Skip to main content
Sister Publication Links
  • Automotive News
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
Subscribe
  • Subscribe
  • login
  • HOME
  • News
    • News by Brand
    • Auto Shows
    • Canadians Abroad
    • Photo Galleries
    • Automakers
    • Suppliers
    • Retail
    • Dealer Best Practices
    • Government Relations
    • Trade and Tariffs
    • Technology
    • Labour
    • Aston Martin
    • BMW
      • Mini
      • Rolls Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ferrari
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Kia
    • Mazda
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Fiat Chrysler
      • Jeep
      • Fiat
      • Lancia
      • Maserati
      • Ram
    • Subaru
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
    • Volvo
    • VinFast
    • Toronto Auto Show
  • Opinion
    • Blogs
  • Video
  • Podcasts
  • EVENTS & AWARDS
    • 2022 Auto News Canada All-Stars
    • 2022 Canadians To Watch
    • Notable Champions of Diversity
    • Best Dealerships To Work For
    • Canada Congress
    • Retail Forum: Dealer Discussions
    • Leading Women Roundtables
    • Embracing Diversity Roundtable
    • Embracing Diversity Roundtable Volume 2
    • EVs Decoded
    • 2023 Best Dealerships To Work For nominations
  • Jobs & Classifieds
  • +MORE
    • IN THE DRIVER'S SEAT
    • NEWSLETTERS
    • SUBSCRIBE
    • CLASSIFIEDS
    • PEOPLE ON THE MOVE
    • COMPANIES ON THE MOVE
    • WEBINARS
    • ADVERTISE WITH US
    • CONTACT US
    • DIGITAL EDITION
    • PUBLISHING PARTNERS
MENU
Breadcrumb
  1. Home
  2. Suppliers
January 13, 2020 12:00 AM

Canadian auto suppliers pushed to U.S.

John Irwin
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Bloomberg

    Canadian suppliers say they are being pulled by the gravity of U.S. President Donald Trump’s protectionist policies.

    Government support, logistics and politics all played roles in an Ontario injection moulder’s decision to open a $20-million plant in Ohio rather than expand in the province, and it’s not alone in feeling the heat to invest south of the border. 

    Axiom Group Inc., based in Aurora near Toronto, said in November that it planned to open its first U.S. manufacturing operation in an Ohio industrial park, building plastic injection-moulded parts for Jeep models assembled at plants in Michigan. The company, whose major customers include Fiat Chrysler, Volkswagen and Tesla, has cited incentives, logistics and U.S. economic and trade policies as reasons for the move. 

    “We’re already in Ontario and Mexico, and we were getting some pressure to have a presence in the United States,” said Chris Moschopedis, Axiom vice-president of corporate strategy. Axiom employs 300 people, including 80 in Mexico. 

    The adoption of just-in-time parts delivery is also at play. As automakers invest in the United States and Mexico they are likely to want suppliers nearby, meaning Canadian companies have to invest in the vicinity of new plants. 

    “Suppliers feel pressure to locate near where their customers are, and that’s become a more important thing as [automakers] look at the entire value chain,” said Julie Fream, CEO of the Original Equipment Suppliers Association (OESA) in the United States. 

    FINANCIAL, POLITICAL FACTO 

    Ontario has lost out on potential investments in recent years as companies are lured to invest south of the border. Jurisdictions in the United States and Mexico frequently have lower wages than those in Canada, while U.S. states are often eager to provide financial support, real estate and other incentives. 

    In Ohio, Axiom is receiving “significant support,” Moschopedis said. JobsOhio, a nonprofit that seeks to attract investment to the state, will prescreen people who apply for the 250 or so jobs at the plant, Moschopedis said. 

    “You don’t have that kind of support in Ontario,” he said. 

    NO, CANADA 

    Just one new assembly plant has opened in the country since 2000, while numerous new plants have landed in Mexico and the United States. And while automakers have invested in some of their existing Canadian operations, several factories have closed, including General Motors plants in Quebec and Ontario and Ford’s facility in St. Thomas, Ont. 

    Still, the federal and provincial governments have not been passive observers. Ottawa has doled out hundreds of millions of dollars in incentives to automakers’ Canadian operations over the years. In early 2019, the Ontario government released its Driving Prosperity plan for the auto sector, including proposals to cut red tape and help suppliers modernize their manufacturing operations. 

    Typically, the two levels of government cover up to a total of 20 per cent of an auto company’s investment. For example, the federal and provincial governments combined to provide $220 million in incentives to Toyota’s recent $1.4-billion investment in its Canadian facilities, or about 16 per cent of the cost. 

    U.S. states often go further. Toyota and Mazda will receive as much as US $700 million ($925 million) in state and local incentives for their US $1.6-billion ($2.1 billion) plant under construction in Alabama. Incentives, then, would cover about 44 per cent of total costs. 

