor 8,648,879 2 Renault/Nissan 9,481,705 2General Motors 8,127,929 3 Toyota Motor 9,238,350 3Renault/Nissan 7,654,459 4 General Motors 8,914,736 4Hyundai Motor 7,177,294 5 Hyundai Motor 7,709,046 5Ford Motor 5,613,074 6 Ford Motor 7,039,180 6Fiat-Chrysler 4,249,527 7 Honda Motor 5,090,754 7Honda Motor 3,913,446 8 Fiat-Chrysler 4,968,593 8PSA/Peugeot-Citroen 2,820,247 9 PSA/Peugeot-Citroen 3,296,780 9BMW 1,864,422 10 BMW 2,115,224 10Daimler 1,851,783 11 Daimler 2,111,693 11SAIC-GM-Wuling 1,471,397 12 Maruti Suzuki 1,698,155 12Mazda Motor 1,314,700 13 SAIC-GM-Wuling 1,641,764 13Suzuki Motor 1,265,603 14 Mazda Motor 1,625,226 14Maruti Suzuki 1,220,408 15 Suzuki Motor 1,605,369 15Top 15 Brands 66,412,108 Top 15 Brands 77,034,137Major Market Total 78,556,570 Major Market Total 94,730,000Top 15 % 84.5 Top 15 % 81.3Source – Wards/AMIP/AutomotiveCompass


COMPETITIVE ADVANTAGE


● The N.A. Free Trade Agreement integrates Canada into a market with annual sales of 20 million vehicles.

● No tariffs on OE parts imported into Canada (vs 2.5% tariff in the U.S.)

● Canada and the U.S. are actively expanding border capacity.

Los Angeles

Detroit/WindsorChicago

Atlanta

Seattle

Miami

Mexico City

800 km

400 km

CANADA

U.S.A.

MEXICO

Montreal

Toronto

Part of an Integrated North American Market


Canada is Strategically Located

© Automotive News

● There are 37 high-volume assembly plants within a 500 km radius of the Windsor-Detroit border. These plants produced 7.2 million vehicles in 2012.

● Canada is also close to all major automotive R&D centres in Michigan and Ohio.


139 Million Consumers within a Day’s Drive

Daily Two-way Goods Trade between Ontario-USA for 2011 Valued at C$716 million

Sources: Industry Canada, Statistics Canada and US Census Bureau


Low Import Tariffs

Source: Finance Canada. The Federal Budget, and World Trade Organization. Trade Profiles.

$2.8

$1.9

$3.0

$1.7

$1.2

$4.3

$0.0$0.0$0.0

Transport equipment Electrical machinery Non-electrical machinery

Average Applied MFN Tariffs On $100 Million In Imports

$ millions


35.8%

34.8%

34.4%

32.9%

31.5%

28.0%

25.0%

37.4%

36.9%

36.6%

36.2%

36.0%

36.1%

Indiana

Ohio

Great Lakes States

Illinois

Tennessee

Kentucky

Georgia

Michigan

Alabama

Texas

Ontario (2008)

Ontario (in 2010)

Ontario (in 2012)

2010 Combined Federal and State/Provincial

Competitive Corporate Taxes on Manufacturing


Corporate Income Tax Rates on Manufacturing

2011 2012

Federal 16.5% 15.0%

Ontario 10.0% 10.0%

Combined 26.5% 25.0%


Accelerated Capital Cost Allowance

• Manufacturing and Processing Equipment (M&P): Since 2007, the depreciation rate for eligible M&P equipment has been temporarily increased to a 50% straight line rate (Class 29 as defined by the Canada Revenue Agency) for eligible machinery and equipment purchased after March 18, 2007 and before 2014.

• Companies who locate in Ontario can take advantage of this generous rate of write-off for capital expenditures in manufacturing or processing machinery and equipment each year up to the end of 2013.

• ACCA claims can be deferred indefinitely to subsequent years.


Accelerated Capital Cost Allowance

Asset Class Eligible Allowance Depreciation Rate Depreciation Method “Half-Year” Rule

43Capital Cost Allowance

(CCA)30% Declining Balance Yes

29Accelerated Capital

Cost Allowance (ACCA)

50% Straight Line Yes

ACCA Benefits Allows business to completely depreciate qualified capital cost over a three year period.

Provides additional cash flow in the three years following the capital expenditure by reducing the taxable income.

Provides higher return on capital in the long term.


The Ontario government offers Training Tax Credits to encourage employers to hire and train apprentices and workers in specific skilled trades.

Ministry of Training, Colleges and Universities:

Apprenticeship Training Tax Credit: Maximum $10,000 per apprentice over 48 months.

