Though every company has its own unique story in the current fiscal climate, two major players in the parts and logistics segment of the automotive industry say they’re adequately shored up and weathering the latest storm created by the lower value of the Canadian dollar.
On the parts manufacturing side, Linda Hasenfratz, CEO of major Canadian drivetrain components producer Linamar, says that the Guelph, Ontario, based company has enough back-and-forth flow of U.S. dollars to stem the tide.
“We’ve always been pretty close to naturally hedged,” Hasenfratz explains. “We have a fair chunk of revenue that comes in Canadian dollars and we have some in U.S. as well.
“We also have a lot of U.S.-dollar expenses because we buy most of our castings and forgings in the U.S., and we pay in U.S. dollars for most of our capital equipment and a lot of our tooling,” she said in an interview with Automotive News Canada.
“As a result, the in-flow and out-flow of U.S. (dollars) is pretty close. It’s not exact; in the past we’ve actually been fully naturally hedged. At the moment we have a small amount of excess U.S. dollars, so that means we’ve got a bit of a tailwind but not much. So, the impact to us is minimal.”
Different companies will operate under different financial strategies in times such as these, but Hasenfratz feels that Linamar’s is keeping the manufacturer on firm footing.
“In my opinion, I’m happy with (it),” she says. “I’m not getting a windfall, but at the same token I don’t get hit between the eyes when it goes the other direction. So, I prefer to keep the natural hedge happening or as close to it as possible.”
On the logistics side of the supply chain, Dawna Peat, responsible for strategic development for TFT Global based in Ingersoll, Ontario, explains that her firm’s model is also remaining steady through the dip in the Canadian dollar, but it’s for a different reason.
Costs up for all
“It really doesn’t impact on us,” she says. “Supplies and major expenses like material handling equipment and so forth have increased, but that also increases for our competitors. We haven’t found that our competition has been able to do any better pricing-wise, and we definitely have still continued to see a steady growth in our company.
“So, other than the fact that our costs have gone up – but like I said, those costs go up for everybody – there really haven’t been any major impacts that we’ve seen at this time.”
The automotive parts and logistics industries in Canada are still facing pressures from a number of sides. Stock value downgrades in the wake of the U.K.’s Brexit vote and concerns over the impending impact of the Trans-Pacific Partnership have raised concerns, as has the shift in vehicle manufacturing to the southern United States and Mexico.
However, at least in these cases, this time around parts and logistics providers are finding that the lower Canadian dollar has been a manageable factor.