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 (38% of total production in 2018); motor vehicle parts, including engines (55%); and motor vehicle bodies and cabs, truck trailers and non-commercial trailers (7%). Overall, the industry is highly export intensive as around 80% of its production is shipped to foreign markets, mostly to the United States which accounts 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 (93%), followed by motor vehicle parts (57%) and motor vehicle bodies and trailers (42%). The industry employed a total of 163,800 workers in 2018 (9.5% of total manufacturing employment), with 33% in motor vehicles, 56% in motor vehicle parts, and 11% in motor vehicle bodies and trailers. The workforce is mostly composed of men (76%) and Ontario is by far the largest employer, accounting for 81% of all automobile workers in Canada. Key occupations (4-digit NOC) include:[3]

  • 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)

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 wage rates range from $8 to $10 per hour, compared with $40 to $60 per hour in Canada. As a result, Mexico’s share of North American light vehicle production currently stands at 23%, compared to 12% for Canada. After falling drastically in 2008 and 2009, production in the Canadian industry progressively recovered from 2010 to 2014, driven by the accumulation of a huge pent-up demand in the United States during the recession and softer financing conditions. Production remained relatively stagnant in recent years with the gradual fading of the pent-up demand and the shift in consumer demand from the passenger cars toward light trucks (sport utility vehicles (SUVs) and pickups), which are now accounting for over two-thirds of motor vehicle production in Canada. The resulting pace of growth in real GDP averaged 1.0% annually for the entire period 2009-2018, although the current level of output in the industry remains significantly below its historical peak of 2005. After bottoming out in 2010, employment increased modestly in the following three years and remained relatively stable since 2014. This resulted in a net decline of 1.0% annually in employment over the period 2009-2018, leaving the industry with less than two-thirds of the workforce observed in the early 2000s. This situation reflects major restructuring and strong productivity gains resulting from the high capital intensity of the industry, which is 66% higher than the manufacturing average.

Over the projection period, output growth in the industry is expected to slow somewhat in response to softer vehicle demand in both Canada and the United States. Indeed, rising vehicle prices, high househould debt, falling passenger car sales, and aging demographics are expected to lower growth in new vehicle demand relative to the previous decade. However, the shift toward high-profit-margin and high-volume light trucks in Canadian automakers’ product lineup will help offset the impacts from unit sales stagnation. The growing production of light trucks, which are larger and require more components per vehicle than passenger cars, will also continue to benefit Canada’s parts manufacturers moving forward. Additional models will be entering the Canadian production lineup, including Toyota’s RAV4 and Lexus NX models. Such developments are expected to boost the value and the volume of domestic parts purchases over the medium term. In addition to the switch toward higher-end vehicles, auto manufacturers are investing significantly in the development of technologies that will support electrified, connected and self-driving vehicles. Stricter vehicle emission standards are encouraging original equipment manufacturers (OEMs) to develop more fuel-efficient vehicles, which is accelerating the lightweighting and electrification of traditional vehicle parts. This will push auto suppliers to innovate with non-traditional materials and designs, as well as advanced manufacturing processes.

Fortunately, Canada is well positioned to benefit from these new developments through its Toronto-Waterloo high-tech and advanced manufacturing corridor, its highly skilled labour force, and various financial incentives and programs by the Federal and Ontario governments to attract investment and strengthen the automotive sector’s competitiveness of OEMs and parts suppliers. Canada’s trade relations with the United States have also improved. The decision from the U.S. administration to remove tariffs on steel and aluminum imported from Canada has lowered material costs and increased profit margins for auto manufacturers, while eliminating a major barrier to the ratification of the Canada-U.S.-Mexico Agreement (CUSMA). The low value of the Canadian dollar is also expected to stimulate exports and reduce the cost of Canadian labour relative to the United States. On average, real GDP in the industry is projected to increase at an annual rate of 0.7% over the period 2019-2028. Despite slower output growth relative to the previous decade, employment growth is projected to return to positive territory, averaging 0.3% annually. Although productivity growth is not expected to be as robust as the past ten years, the industry should continue to increase its efficiency and improve its cost-competitiveness in response to the growing presence of high-tech and electronic equipment companies in new vehicle technologies. The industry is also implementing more advanced manufacturing processes, such as using artificial intelligence and 3D printing to produce lightweight car parts.

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

Figure showing the annual average growth rates of real GDP and employment over the periods 2009-2018 and 2019-2028 for the industry of motor vehicles, trailers and parts. The data is shown on the table following this figure

Sources: Statistics Canada (historical) and ESDC 2019 COPS industrial projections.

Text Version of Figure Real GDP and Employment Growth Rates in Motor Vehicles, Trailers and Parts (%, annual average)
  Real GDP Employment
2009-2018 1.0 -1.0
2019-2028 0.7 0.3

Sources: Statistics Canada (historical) and ESDC 2019 COPS industrial projections.

[3]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). Back to text.

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