Only three of Canada’s remaining seven plants build hybrid vehicles

Emily Jackson – Financial Post
November 28, 2018

As Oshawa grapples with General Motors’ plans to stop production at its century-old assembly plant, part of a larger restructuring so the automaker can instead invest in electric and connected vehicles, attention turns to Canada’s remaining seven auto plants.

Given GM’s willingness to shutter eight plants, including four in the United States, and bet $6 billion in annual savings on “future” technologies, industry watchers are questioning whether Canada’s auto production sector is prepared for a future in which electric or self-driving cars overtake traditional vehicles.

GM’s Oshawa plant accounted for 5.6 per cent of total Canadian auto production of just under two million and, despite its stature as an automotive hub, produced the smallest number of cars among the eight plants in Canada.

“Curiously, out of all of the announced closures, the Oshawa plant is the only one with flex capabilities (that is, the ability to manufacture both cars and trucks on the same line), something that would have seemed ideal were a manufacturer to shift its strategy towards light trucks and electrified vehicles,” said BMO in a report published Tuesday.

The remaining facilities still produce thousands of cars, not just the larger SUVs and trucks that today’s consumers prefer.

GM’s Oshawa plant accounted for 5.6 per cent of total Canadian auto production of just under two million. Cole Burston/Bloomberg

Honda of Canada Mfg.’s Alliston plant which makes the Civic and CR-V, accounts for 21.5 per cent of all Canadian auto production. Civic has been the best-selling passenger car in Canada for 20 years, according to Honda spokeswoman Laura Heasman, noting that the company recently invested $492 million to modernize the plant, which is capable of adapting.

Toyota Canada Inc. builds Corollas in Cambridge, while Fiat Chrysler Automobiles plant in Brampton makes the non-SUV suite of Chrysler 300, Dodge Charger and Dodge Challenger.

As for Canada’s position in electric vehicle manufacturing, three of the remaining seven plants build hybrid vehicles, including FCA’s plant in Windsor and Toyota’s plants in Woodstock and Cambridge. FCA spokeswoman LouAnn Gosselin said it makes the only plug-in hybrid minivan on the market, a van Alphabet’s Waymo intends to use for its self-driving fleet.

An auto worker works on a 2017 Chrysler Pacifica on the assembly line at the Windsor Assembly Plant. THE CANADIAN PRESS/AP, Carlos Osorio

Barry Cross, an operations professor at Queen’s University’s Smith School of Business, believes North America has reached “peak car.” Fewer young people are rushing to get their driver’s licences, ride-sharing is more popular and self-driving technology is improving, he said. Households that previously needed two or three cars may cut back to one.

“There’s a huge wake-up call associated with this right now,” Cross said.

On top of this, electric engines are “on the cusp of accessibility,” he said. To remain relevant in a world in which people are buying fewer cars, companies will have to build something “better, faster or cheaper” in order to survive, he said.

Still, Flavio Volpe, president at the Automotive Parts Manufacturers’ Association, is cautious about betting on electric vehicles.

When he worked at Ontario’s economic development ministry from 2007 to 2011, he said they chased “every single lead we could” on vehicle electrification. Back then, GM made a big bet on the Chevy Volt, which it decided to build in Detroit-Hamtramck. Yet that plant is one of the eight facilities slated for closure.

“Right now, the market for electric vehicles doesn’t support an assembly plant, let alone various assembly plants,” Volpe said.

Volpe believes it’s better for Canada to pursue expertise in connected vehicles, the technology that makes features such as telematics, weather, connectivity or advanced driver assistance. Canada is well-positioned to lead in this with thousands of tech companies in Ontario alone.

“The bet is connected technology,” Volpe said.

Canadian companies including Blackberry Ltd.’s QNX division are pursuing connected technology.

Meantime, BMO economist Doug Porter also questions how quickly electric vehicles will take off in the next 20 years. He said it’s possible that we are at peak car thanks to longer-term factors such as ride-sharing and more people living in the downtown core. But sales numbers still show a strong desire to own their own vehicles, Porter said.

“There’s still quite an appetite for motor vehicles,” he said.



Via: Financial Post