Employer Signing Bonus: $2,000 signing bonus if a new apprentice is registered.

Employment Ontario: Wage incentives and other recruitment support.

Ontario Youth Apprenticeship: School to work transition program.

Ministry of Finance:

Co-op Education Tax Credit: Refundable tax credit of up to $3,000 per placement.

Training Tax Credits in Ontario


• Corporate Tax Reform: The government’s comprehensive tax package is providing $4.8 billion in overall tax relief over three years, including CIT cuts that started July 1, 2010:- The general Corporate Income Tax (CIT) rate was lowered from 14 per cent to 12 per cent- The CIT rate for manufacturing and processing was lowered from 12 per cent to 10 per cent

• Infrastructure Investment: Support for Detroit-Windsor gateway, including the Detroit River International Crossing and the Windsor-Essex Parkway to ensure people and goods move safely and efficiently through the US-Canada border

Tax Rates & Other Support for the Auto Industry


US55%

China6%

France5%

UK4%

Japan4%

Other 19%

Germany7%

Foreign direct investment projects in Ontario, by source country, 2011

Source: FDI Intelligence, March 2012

For example, Ontario Attracts Investors from Many Countries


AND ... Ontario is Home to the Majority of Foreign-Controlled Head Offices in Canada

Foreign Head Office Distribution in Canada, 2011

Rest of Canada

40% Ontario60%

Source: Statistics Canada


AUTOMOTIVE INTERIORSABC GroupAGS Automotive SystemsAisin CanadaArcelorMittal TubularBend AllBrose CanadaCanadian General-Tower LimitedCommercial Spring and Tool Co.DBGEnstel Manufacturing Inc.Exco Technologies LimitedFalcon Tool & Die (1979) Ltd.Freeway Washer LimitedH. Paulin & Co. Ltd.Hayashi Canada Inc.Hematite ManufacturingInvotronicsJYCO Sealing TechnologyLear CanadaMagna International Inc.Martinrea International Inc.Marwood Metal FabricationMatcor Automotive Inc.MetriCan Stamping Co. Inc.Mitchell PlasticsOmron Dualtec Automotive Inc.Papp PlasticsPlasmaTreat North America Inc.Salflex Polymers Ltd.Samuel AutomotiveSchukra Of North America Ltd.Sealed Air (Canada) Co./Cie.Stahlschmidt Cable SystemsThe NARMCO GroupThe Woodbridge GroupTierconTG Minto Corp.Toyota Boshoku CanadaTS TechVan-Rob Inc.Vari-FormVelcro Canada Inc.Windsor Mold GroupWoodstock Stampings Inc.

PRODUCTION HANDLINGABB Inc.Marwood Metal FabricationODG GroupPanasonic Canada Inc.Schaefer Systems Inc.Schenker DB LogisticsSealed Air (Canada) Co./Cie.SEW EurodriveThe NARMCO GroupValiant Tool & Mold Inc.

AUTOMOTIVE EXTERIORS3MABC GroupAGS Automotive SystemsAmino North America Corp.Essar Steel Algoma Inc.ArcelorMittalArcelorMittal TubularEnstel Manufacturing Inc.Canadian General-Tower Ltd.Commercial Spring and Tool Co.DBGDelhi-Solac Inc.Exco Technologies LimitedF&P Manufacturing Inc.Falcon Tool & Die (1979) Ltd.Flex N GateFreeway Washer LimitedH. Paulin & Co. Ltd.Henkel Canada CorporationKSR International Inc.Lanex Manufacturing Inc.Magna International Inc.Martinrea International Inc.Marwood Metal FabricationMatcor Automotive Inc.Maxtech Manufacturing Inc.MetriCan Stamping Co. Inc.ODG GroupPlasmaTreat North America Inc.PPG CanadaQuality Safety Systems CompanySalflex Polymers Ltd.Samuel AutomotiveSealed Air (Canada) Co./Cie.SinterisThe Butcher Engineering LimitedThe NARMCO GroupThe Woodbridge GroupTierconTrimont Manufacturing Inc.Van-Rob Inc.Vari-FormWarren IndustriesWEGU ManufacturingWindsor Mold GroupWoodstock Stampings Inc.

HVACABC GroupArcelorMittal TubularBurlington Technologies Inc.Commercial Spring and Tool Co.DANA CorporationH. Paulin & Co. Ltd.Linamar CorporationMagna International Inc.Martinrea International Inc.Nichirin IncorporatedOmron Dualtec Automotive Inc.

