December 11, 2019

Natashia Mierkalns has to move fast on the job.

Wiring electronics for a video module, or installing sensors, she is always moving and training, learning new skills to keep pace with technology on the job, she says.

Mierkalns is a 21st century auto worker, and we can forget those old clichés about auto workers doing low-skilled, repetitive labour.

“Cars have a lot more connections than they used to, but there is a lot of training, they are very good with training,” said Mierkalns, who has been at Cami four years.

“It has become very knowledge-based.”

Natashia Mierkalns works at CAMI Automotive in Ingersoll on Nov. 28, 2019. She works on electronics and is always training to keep pace with new technology on the job. DEREK RUTTAN / LONDON FREE PRESS

Welcome to the new automotive plant where demand for technology is driving change on the shop floor. To compete for future work, and keep what manufacturing we have, the factory of the future will be even more wired, say automotive industry observers.

The good news is that with Canadian workers’ skill set and the extensive research now ongoing across the country, we can compete, they agree.

“There is a heckuva lot going on,” said Grant Courville, vice-president products and strategy at Blackberry QNX, in Kanata near Ottawa, a leading technology supplier to the auto industry.

“I am bullish on it,” he said of the auto industry’s future in this country.

“We have talent across Canada that applies to the next generation of cars. We should be waving the flag and beating our chest.”

Simply put, the steady decline in auto assembly will continue, but likely stabilize as automakers want a presence here, albeit a smaller one.

Grant Courville, vice-president of product management and strategy at QNX, a BlackBerry subsidiary, with a completely autonomous test vehicle using all the engineering features they use for development of their software products. WAYNE CUDDINGTON / POSTMEDIA

But there will be growth in the parts sector, observers also predict, as Canada is well positioned with a skilled workforce and good research ongoing, to supply technology that will drive the sector.

Consider there are now more than 30 schools, businesses and centres doing automotive research across Canada and more than a dozen centres for research by automakers. That does not include the National Research Council doing work in advanced manufacturing research across Canada, also aiding the auto sector.

“There is a lot of focus right now on modernizing products. Everyone is excited about the advanced technology in vehicles,” said Flavio Volpe, president of the Automotive Parts Manufacturers Association.

“The jurisdictions that will win will be the ones that offer skilled employees, who can work in a field where technology will dominate vehicle production,” he added.

“There will be an overhaul of the entire production base and in 20 years, I will be surprised if Ontario is not (near) the top of that list.”

Tony Mancina, head of engineering, FCA Canada is shown next to an advanced driving simulator on Sept. 24, 2019, at the FCA Automotive Research & Development Centre in Windsor. DAN JANISSE / WINDSOR STAR

Parts makers and assembly plants all have modernization plans, and are focused on “continuous improvement,” he added.

But perhaps most importantly there will be demand for that innovation, said automotive analyst Dennis DesRosiers.

In the U.S. 97 per cent of people own cars, and in Canada 86 per cent. In Mexico, that number is only 20 per cent and Canadian industry will help supply the cars that more Mexicans will buy, he added.

“That could double to 40 million,” he said. “They may be buying a lot of vehicles. It is pretty positive and may mean strong growth for 20 years.”

There has also been a shift in recent years away from foreign-made nameplates. There are now 28 import nameplate plants in North America and the total of vehicles imported from overseas has dropped 15 per cent as a result.

The bottom line is, we are making more in North America than ever, and that will keep growing, said the analyst.

DesRosiers however also envisions a time when every manufacturer is reduced to one major assembly plant in Canada, meaning the Fiat-Chrysler Brampton plant may eventually close considering it makes large, muscle cars that are not the future of the industry.

“We might lose anywhere from 5,000 to 15,000 assembly jobs. But we may see growth in raw materials, tool and die, and stability and growth in the parts sector and significant growth in the retail sector,” said DesRosiers.

“Any jobs lost in vehicle assembly may be replaced two-or-three fold in other areas of the industry. The auto sector will survive nicely in Canada, even though assembly as sector skinnies up quite a bit.”

