Chief among those drawbacks is Canadian manufacturing’s dependence on trade with the United States, which could make Canada far more expensive when the loonie and U.S. dollar have equivalent value.
“Some of the issues are pretty insurmountable,” Dziczek said. “Most of their products are sold to the U.S., so then you have a currency issue. You’d rather be building vehicles in the currency in which you’ll be selling them because over the course of just a few years, that currency calculation can change quite dramatically. And when Canada’s currency is at par with the [U.S.] dollar, Canada’s much more expensive, not just for labour, but for everything that you need to buy for a vehicle.”
She said another traditional advantage Canada had on health-care costs is shrinking in the automotive sector, in large part because the American auto workforce is much younger today than it was several years ago. “Younger workers have fewer family members, fewer health problems. Their hourly costs for health care is not as big of a gap as it once was, so it’s a smaller advantage these days.”
Walker told Automotive News in August that the company is keeping its options open when it comes to a North American assembly plant, though no decision has been made and it would depend on customer demand. He said the company was aware of brownfield and greenfield capacity in North America.
Magna Steyr, the largest vehicle assembly contractor in the world, was projected to build about 200,000 vehicles this year at its Graz, Austria, plant, which assembles the BMW 5 series, Jaguar I-Pace, Jaguar E-Pace and Mercedes-Benz G class. It was also slated to assemble the BMW Z4. In April, it inked a deal to develop a next-generation electric vehicle architecture for China-based automaker BAIC Motor.
The Graz site is reaching its capacity, thus the potential for a new plant, said Walker.
“We are over capacity in the next couple of years as we continue to launch new vehicles. If we continue to get business over at Magna Steyr, then we would expand to a second location.”
Despite concerns about Canadian auto manufacturing’s viability, economic-development officials continue to pursue new plants and investments throughout Ontario.
“Our government is sending the message that Ontario is open for business,” Sarah Letersky, a spokeswoman for Ontario’s minister of economic development, job creation and trade, said in a statement. “We will make Ontario more competitive and a better place to do business by stabilizing industrial hydro rates, cutting the corporate income tax from 11.5 per cent to 10.5 per cent, and cutting red tape and stifling regulations put into place by the previous government.”
Walker has not indicated whether Ontario’s revamped economic policy will have any effect on his decision to rule out Canada for new investment.
Economic-development officials in Ontario auto-manufacturing cities, such as Oakville and Windsor, wouldn’t say whether they would try to woo the Magna Steyr plant.
A spokeswoman for the WindsorEssex Economic Development Corp. said it is available to assist with investment analysis, help “cut red tape” and provide data for site selection, among other actions.
Dorothy St. George, the director of economic development in Oakville said it was “premature” to discuss whether the city would attempt to attract Magna Steyr, adding the company would need to lay out its business case for a new plant.
