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2019 Election| Manufacturing| Automotive| July 2019
The automotive sector is crucial to the economy, impacting consumer spending and trade among Canada, the USA, and Mexico, while facing challenges like trade deficits and technological advancements. The sector has seen shifts in production, with jobs moving to regions like Mexico, and electric vehicle adoption and production rationalization are major trends. Key issues include labor laws, carbon taxes, and high electricity costs affecting competitiveness, necessitating a partnership with the federal government for better support.
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2019 Election| Manufacturing| Automotive| July 2019
- 1. AUTOMOTIVE SECTOR – BY: PAULYOUNG CPA, CGA DATE: AUGUST 2, 2019
- 2. PAUL YOUNG -BIO • CPA, CGA • Academia (PF1, FA4 and MS2) • SME – Risk Management • SME – Close, Consolidate and Reporting • SME – Public Policy • SME – Financial Solutions • SME – Supply Chain Management Contact information: [email protected]
- 3. SUMMARY • Automotive sectoris key area of the economy as it drives both consumer spending as well as trade between Canada, USA and Mexico. • Automotive sector always rationalizes production based on demand and/or change in product cycles
- 4. AGENDA Source - http://business.financialpost.com/news/economy/canadas-reliance-on-foreign-financing-grows-as-exports-tumble •Introduction • 2008 vs 2018 Production • Automotive Sales and Production Volume • Plug-in Vehicle Sales – October 2017 • Ontario Plug-In Vehicle Program • Norway / Electrical Cars • NAFTA and Automotive • Horwath and GM • GM Stock Sale • CAMI Layoffs • Ford Canada downsizing
- 5. INTRODUCTION • Automotive sectorhas changed over the past 15+ years due to many factors • Trump has put allot focus in fixing trade deficits - https://www.economist.com/finance-and- economics/2019/05/08/donald-trumps-trade-war-hots-up • Flexible manufacturing - https://www.autonews.com/article/20181101/OEM01/181109993/japanese- carmakers-weapon-of-choice-in-trump-trade-war-flexible-factories • Hydroforming - https://www.thefabricator.com/article/tubepipefabrication/automotive-hydroforming- project-goes-start-to-finish-without-a-hitch • Robotic welding - https://www.prnewswire.com/news-releases/the-robotic-welding-market-is-projected-to- grow-at-a-cagr-of-8-91-from-2018-to-2023--300681306.html • More automotive production has moved to areas like Mississippi, Alabama, Texas and Mexico • Electrical vehicles have had slow adoption • Advance technology like 3-D printing continues to expand into automotive - https://3dprintingindustry.com/news/3d-printing-automotive-industry-3-132584/ • Unifor and UAW have never address changes in technology on the workplace.
- 6. AUTOMOTIVE PRODUCTION SOURCE – WARD AUTOMOTIVEAND SCOTIABANK AND BMO
- 7. ELECTRICAL CAR MARKET •Source: https://cleantechnica.com/2016/06/05/electric-car-sales-increased-42-globally-q1-2016/ or https://www.theguardian.com/environment/2016/oct/13/electric-car-sales-set-to-pass-2m- landmark-globally-by-end-of-2016
- 8. ELECTRICAL VEHICLE SALES Source- https://insideevs.com/july-2018-plug-in-electric-vehicle-sales-report-card/ or https://www.desrosiers.ca/sales/ or https://www.scotiabank.com/ca/en/about/global- economics/global-auto-report.html or https://insideevs.com/monthly-plug-in-sales-scorecard/ or http://www.ev-volumes.com/ Total USA vehicle sales 17.1M or about 1.5% of new vehicle sales are electric https://insideevs.com/decemb er-2018-u-s-plug-in-ev-sales- report- card/https://insideevs.com/ne ws/347358/ev-sales- scorecard-april-2019/
- 9. ELECTR ICAL VEHICL E SALES Source -https://insideevs.com/july-2018-plug-in-electric-vehicle-sales-report-card/ or https://www.desrosiers.ca/sales/ or https://www.scotiabank.com/ca/en/about/global-economics/global-auto-report.html or https://insideevs.com/monthly-plug- in-sales-scorecard/ or https://insideevs.com/us-plug-in-electric-car-sales-charted-november-2018/ or https://cleantechnica.com/2019/02/09/tesla-model-3-1-best-selling-electric-car-in-world-7-of-global-ev-market/ • Total USA vehicle sales 16.8M or about 1.8% vehicle sales being electrical