News last month that Ford is cutting an additional 450 jobs at its Oakville assembly plant, after eliminating 200 in the summer, and is ending production of two vehicles, the Flex and Lincoln MKX, appear to back him up.

Ford employees work on the line at an assembly facility June 3, 2008 in Oakville. SIMON HAYTER / GETTY IMAGES

Automotive assembly plants employ about 50,000 whereas the parts sector comes in at about 90,000.

The Conference Board of Canada agrees with DesRosiers, forecasting stability in auto production and employment until 2023. Of course, the auto industry has enjoyed solid growth over the last 10 years since the downturn in 2008 and 2009 rocked the industry.

Rebekah Young, economist and automotive analyst with Scotiabank, has a more direct description of how the next wave in automotive manufacturing will roll out for manufacturers.

“It will be adapt or die,” she said of the need for industry to innovate. “Industry will look very different.”

Along with a more wired, high-tech factory she also sees a need for manufacturers to embrace “greater versatility and adaptability.”

That means an assembly plant will have to move quickly to change its lineup including changing what vehicles it assembles, as factories will be called on to supply a fragmented market.

“It will follow consumer preferences at a much faster pace. In the long run there will be more automation and fewer workers, but more staff versed in IT (information technology) and less so around blue collar jobs,” said Young.

As for the long-term picture, she does not see a reversal of the downward trend in reducing automakers’ footprint in Canada.

“I don’t see anything that will bring full production back to Canada,” said Young. “There is a lot of focus now on the value chain, looking at parts and innovation and research and development,” as areas where there will be investment.

The industry is also seeing manufacturers and technology firms embrace the wired factory floor.

Kali Gawinski of Windsor wears a Motion Capture suit as she demonstrates motion capture virtual reality technology at the new Ford Ergonomics and Variation Analysis Lab (EVAL) July 17th, 2015 in Dearborn, Michigan. Since 2003 Ford has reduced the injury rate by 70 percent for its more than 50,000 assembly line workers in the U.S. and more around the world through new ergonomics technology, lift-assist devices, and workstation redesign. BILL PUGLIANO / GETTY IMAGES

“We are seeing collaborations with companies to overcome hurdles of new technology. There are new forms of partnerships. There is a need for versatile platforms.”

As for the auto parts sector in Ontario, it now produces more than $35 billion a year in goods and employs about 90,000, reported the Automotive Parts Manufacturers Association.

Volpe sees a shift in the long-term forecast for the sector here in Ontario, with workers moving more to advanced manufacturing, highly specialized work in the auto plants and a lot of what is now software and high-tech, will increasingly be part of the auto sector.

But he remains bullish, saying the employment will likely be stable but those workers will do more work, and do it differently.

The most critical factor, he believes, is that Ontario has the foundation of experienced, knowledge workers and infrastructure of an education system and existing industry, to keep the sector strong.

“It’s like running a baseball team. There’s no reason Ontario cannot be the New York Yankees. We have the elements to be in the game all the time,” he said.

“I see a future for the platforms that are here now,” he said of the vehicles assembled in Ontario.

“We have a business model that works, but we have to keep it fresh.”

New robots manufactured by Comau are pictured on the assembly line of the Fiat 500 BEV Battery Electric Vehicle, the first of its kind in Europe, during its inauguration at the Mirafiori plant in Turin on July 11, 2019. MIGUEL MEDINA / AFP VIA GETTY IMAGES

He predicts more robotics and artificial intelligence in plants but rather than fewer jobs, it may free workers to do other work that cannot be done by AI.

“As artificial intelligence and machine learning expands, productivity will not replace people, it allows them to do more. If there are 5,000 working in an auto plant today, in 15 years they may still be 5,000, but they will assemble more vehicles,” said Volpe.

“Leading automakers in Germany and Japan are committed to a collaborative manufacturing system and approach. Robotics doesn’t replace the human element, it maximizes what the operator will do.”