COMFORT & CONVENIENCEABC GroupAGS Automotive SystemsArcelorMittal TubularDBGExco Technologies LimitedMagna International Inc.Matcor Automotive Inc.QNX Software SystemsVan-Rob Inc.Vari-FormWindsor Mold Group

PRODUCTION CONTROL EQUIPMENTAUTOMATION & DESIGNABC GroupABB Inc.Altair Engineering Canada, Ltd.Applied Precision Inc.ArcelorMittal TubularArmada Toolworks Ltd.Bend AllCannon Automotive SolutionsCentrelineClover Tool Mfg. Ltd.DBGEngineered Solutions Corp. (ESC)Exco Technologies LimitedFalcon Tool & Die (1979) Ltd.FANUC Robotics Canada Ltd.Giffels Associates Limited/IBI GroupHenkel Canada CorporationHusky Injection MoldingHuzura Manufacturing Ltd.LogikorMagna International Inc.Marwood Metal FabricationODG GroupOES, Inc.Omega ToolPanasonic Canada Inc.PlasmaTreat North America Inc.PricewaterhouseCoopers LLPQNX Software SystemsRWDI AIR Inc.Sanyo Canadian Machine WorksSchenker DB LogisticsSiemens PLM Software (CA) Ltd.Solarsoft Business SystemsStahlschmidt Cable SystemsTech Con AutomationThe NARMCO GroupTutelar TechnologiesValiant Tool & Mold Inc.Van-Rob Inc.Vari-FormWindsor Mold Group

CHASSISABC GroupAGS Automotive SystemsArcelorMittal TubularArmada Toolworks Ltd.Bend AllEnstel Manufacturing Inc.Burlington Technologies Inc.Canadian Autoparts Toyota Inc.DANA CorporationDBGDYNA-MIG Manufacturing Inc.Electromac GroupF&P Manufacturing Inc.Falcon Tool & Die (1979) Ltd.Flex N GateGlobal TechnologiesH. Paulin & Co. Ltd.Jefferson Elora CorporationKautex-TextronKumi Canada Corp.Linamar CorporationMagna International Inc.Martinrea International Inc.Matcor Automotive Inc.MetriCan Stamping Co. Inc.MMSC CanadaMusashi Auto Parts Canada Inc.Nichirin IncorporatedODG GroupSanoh Canada Ltd.Showa Canada Inc.SinterisToyotetsu Canada Inc.The NARMCO GroupVan-Rob Inc.Vari-FormWescast Industries Inc.Windsor Machine & StampingWindsor Mold GroupWoodbine Tool & DieWoodstock Stampings Inc.

BRAKINGCTS SystemsDANA CorporationDYNA-MIG Manufacturing Inc.F&P Manufacturing Inc.KSR International Inc.Linamar CorporationMartinrea International Inc.Maxtech Manufacturing Inc.Nichirin IncorporatedSinteris

COMMUNICATION& INFORMATIONABC GroupAGS Automotive SystemsArcelorMittal TubularDBGExco Technologies LimitedMagna International Inc.Matcor Automotive Inc.Omron Dualtec Automotive Inc.QNX Software SystemsTutelar TechnologiesVan-Rob Inc.Vari-FormWindsor Mold Group

POWERTRAINABC GroupAGS Automotive SystemsArcelorMittal TubularBend AllBurlington Technologies Inc.Commercial Spring and Tool Co.D & V Electronics Ltd.DANA CorporationDBGElectrovayaExco Technologies LimitedF&P Manufacturing Inc.Freudenberg-NOK Inc.H. Paulin & Co. Ltd.InvotronicsLinamar CorporationMagna International Inc.Martinrea International Inc.Musashi Auto Parts Canada Inc.Nichirin IncorporatedNTN Bearing Mfg CanadaSinterisThe NARMCO GroupUltraFit ManufacturingVan-Rob Inc.Vari-FormZenn Motor Company

AIR INTAKE / EXHAUST SYSTEMSABC GroupEnstel Manufacturing Inc.Commercial Spring and Tool Co.DBGFalcon Tool & Die (1979) Ltd.H. Paulin & Co. Ltd.Huarong Purification Inc.Linamar CorporationMagna International Inc.Martinrea International Inc.Marwood Metal FabricationTHE NARMCO GROUPVan-Rob Inc.Wescast Industries Inc.Windsor Mold GroupWoodstock Stampings Inc.

ENGINE MANAGEMENTInvotronicsMagna International Inc.Omron Dualtec Automotive Inc.Zenn Motor Company

TRAININGABB Inc.Engineered Solutions Corp. (ESC)Exco Technologies LimitedHenkel Canada CorporationHumberCollegeMagna International Inc.Ontario Centres of ExcellenceThe PIC GroupPlasmaTreat North America Inc.RWDI AIR Inc.