- 10. ELECTRICAL CAR RAW MATERIAL •Source - http://www.madehow.com/Volume-5/Electric-Automobile.html
- 11. ANATOMY OF ELECTRICA L CAR • Metals– Steel, aluminum, nickel, copper, • Rare Earths, vanadium, lithium • Rubber • Plastics,
- 12. ONTARIO PLUG-IN VEHICLES Source- https://www.thestar.com/business/2017/12/03/ontario-will-miss-its-2020- electric-vehicle-target-experts-say.html
- 13. NORWAY/ELECTRICAL CARS Source -https://www.theguardian.com/world/2018/jan/04/over-half- of-norways-new-car-sales-now-electric-or-hybrid-figures-show Incentives: • Tax Incentives - https://www.reuters.com/article/us-norway-budget- autos/norway-seeks-to-trim-lavish-electric-car-subsidies-idUSKBN1CH1PQ • Free Tolls (exempt) – $6,000/yr - https://www.reuters.com/article/us-autos- electric-analysis/road-to-electric-car-paradise-paved-with-handouts- idUSKCN1BW1AN
- 14. AUTOMOTIVE AND NAFTA Source- http://money.cnn.com/2017/11/28/news/economy/trump-car-companies-nafta/index.html
- 15. ISSUES FACING AUTOMOTIVE/ ONTARIO 1. Labour Laws (NDP/Liberals) - https://www.bnnbloomberg.ca/video/magna-takes-aim-at-ontario-over-the-cost-of-doing- business~1172261 2. Carbon tax - https://www.thestar.com/business/2016/10/04/how-trudeaus-carbon-price-plan-will-affect-five-canadian-industries.html “Truck and car plants don’t generate a lot of emissions, says Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, but some of their suppliers do and extra costs from a carbon tax would likely be passed along. That would hurt overall cost competitiveness with the United States and could lead to new or expansion plants — and associated jobs ” 3. CPP Hikes - http://haroldalbrechtmp.ca/for-immediate-release-canada-is-bleeding-manufacturing-jobs-and-it-is-only-getting-worse/ 4. Hydro Rates - https://www.theglobeandmail.com/news/national/high-electrical-costs-have-driven-thousands-of-manufacturing-jobs- from-ontario-report/article36610740/ “Using existing economic studies, Mr. McKitrick said the report estimated nearly two-thirds of the province's decline in manufacturing jobs since 2008 was due to elevated electricity prices, equalling about 74,881 jobs. Much of the decline was in energy-intensive industries like the paper sector, iron and steel facilities, and automobile manufacturing. 5. 3-D Printing - https://www.mbtmag.com/blog/2017/09/3d-printing-revving-auto-manufacturing “While the industry isn’t ready yet to offer on-demand cars, it is already showcasing next-generation models based on AM. Notable among them is a functional 3D printed model of the class Shelby Cobra sports car, made up of 20 percent carbon fiber and 80 percent thermoplastic resin. Printed at the Department of Energy’s Manufacturing Facility at Oak Ridge National Laboratory (ORNL), an estimated 75 percent of the vehicle’s parts are produced by additive manufacturing. ” 6. Global Production Rationalization - https://www.thestar.com/news/canada/2018/11/25/gm-to-announce-no-product-allocated-for- oshawa-plant-after-next-year-sources.html 7. USMCA content rules - http://canada.autonews.com/article/20181116/CANADA/181119781/usmca-content-rules-to-raise-production- costs-automakers-warn
- 16. GM STOCK SALELink - http://www.huffingtonpost.ca/2015/04/08/gm- share-sale-canadian-government_n_7024464.html Let’s see you quote Huffington Post, right? The article talks about buying shares for investment purposes, right? Government do not buy shares in companies that has never been their role. Government can buy shares in companies as part of pension plans, like CPPIB, but that is it. Secondly, I thnk you need to educate yourself on the bailout. Why was the bailout loans/shares done? It was done to help save Chrysler and General Motors as part of the global meltdown. The NDP that was under Layton made the bailout part of the stimulus package, right? I guess you miss that part of the automotive deal, right? http://www.theglobeandmail.com/try-it- now/?articleId=16760149 or http://www.theglobeandmail.com/try- it-now/?articleId=11167942. The bailout protected and saved jobs until 2016 - http://www.bloombergview.com/articles/2014-12- 17/did-the-auto-industry-learn-anything-from-the-bailout.