Robotics and artificial intelligence also have their limitations, namely speed and productivity. When demand for the Tesla 3 increased, the automaker had to shift away from robotics in its California plant to hire people in order to speed production, he added.

“Automation limited the plant. They had to adjust dramatically. How they adjusted was they hired more people,” said Volpe.

He also believes the new Canada U.S. free trade deal, the United State-Mexico-Canada Agreement or USMCA, ensures some work will go to areas paying a higher wage than Mexico, above $16 an hour and that will see more work for the U.S. — good news for Canadian suppliers.

“The USMCA has taken the shine off Mexico,” he said of a provision that states 40 per cent of parts in every vehicle have to come from plants where workers earn more than $16 an hour.

In the short term, five to 10 years, the parts sector will look largely as it does now, he forecasts.

In the longer term, say about 20 years, Volpe points directly to Canada having one of the largest IT business clusters in North America that has to do more work in the auto sector, “or risk being left behind,” he said.

A phrase being used widely now in the manufacturing sector is Industry 4.0, and it suggests how industry will transform.

Ionut Moldoveanu, a worker at Radix Inc., works with a collaborative robot used to work alongside workers, while on the shop floor at Radix Inc. on Oct. 30, 2019. DAX MELMER / WINDSOR STAR

Technology will play a greater role on the plant floor, increasing use of automation, artificial intelligence in production and using the “Internet of things” or IOT in manufacturing, a phrase explaining how machines wirelessly receive and exchange web-based data. Machinery embracing IOT can visualize production and make decisions on its own.

“Skills required now are so different than 20 years ago. If we digitize plants it requires a level of training the industry has not seen before,” said Volpe.

“The Germans lead the way on this. Canada must embrace it. It is about reacting quicker, building quicker and adapting quicker.”

Perhaps no other Canadian parts maker represents the future of the automotive industry in Canada better than Blackberry QNX. The former smartphone maker has been supplying automakers for 20 years and now has parts in 150 million vehicles, said Courville.

“The industry is moving toward automation, digital technology and electronics all causing a huge disruption in the industry. With that comes opportunity,” said Courville.

QNX makes software that helps run many vehicle systems such as security and operating systems, apps that are on display including OnStar and that electronic display system that Mierkalns installs, to name a few.

A Waymo autonomous vehicle is displayed at the Fiat Chrysler Automobiles booth during the 2019 CES in Las Vegas, Nevada on Jan. 8, 2019. STEVE MARCUS / REUTERS

“We provide foundational software for cars. Cars are the next big mobility platform, that is why Google and others are interested in cars now. Vehicles will become an extension of digital life.”

He cites GM Canada’s investment in a research and development test track in Oshawa after the assembly plant closes as an example of where the Canadian industry is headed. Even as the company shrinks its hourly and salaried workforce in Oshawa by about 2,000, the automaker is boosting its ranks of software engineers in Canada to 1,000, from 700.

He points as well to Ford having 400 staff in Ottawa working in software and hardware engineering, just as its cuts manufacturing workers.

Courville is also excited about the $80-million Autonomous Vehicle Integration Network spread across Ontario, in six cities including Stratford, where business, schools and research centre are doing work related to self-driving vehicles, as proof of where the industry is headed.

“Canada is a hotbed of talent,” added Courville.

Mierkalns, 34, is one of the talented. These days she is wiring electronics for the dashboard-mounted video module on the Chevrolet Equinox vehicles she helps assemble. She only does one job for about six months, then she can move to another to break the monotony and that means there will be more training, upgrading and learning, she added.

“I like it. I like the manual labour and keeping busy, the shifts go by fast,” she said. “It’s physical work.”

It is also work that will last, she believes. There is always talk on the shop floor the plant will close or lay off workers. She tries to ignore the chatter, but can see Cami being one of the plants that lasts 20 years. If it doesn’t, she will have the skills and training to keep working.

“Automotive it not reliable, it can be hit and miss,” she said. “But I hope I can retire from here. I think I can. That is my plan.”

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