ECONOMIC DEVELOPMENTCanada's Automotive CorridorCanada's Technology Triangle Inc.City of BrantfordCity of HamiltonDurham RegionGreater Toronto Marketing AllianceLondon Economic Development Corp.Municipality of Chatham-KentNiagara Economic Development Corp.Regional Municipality of HaltonSarnia-Lambton Economic PartnershipSouth Western Ontario Marketing AllianceWindsorEssex Economic Development

EDUCATION & RESEARCHAdvanced Design &Manufacturing Institute (ADMI)AUTO21 Inc.CON*NECTConestoga CollegeGeorgian CollegeHumber CollegeMcMaster University-MAC AutoMohawk CollegeOntario Centres of ExcellenceSeneca College of Applied Arts & TechnologyUniversity of Waterloo - WatCARUniversity of Windsor

MANUFACTURING MACHINERY,TOOLS & EQUIPMENTABB Inc.ArcelorMittal TubularBurlington Technologies Inc.DBGElectromac GroupFalcon Tool & Die (1979) Ltd.Flex N GateMagna International Inc.The NARMCO GroupODG GroupStahlschmidt Cable SystemsValiant Tool & Mold Inc.Van-Rob Inc.Exco Technologies LimitedPlasmaTreat North America Inc.J.P. Bowman LimitedABC GroupAnchor DanlyHusky Injection MoldingVari-FormWindsor Mold GroupFANUC Robotics Canada Ltd.Nachi Robotic Systems Inc.Yaskawa Motoman Canada Ltd.TRW

ENGINE COOLINGBend AllBrose CanadaDenso ManufacturingMagna International Inc.Martinrea International Inc.The NARMCO GroupVari-Form

BODY SYSTEMSABC GroupAGS Automotive SystemsArcelorMittal TubularArmada Toolworks Ltd.Cannon Automotive SolutionsCommercial Spring and Tool Co.DBGEnstel Manufacturing Inc.Exco Technologies LimitedF&P Manufacturing Inc.Falcon Tool & Die (1979) Ltd.Flex N GateFreeway Washer LimitedH. Paulin & Co. Ltd.Hematite ManufacturingHuzura Manufacturing Ltd.KSR International Inc.Lanex Manufacturing Inc.Magna International Inc.Martinrea International Inc.Marwood Metal FabricationMatcor Automotive Inc.Maxtech Manufacturing Inc.MetriCan Stamping Co. Inc.MultimaticODG GroupOmega ToolOmron Dualtec Automotive Inc.Samuel AutomotiveSinterisThe NARMCO GroupThe Woodbridge GroupTierconVan-Rob Inc.Vari-FormWarren IndustriesWEGU ManufacturingWindsor Mold GroupWoodstock Stampings Inc.Yachiyo of Ontario Manufacturing

SAFETYABC GroupIntertec SystemsMagna International Inc.Quality Safety Systems Co.Tyco Electronics Canada Ltd.

ELECTRICAL & ELECTRONICSCommercial Spring and Tool Co.D&V Electronics Ltd.DBGDenso Manufacturing CanadaDigital DashIntertec SystemsInvotronicsKasai Canada Inc.KSR International Inc.Magna International Inc.Omron Dualtec Automotive Inc.QNX Software SystemsSchukra Of North America Ltd.Spatial ViewTyco Electronics Canada Ltd.Van-Rob Inc.Windsor Mold Group

Canada has Suppliers in Every Product Category


Canada Supply Base is Second to None

Top OEM Supplierswith Plants in Canada

Global Rank 2011#2 Denso (Japan)#3 Continental (Germany)#4 Magna International (Canada)

#5 Aisin Seiki (Japan)

#6 Faurecia (France)

#7 Johnson Controls (U.S.)

#10 Delphi (U.S.)

#12 TRW (U.S.)

#13 Lear (U.S.)

#17 Toyota Boshoku (Japan)

#20 Autoliv (Sweden)

#22 Visteon (U.S.)

#35 Toyoda Gosei (Japan)#37 Brose (Germany)#54 Nemak (Mexico)#56 Flex-n-Gate (U.S.)

