Canadian auto sector still outperforming U.S. for now
By Michelle Collins | June 6, 2003
"Canadian auto industry shipments (assemblies and parts) climbed a solid 4.5% year-over-year in the first quarter, a much stronger performance than the meager 0.3% gain in the United States," says Carlos Gomes, Scotiabank's auto industry specialist. "Vehicle production in Canada is also holding up well, edging down only 1% below a year ago through April, in-line with the decline in the United States and a much better performance than the double-digit fall in Mexico."
Investment in the industry continues to be high in Canada it is well below the $3.1 billion annual average of the past decade. During this timeframe Canadian plants have had a five per cent advantage in productivity over their U.S. counterparts. However, increased capital spending coupled with the new assembly plants in the Southern States will boost American production by almost 50 per cent to 2.7 million units by 2006. Currently, Canadian plants are producing less.
"A recent report by the Auto Parts Manufacturers Association indicated that Canada still ranked third in global auto industry investment, behind China and the United States," adds Gomes. "However, capital expenditures are expected to fall 12% in 2003 to $2.8 billion, as both automakers and parts suppliers trim spending."
Employment in the Canadian sector also continues to be healthy with 12,000 new jobs being added. However, this area is also slowing down and may see decline in the coming months in an effort to eliminate excessive inventories. In comparison the U.S. manufactures have lost 16,000 jobs so far this year, bringing the total loss to 148,000 since early 2000.
The Canadian Auto Report is available online at http://www.scotiacapital.com/English/bns_econ/bns_auto.pdf.
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