Canadian Occupational Projection System (COPS)

Industrial Summary

Motor Vehicles, Trailers and Parts

NAICS 3361; 3362; 3363

This industry comprises establishments primarily engaged in manufacturing motor vehicles (48% of total production in 2016); motor vehicle bodies and cabs, truck trailers and non-commercial trailers (5%); and motor vehicle parts, including engines (47%). Overall, the industry is highly export intensive as around 80% of its production is shipped to foreign markets, mostly to the United States which account for 95% of exports. The three segments, however, do not face the same degree of export intensity. The motor vehicles segment is the most export intensive (94%), followed by motor vehicle parts (59%) and motor vehicle bodies and trailers (43%). The industry employed a total of 151,700 workers in 2016 (9.0% of total manufacturing employment), with 32% in motor vehicles, 57% in motor vehicle parts, and 10% in motor vehicle bodies and trailers. The workforce is mostly composed of men (79%) and Ontario is by far the largest employer, accounting for 85% of all automobile workers in Canada. Key occupations (4-digit NOC) include:

  • Other metal products machine operators (9418)
  • Motor vehicle assemblers, inspectors and testers (9522)
  • Supervisors, motor vehicle assembling (9221)
  • Metalworking and forging machine operators (9416)
  • Welders and related machine operators (7237)
  • Mechanical engineers (2132)
  • Labourers in metal fabrication (9612)
  • Mechanical assemblers and inspectors (9526)
  • Tool and die makers (7232)
  • Mechanical engineering technologists and technicians (2232)
  • Industrial painters, coaters and metal finishing process operators (9536)
  • Machining tool operators (9417)

* Key occupations for manufacturing industries in general also include: Manufacturing managers (0911); Construction millwrights and industrial mechanics (7311); Material handlers (7452); Shippers and receivers (1521); Transport truck drivers (7511); Industrial engineering and manufacturing technologists and technicians (2233); Industrial electricians (7242); and Industrial and manufacturing engineers (2141).

The industry has been through difficult times over the past decade, primarily reflecting increased import penetration on the North American market and the aftermath of the 2008-2009 recession. In addition to the shift in consumer preferences toward more fuel-efficient Asian-made cars, the recession led to a drastic decline of new vehicle sales in the United States, which fell to their lowest level in 27 years. As a result, the Detroit Three manufacturers undertook major restructuring programs to avoid bankruptcy, including a new era of wage negotiations and belt tightening to contain legacy pension costs. With the new wage structures in place, Canada’s automotive sector emerged as a more efficient global contender, but that was not sufficient to offset the shift in production to Mexico, where hourly wage rates range from US $8 to $10, compared with US $30 to $40 in Canada. As a result, Mexico’s share of North American light vehicle production currently stands at 20%, compared to 13% for Canada. After falling markedly in 2009 and 2010, production and employment in the Canadian industry partially recovered in subsequent years, primarily driven by the accumulation of a huge pent-up demand in the United States during the recession. The rebound in employment, however, was quite modest. On average, real GDP contracted at an annual rate of 1.4% over the period 2007-2016, while employment fell at a more severe rate of 3.8% per year. This situation reflects significant gains in productivity resulting from the capital intensity of the automotive industry and the retention of experienced workers under union labour contracts.

Broad economic conditions are positive for the Canadian motor vehicle industry, particularly in the first half of the projection period. Low fuel prices, robust labour markets, low interest rates and a favourable currency situation have pushed demand in the United States to record levels in 2015 and 2016, and this situation is expected to persist over the short- to medium-term. Over the longer term, however, North American demand may be nearing saturation as consumer spending is expected to moderate with the advent of rising interest rates, higher fuel costs, and weaker growth in disposable income as the baby-boom generation retires. Structural factors are also expected to restrain demand for Canadian automotive products. American consumers are holding onto their vehicles longer than in the past, both due to frugality and better vehicle construction. This factor and the fact that American households are the most motorized in the world, owning one quarter more vehicles than the G7 average, provide minimal opportunity for automakers to increase penetration of the U.S. market. On the supply side, generous government subsidies and low wage costs for Mexican producers are a direct threat to Canadian market share, pushing Canadian automakers to streamline operations and consolidate production in high-value-added segments such as light trucks, vans, sport utility vehicles (SUVs) and cross-over vehicles, where Canada has a competitive advantage. Commercialization of innovative assisted driver, efficient internal combustion engines and electric vehicles are now strategic priorities in design and development. As a result of fierce competition from Mexico, new plant commitments have been almost inexistent in the last decade (the last new auto assembly plant built in Canada was the Toyota Woodstock facility in 2008). Recently, however, more than $2 billion of investments in plant upgrades have been announced to maintain the existing productive capacity. General Motors has committed $554 million to upgrade its Oshawa assembly plant; Fiat-Chrysler Automotive has earmarked $331 million for a new paint shop at its Brampton plant and a new engine development program; Ford has pledged a $713 million investment for its new engine program in Windsor; and Honda has committed $500 million to build a state-of-the-art paint shop in Alliston. On average, real GDP in the industry is projected to increase at an annual rate of 0.7% over the period 2017-2026. Renewed growth in production is expected to result in a modest rebound in employment, with job creation averaging 0.6% per year. However, uncertainty with regards to the North American Free Trade Agreement (NAFTA) poses a risk to automakers’ investment and production on Canadian soil.

Real GDP and Employment Growth Rates in Motor Vehicles, Trailers and Parts

Figure showing the annual growth of real GDP and employment over the periods 2007-2016 and 2017-2026 for the industry of Motor Vehicles, Trailers and Parts . The data is shown on the table following this figure

Source: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

Text Version of Figure Real GDP and Employment Growth Rates in Motor Vehicles, Trailers and Parts , 2007-2016 and 2017-2026, in Percent
  Real GDP Employment
2007-2016 -1.4 -3.8
2017-2026 0.7 0.6

Source: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

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