#76 Linamar (Canada)

#78 Martinrea (Canada)Source: Automotive News

● Many of the largest global suppliers have facilities in Canada, along with steel and other material producers

● Some of the biggest and most capable suppliers are Canadian-based including ABC Group, AGS Automotive, Linamar, Magna, Martinrea, Multimatic, Valiant, Wescast and Woodbridge Foam

● Other Canadian companies – such as Ballard, QNX Software and Westport Innovations – are recognized global leaders in their field

● Assemblers and Tier 1s in Canada also have access to supply chains in the U.S. and Mexico


For Example, Ontario is a Significant Player in the NAFTA Auto Parts Industry

Share of NAFTA Parts Shipments, 2009

Source: Statistics Canada, US Bureau of Economic Analysis

• Ontario parts firms are leaders in the development of innovative components, such as, stampings, modules and systems, & lightweight and composite materials

19.4%

10.7%

9.9%

9.8%

6.5%

6.1%

3.9%

3.9%

3.4%

3.4%

Michigan

Ohio

Ontario

Indiana

Tennessee

Kentucky

Alabama

North Carolina

South Carolina

California


Areas of Automotive Expertise

Information and Communications Technology• Software engineering• Navigation and positioning• Wireless technologies and networks• Microchip design, system-on-chip, engineering• Semi-conductor technologies (MEMS, RF)• Telematics, communications• Micromachining• Intelligent systems• Photonics and optoelectronics• Nanotechnology• Enhanced synthetic vision

Advanced Design, Visualization and Manufacturing• Inspection and vision systems• Laser imaging• Tooling and robotics• Stereo-lithography, laser deposition• Virtual design

Metal Processing• Advanced casting of light metals• Cutting and machining• Sheet and tube forming• Welding and joining• Powder metallurgy

Advanced Materials• Lightweight materials• Nano-materials• Bio-materials

Advanced Technologies• Mechatronics• Powertrain engineering• Clean diesels• Homogenous charge compression ignition• Fuel cells, hydrogen and alternative fuels


Canada Has Highly Educated and Multicultural Workforce

1 OECD. Education at a Glance 20092 International Institute of Management Development. World Competitiveness Yearbook 2010.3 World Economic Forum. Global Competitiveness Report 2010-2011

Canada ranks #2 in the G7 in terms of the availability of qualified engineers in its workforce, according to the IMD 3

The WEF ranks Canada #3 in a 139-country study on the quality of management schools 2

Canada ranks #1 in the OECD for its college completion rates (23.6% of working-age Canadians have graduated from college)1


Ontario has a Highly Educated Population

64

62

50

44

41

38

35

30

17

Ontario

Canada

Ireland

Japan

United States

United Kingdom

Germany

France

Mexico

Post-secondary Educational Attainment (%), Select Markets, 2010(Age 25-64)

Overall, 64% of Ontario’spopulation has completedpost-secondaryeducationUniversity: 30%College: 27%Apprenticeship: 7%

Note: Not all jurisdictions count apprenticeship as post-secondary education Sources: Statistics Canada and OECD, 2012


Ontario is a Leader in Recruiting and Retaining a Highly Skilled Workforce

Rank City

1 New York City

2 Toronto

3 Singapore

4 Montreal

4 London

6 Los Angeles

7 Boston

8 Chicago

9 Vancouver

9 Copenhagen

9 Hong Kong

Out of 131 global cities examined, Toronto ranked second for low risks associated with employment and redeployment.

Canada’s strengths are derived from strict enforcement of equal opportunity laws, clear government-mandated health and retirement benefits, low levels of corruption, and the high quality and broad availability of training facilities.

Overall People-Risk Rankings, 2012

Source: AON Consulting, 2012


● Among major auto producing nations*, Canada:• has the highest quality of life;• has the second lowest cost of

living and the lowest apartment rents;

• is among the safest places to live and do business; and

• is among the least afflicted by pollution.

● Other Canadian advantages include:• high-quality, low-cost education;• universal health care; • cosmopolitan cities; and• Multi cultural society

* US, Canada, UK, France, Germany, Spain, Korea, Japan, Mexico, China

World Rank - Quality of Life Factors

8th

25th

15th

12th

10th

20

19th

17th

54th

18th

27th

Source: IMD, World Competitiveness Yearbook 2006

US=1.00

Canada is a Great Place to Live!


RESEARCH & DEVELOPMENT


Snapshot of Automotive R&D in Canada

● Annual R&D spending in the motor

vehicle and parts industry averaged $450

million in the last decade

● Over 1,400 auto-related patents granted

to inventors based in Canada.