    Axiom’s Moschopedis said the support offered by the provincial government pales to that offered south of the border and that applications can take years to fulfill. 

    FACTORS BEYOND GOVERNMENT INCENTIVES 

    “The government says it’s open for business, but there is still a lot of red tape [in Ontario] and not a lot of incentives.” 

    But, auto analyst Dennis DesRosiers said some of the factors that have made Ontario seem less attractive to automakers and suppliers are out of the government’s control, pointing to health care legislation in the United States as an example. 

    “We’re less competitive than we used to be, and it’s not necessarily because of lack of government aid,” DesRosiers said. 

    Moschopedis said Axiom chose to invest in Ohio, in part, as a way of “hedging our bets” on the new North American trade pact, which awaited ratification by the United States and Canada. 

    U.S. President Donald Trump’s protectionist trade leanings spurred the renegotiation of the North American Free Trade Agreement. The three countries agreed to modifications to the revised pact in December, paving the way for ratification.

    Political pressure from Washington can affect a company’s decision to invest there, DesRosiers said. And that is especially true in an era when Trump has taken to Twitter to criticize a company’s decision to invest outside of the United States, as he has since taking office in 2017. 

    “These companies are big multinationals,” he said, “and whether we like the man or don’t like the man, he’s in a very powerful position sitting in Washington to cause these companies a lot of grief.” 

    As suppliers sort out their futures, Moschopedis urged the Ontario government to meet with as many business leaders as possible to determine whether manufacturing is a part of the province’s economic future. 

    “Once upon a time, Ontario was the manufacturing heart of Canada,” he said. “Now it’s become IT and other knowledge-based [sectors], and obviously that was a strategic decision.” 

    RECOMMENDED FOR YOU
    Ford, GM, Volvo exhaust supplier Wescast closing Ontario foundry, Unifor says
    Recommended for You
    Wescast Industries
    Ford, GM, Volvo exhaust supplier Wescast closing Ontario foundry, Unifor says
    Doug Ford Funding Announcement
    Ontario spending $4.7M on free training in auto industry
    LG Energy Solution
    LG Energy Solution inks Ontario lithium supply deal with Green Technology Metals
    Achyut Jajoo, Rory Macleod
    Sponsored Content: Expert Insights: The Future of Connected Vehicles and Customer Experiences
    Digital Edition
    May 2023 Issue
    View latest issue
    See our archive
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up today for our Weekly Newsletter, Daily Newsletter and Breaking News Alerts. We'll deliver the news you need to know straight to your inbox.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Subscribe Now

    An Automotive News Canada subscription includes 12 monthly issues – delivered in print to your doorstep, and digitally to your inbox – plus unlimited, 24/7 access to our website.

    Subscribe Now
    Connect With Us
    • Facebook
    • Twitter
    • Instagram

    Our Mission

    The Automotive News Canada mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in Canada.

    Contact Us

    1155 Gratiot Ave
    Detroit MI 48207

    1-877-812-1257

    Email Us

    ISSN 2475-5001 (print)
    ISSN 2475-501X (online)

    Resources
    • About us
    • Contact Us
    • Digital Edition Archive
    • Advertise with Us
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Canada
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • News
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ferrari
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Kia
        • Mazda
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Fiat Chrysler
          • Jeep
          • Fiat
          • Lancia
          • Maserati
          • Ram
        • Subaru
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
        • Volvo
        • VinFast
      • Auto Shows
        • Toronto Auto Show
      • Canadians Abroad
      • Photo Galleries
      • Automakers
      • Suppliers
      • Retail
      • Dealer Best Practices
      • Government Relations
      • Trade and Tariffs
      • Technology
      • Labour
    • Opinion
      • Blogs
    • Video
    • Podcasts
    • EVENTS & AWARDS
      • 2022 Auto News Canada All-Stars
      • 2022 Canadians To Watch
      • Notable Champions of Diversity
      • Best Dealerships To Work For
        • 2023 Best Dealerships To Work For nominations
      • Canada Congress
      • Retail Forum: Dealer Discussions
      • Leading Women Roundtables
      • Embracing Diversity Roundtable
      • Embracing Diversity Roundtable Volume 2
      • EVs Decoded
    • Jobs & Classifieds
    • +MORE
      • IN THE DRIVER'S SEAT
      • NEWSLETTERS
      • SUBSCRIBE
      • CLASSIFIEDS
      • PEOPLE ON THE MOVE
      • COMPANIES ON THE MOVE
      • WEBINARS
      • ADVERTISE WITH US
      • CONTACT US
      • DIGITAL EDITION
      • PUBLISHING PARTNERS