- 17. GM STOCK SALEThirdly,the government of Canada was committed to bringing in a balance budget as such made decisions with their investment holding and expense management. You seem to ignore the fact government sets priorities, like Martin did in the 1990s. Martin ran surpluses via cutting government spending as well as taking money from EI. Yet, Harper makes a few decisions with regards to investment then you call him and idiot, right? Here are some factors from the government documents that for some reason you did not read 1. 2009-2010 Budget - http://www.budget.gc.ca/2009/pdf/budget- planbugetaire-eng.pdf - page 24 discusses the automotive loans - Offering short-term repayable loans to the automotive sector in collaboration with the Ontario and U.S. governments or page 82 The Government, through EDC, has contributed almost $3 billion in short- term loans to support the automotive industry in Canada. 2. GM file for bankruptcy protection as it restructured its business - http://www.cbc.ca/news/business/car-giant-gm-files-for-bankruptcy- protection-1.812398 3. Chrysler also filed for bankruptcy protection - http://www.forbes.com/2009/05/06/chrysler-gm-fiat-bankruptcy- opinions-columnists-nouriel-roubini.html 4. Ford never asked for bailout
- 18. GM STOCK SALE Whatas the value the government recorded those shares on the financial Statements? http://www.thecanadianpress.com/english/online/OnlineFullStory.aspx?filena me=DOR-MNN- CP.ecd551301cb345bf829a8baced24da04.CPKEY2008111300&newsitemid=3 2623847&languageid=1 1. The government purchased the shares – “Late Thursday, a finance official said the shares were initially booked at a value of $15.31 per share.: 2. The government sold the shares for what price? http://www.bloomberg.com/news/articles/2015-04-06/canada-to-sell-final-73-4- million-shares-of-gm-from-bailout. It seems there was gain on selling the sales. 3. Government records revenue and expenses as such if the government is going to lose money on share offering then that would have meant a higher deficit. The government made money off the share value. 4. Chrysler paid back the loans - http://www.cbc.ca/news/business/chrysler- nears-7-5b-bailout-payback-1.1026704 5. GM - http://www.cbc.ca/news/canada/windsor/ottawa-doesn-t-regret- gm-bailout-1.880819
- 19. GM STOCK SALE Since2009 lots of things have happen to the automotive sector – see below information 1. Mexico is lead destination for new automotive investment - http://www.slideshare.net/paulyoungcga/key-industry-and-market-indicators-for- july-2015-canada-and-north-america-51666561 (See slide 9) 2. Canada’s input costs have risen in areas like Hydro - http://www.ghy.com/tradelines-news/chrysler-ceo-tells-kathleen-wynne-hydro- costs-making-ontario-too-expensive/ 3. GM/CAMI - http://www.cbc.ca/news/business/gm-plans-560m-investment-in-cami- plant-in-ingersoll-1.2954527 4. Chrysler Canada - http://www.cbc.ca/news/canada/windsor/chrysler-invests-2b-us- in-windsor-plant-for-minivan-and-hybrid-1.2897611 BTW: What leader is talking that he is the champion of manufacturing, right? It seems to me that Mr. Mulcair wants to raise corporate taxes for large corporation, right? What are Toyota, GM, Chrysler, Ford, etc.? The aforementioned companies are not small! http://www.cme-mec.ca/?lid=JCKNC-E742G-1W6JA&comaction=show&cid=HRH7K- 9UE34-ACUS8 FYI – I will not doing your analysis anymore for you. You make quick posts with a link a few buzzwords, but no analysis to support your opinion. You expect me to read the articles, right? Yet, you never read my links or information, right?
- 20. HORWATH AND GM •It is obvious that economics and cost pressures do not dawn on @andreahorwath. Ford has only so many things he can do to help business. @justintrudeau is the problem with his CPP Hikes or force carbon taxation or excessive regulations https://www.slideshare.net/paulyoungcga/business-competitivesness- canada-march-2019 • BTW: Where was Horwath when https://www.thestar.com/business/2014/05/08/magna_says_no_new_plants_for_canada_cites_ontario_energ y_costs.html or https://www.slideshare.net/paulyoungcga/automotive-whats-next-march-2019 • Or https://www.theglobeandmail.com/report-on-business/ontario-policies-could-put-auto-making-at-risk- fiat-chrysler-ceo-warns/article25418311/ https://torontosun.com/news/provincial/pc-government- could-have-helped-save-more-gm-jobs- horwath?utm_term=Autofeed&utm_medium=Social&ut m_source=Facebook&fbclid=IwAR2GCOeK_abLIcIDlA bk__vqtjyXv3qtdcYKlB3Y- G77MHiaed94NBZWt1Q#Echobox=1557376673
- 21. BLOG – AUTOMOTIVE •https://torontosun.com/opinion/columnists/lilley-ford-government-strives-to-attract-new- auto-plants • @ToddSmithPC I have already discussed the issues with competitiveness. https://www.slideshare.net/paulyoungcga/2019-election-automotive-ontario-and-canada- may-2019 @fordnation @VicFedeliMPP need a partner in Ottawa which will never happen under @JustinTrudeau as he hates anything related to Manufacturing! •
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- 24. WHAT’S NEXT • Investment intoelectrical hybrid cars - https://www.reuters.com/article/us- autoshow-detroit-ford-motor/ford-plans-11-billion-investment-40-electrified- vehicles-by-2022-idUSKBN1F30YZ • Automotive slow down and product rationalization - https://safehaven.com/commodities/industrial-metals/The-Global-Auto-Industry- Is-Feeling-The-Trade-War-Burn.html • Too many countries are imposing more taxation and regulations masked as they are helping the environment when they are not. Govts around the world need to get their fiscal house in order including taxation and regulatory processes. • Auto manufacturers continue to adjust production capacity https://www.industryweek.com/leadership/fiat-cuts-1500-jobs-canada-plant- dials-back-minivan-output?NL=IW-07&Issue=IW-07_20190329_IW- 07_652&sfvc4enews=42&cl=article_2_b&utm_rid=CPG03000001519274&utm_c ampaign=33784&utm_medium=email&elq2=07a01629797f485ea055462bea36ca 0a or https://www.cnn.com/2019/03/27/business/ford-russia/index.html • Donald Trump continues to look at ways to correct the trade imbalances with countries around the world • Ontario needs a partner in Ottawa that supports tax fairness and a reduction in regulations.