● Expertise in light weighting, biomaterials and

composites, advanced safety systems,

software and the “connected car”, alternative

fuels (particularly EVs), vehicle testing, and

more

● Focus on private and collaborative R&D

Climatic wind tunnel at UOIT-ACE

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012$0

$100

$200

$300

$400

$500

$600

$700

Source: Statistics Canada

Automotive R&D Expenditures

(in CAD$ millions)

average$450M/year


Automotive OEM R&D Centres

Ford Motor Company of Canada Ltd.• Ford Manitoba Extreme Cold Weather Test Facility (Thompson MB)• Ford Powertrain Engineering Research & Development Centre (Windsor ON)

Chrysler Canada Inc.• Automotive Research & Development Centre (Windsor ON)

General Motors of Canada Ltd.• GM Canadian Regional Engineering Centre (Oshawa ON)• GM Cold Weather Development Centre (Kapuskasing ON)

Honda R&D Americas Inc. (Canada)• Environmental testing laboratory (Dartmouth NS)

Toyota Canada Inc.• Toyota Canada Cold Weather Research Centre (Timmins ON)


Generous R&D Tax Credits/Programs

Scientific Research & Experimental Design● SR&ED is a generous federal tax credit which encourages businesses in

all sectors to conduct R&D in Canada● SR&ED is worth $3 billion/year for the manufacturing sector

Industrial Research Assistance Program● IRAP helps support innovative R&D and commercialization of new

products and services by small- and medium-sized firms

Automotive Partnership Canada● APC is a five-year, $145 million program that supports collaborative

university-industry in four areas: environmental performance, the cognitive car, next-generation manufacturing, and social sciences

Automotive Innovation Fund● AIF is a 10-year, $500 million program designed to lever large ($75M or

more) investments in vehicle assembly, powertrain and R&D operations that focus on innovation and environmental technologies


World-class R&D Institutes/Universities

National Research Council - Automotive● Network of 20 research institutes, many specializing in automotive-

related disciplines such as light materials, aerodynamics, alternative propulsion, sensors and telematics

CanmetMATRIALS● National laboratory (Hamilton and Calgary) run by Natural Resources

Canada for metals, materials and processing research in support of manufacturing innovation

AUTO21● National network of centres of excellence for automotive R&D,

regroups 200 researchers from 46 universities to conduct applied R&D in partnership with private companies

Magna-NRC Composites Centre of Excellence

● Research centre to develop coEmposite technology for the Canadian and global automotive industries


World-class R&D Institutes/Universities

Fraunhofer Project Centre @ Western● Research centre and industrial-scale test facility focused on composite

technologies for weight reduction at Western University (London ON)

MacAUTO● McMaster University Institute for Automotive Research and Technology

(Hamilton ON): The University’s numerous automotive-related research institutes and centres work with industry, government and academic partners in developing and commercializing new technologies and materials that will ensure the global competitiveness of Canada’s auto industry.

UOIT-ACE● Automotive Centre of Excellence at the University of Ontario Institute of

Technology (Oshawa ON)

WatCAR● University of Waterloo Centre for Automotive Research (Waterloo ON)

University of Windsor● Automotive engineering specialization and research partnerships, such as

AUTO21 and Chrysler’s ARDC


Government Supported R&D Centres Located throughout Ontario


Ontario’s R&D Cost Advantage

-1.1

-5.4

-23.4

5.2

9.1

9.1

0.0

0.4

10.7

12.7Netherlands

Canada

France

Ontario

UK

Germany

US

Italy

Australia

Japan

R&D Cost Advantage (%) After-Tax Cost of $100 R&D Expenditure, Small and Medium Sized Manufacturers, 2012

R&D expenditure

(general)

R&D expenditure

(at eligible Ontario research institutes)

Gross expenditure

$100.00 $100.00

Actual after-tax expenditure

$51.57 $40.11

Note: data as of April 13, 2012.

Sources: Ontario Ministry of Finance and Canada Revenue Agency

Ontario has a 9.1% cost advantage

relative to the US

Source: MEDI analysis, prepared using CompetitiveAlternatives.com Cost Model, 2012 version, accessed on March 30, 2012.


Benefits of Collaboration

• Mitigates the risk of innovation

• Allows the inclusion of expertise outside a companies

historic strengths

• Widens the reach of expertise

• Provides access to a wider scope of funding

• Takes advantage of embedded relationships and contacts

• Expands the scope of available facilities and equipment

• Both sides benefit from new ideas


NEXT GENERATION

VEHICLES


Position to Take a Leading Role in the Development of the Next Generation of Vehicles• Automakers are developing a broad spectrum of alternative, environmentally friendly

vehicles, especially electric vehicles (EV), among other technologies i.e. advanced hybrids, CNG, fuel cells etc.

• The government has partnered with a number of firms in order to position the province to take a leading role in vehicle electrification and lightweighting, including:

$16.7 million for Electrovaya of Mississauga (Ontario) to develop and manufacture lithium-ion batteries

$48.4 million for Magna International and Magna E-Car to develop advanced lightweighting technology, electrification of vehicle components and battery development.

$2 million for Dana Canada to develop ‘Thermal Management Systems’ for hybrids and electric vehicles

$70.8 million to Toyota Motor Manufacturing of Canada on a spectrum of initiatives, including production of the RAV4 EV


At The Forefront Of Next Generation Vehicle Technologies Research

• Researchers in Ontario’s network of universities and specialized institutions are conducting leading research in advanced manufacturing and alternative energy:

McMaster Automotive Resource Centre (MARC) is leading hub of advanced automotive research and development. Ali Emadi, director of MacAUTO is the holder of the $10-million Canada Excellence Research Chair in Hybrid Powertrain and is one of the world’s foremost developers of electric and hybrid powertrain technologies

AUTO21 partners with the public and private sectors and supports more than 300 researchers across Canada in a variety of auto-related research projects

WatCAR, an automotive research centre at the University of Waterloo, is focused on leading-edge studies to enhance automotive innovation and competitiveness

University of Ontario Institute of Technology’s General Motors of Canada Automotive Centre of Excellence is a state-of-the-art research facility (including a climatic wind tunnel) created to further R&D in the Canadian automotive industry

Magna-NRC Composite Centers of Excellence, supports the Canadian automotive industry in developing next-generation vehicles with lighter, more durable parts, that are safe, affordable, environmentally friendly, and fuel efficient


Government Actively Supports the Auto Industry

• Ontario has made important investments to support the auto sector and to improve the overall business environment in the province, including:

Strategic Investments: In 2011 Ontario invested $121.2 million in innovative automotive initiatives with Dana, Magna International, Magna E-Car and Toyota

Ontario Automotive Investment Strategy (OAIS): A $500 million, 5-year fund leveraged about $7.8B in total investment in the sector

Restructuring of GM and Chrysler: Ontario committed $4.8 billion to the restructuring of GM and Chrysler

Next Generation of Jobs Fund: Provided support to a number of automotive firms, such as Ford, Electrovaya, Mitchell Plastics and Alcohol Counter Measures


• Commitment to fight climate change and improve air quality The Ontario government aims to have one out of every 20 vehicles driven in

Ontario to be electrically powered by 2020, this would support the greenhouse gas emissions target for 2020 set out in our Go Green Action plan. Contribution may be up to 0.6 MT (600,000 tonnes) of GHG savings by 2020

• Reducing the environmental impact of the Ontario government’s operations Commitment to purchase 500 electric vehicles for the Ontario Public Service

(OPS) passenger fleet by 2020 Contributes to the OPS goal of an annual 5% reduction in fuel consumption

• Supporting alignment and direction of Ontario’s auto sector ‘Greener’, more sustainable and more competitive with a strong focus on

high value- added development and production of innovative auto parts and technologies

• Supporting the government’s research and innovation agenda Programs applicable to the research, development and commercialization of

electric vehicles and their components parts

Government Commitments


The Government of Ontario has been active in encouraging consumer adoption of Electric Vehicles (EVs).

Developments include:

Consumer Incentives: Rebates of $5,000 - $8,500 offered to consumers to purchase electric vehicles

EV Infrastructure Fund: On May 4th 2012, Ontario released a Request for Information (RFI) on electric vehicle infrastructure, including home and public charging. The RFI closed on June 4th 2012. The RFI results are currently being analyzed

Access to High Occupancy Vehicle (HOV) Lanes: EVs are provided “green” license plates for EVs to drive in commuter lanes (HOV) with one occupant

Ontario is establishing a series of charging locations at GO commuter train stations in the Greater Toronto Area (Aurora, Lincolnville, Whitby in 2011 and Ajax, Erindale, Oakville, Burlington in 2012)

Commitment to Getting Electric Vehicles (EVs) on the Road


OUTLOOK, CHALLENGES AND OPPORTUNITIES


Light Vehicle SalesCanada and NAFTA, 1990 - 2013

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

0

2

4

6

8

10

12

14

Canada

NAFTA

Canada %

1999-2007: 19-20 mil. unit NAFTA market for new light vehicle sales; Canada @ 8% of NAFTA LV sales

2008-2011:Canada outperformed NAFTA as overall sales collapsed; Canada @ 11% of NAFTA light vehicle demand

2012-2013+: Recovery and organic growth (Mexico and Canada)

Unit Sales (Mil) Canada % of NAFTA

Source – Wards/AMIP/AutomotiveCompass


Light Vehicle ProductionCanada and NAFTA, 1990 - 2019

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

18000000

20000000

0

2

4

6

8

10

12

14

16

18

20

Canada

NAFTA

Canada %

Unit Production (Mil) Canada % of NAFTA



NAFTA LV Production by JurisdictionOntario, Michigan, Mexico Volume Trends (Mil), 2000-2019

Mexico B-car/CUV growth from Ford, GM, Nissan, Honda, Toyota, Mazda; C-car and CUV from Volkswagen

Michigan B/C/D/E/F/S, CUV and SUV growth from GM, Ford, Chrysler

Mexico (2008+) and Michigan (2014+) auto output (new investment driven) growing sharply as Ontario declines

Unit Production (Mil)



Top 10 Auto Supplier Trends

6. Supply-Chain Transformation

1. Customer Facing Focus

Increasingthe Value

of theBusiness

10. Core Competencies

9. Systems & Modules

8. Globalization

7. Resource Pressure

2. Growth

3. Cost Reduction

4. Technology

5. Brand Management


Sources of Automotive Growth

Products

Key Sources of Growth

Recovery Geography

New/Replacement Products

New/Replacement Processes

Vertical Integration

M&AJVs

Marketing

GlobalCrises


Megatrends

New NAFTA Environmental Regulations

• Smaller, lighter vehicles, with upgraded fuel-efficient powertrains

• Will people want to drive much smaller vehicles? Will vehicle profit be high enough to justify investment?

• 2017-2025 standards require a 65% improvement in fuel economy over current levels.

• Higher consumer ownership and operating cost.

• Will consumers accept paying more … possibly much more … for transportation?

• How do we as suppliers support global platforms and still look after local business opportunities?


NAFTA Auto Outlook

Key drivers, enablers and constraints2013 2014-

16

– Employment/Income Growth

– Driving Age Population Growth

– Age of Fleet

– Ownership and Operating Cost

– Affluence/Financial Stability

– Technology

– Fuel Economy Regs

– Supply Chain ConstraintsSource: AutomotiveCompass


Challenges for Canada

• High Exchange Rate

• Low investment in new production facilities

• Fiscally conservative governments at all levels

• High infrastructure costs – energy, environment

• A Southern production migration

• Adaptation of global platforms

• A conservative attitude

• Lack of overall confidence


Canadian Advantages

• Health care costs

• Stable, business-oriented environment

• Productivity

• Quality

• Resources

• Infrastructure

• Tax structure

• Highly skilled labour/well-educated workforce; positive work ethic

• Strong product and technology mix

• Strong supply-base

• Modern and flexible manufacturing facilities


Bridging the Innovation Gap

• Innovation is the key to long term success

• Applies to products, processes, tooling, systems

• It implies a commitment to product excellence

• OEM pulling technology rather than suppliers pushing

• Key Organizations that make it happen (private, associations & government)

• A commitment that the Automotive Industry is an essential and critical industry that always receives primary attention


Collaboration with Academia

• Unprecedented amount of technical change in the next 10-12 years

• Industry cannot get there on its own

• Collaboration is the only alternative

• Must have access to advanced research capabilities

• It will create an unprecedented demand for HQP (highly qualified personnel) and Technological Capability

• Opportunities for new manufacturing processes and procedures are abundant

• Manufacturing shapes our future!!!


Challenges for Industry

• Protecting Intellectual Property

• Protecting manufacturing and product “secret sauce”

• The publish or perish imperative

• Adhering to automotive industry timing requirements

• Adhering to cost containment issues

• Location of facilities in proximity to manufacturing or engineering sites


Episode IV – A New Hope

• Innovation must be our priority

• Encouraging progress that supports this initiative

• MARC Engineering Center

• CANMET Hamilton

• WatCAR Engineering Center

• UOIT Wind Tunnel and Facilities

• Embrace a new model that encourages public private partnerships (P3) that will drive innovation

• Be open to learning from around the world

• Be great partners – the commitment to excellence

• A unique Canadian Identity


Connected Vehicle

CUTACanadian Urban Transit

Association

ITS CanadaIntelligent Transportation

Systems

APMAAutomotive Parts

Manufacturers

AcademiaUniversity Researchers

GovernmentFederal & Provincial

CTA – OTACanadian & Ontario

Trucking Associations

EMCElectric Mobility

Canada First RespondersPolice/ Fire/Ambulance

The Connected Vehicle - Canadian Stakeholders

64

THANK YOU !

JERRY SUYAVONGEmail: [email protected]: jerry.suyavongMobile: +1 (647) 709-7122

2. jerry suyavong canada auto industry 2013 - for pro export colombia

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