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Asia disasters cut into Ontario's auto ranking

Toyota Rav4 production at the firm's Woodstock, Ont., plant. The flooding in Thailand and the earthquake and tsunami in Japan have cut into Ontario's lead over Michigan as top auto producer in Canada or the U.S.


The fallout from two natural disasters in Asia is helping to put Ontario's title as the largest Canadian or U.S. auto-producing jurisdiction at risk.

Ontario has led No. 2 Michigan in vehicle production since 2004, but the Great Lake State is closing the gap this year with a 20-per-cent jump in output as of the end of October, compared with only a 1-per-cent rise in assembly in Ontario.

The higher increase in Michigan has cut Ontario's lead to only 150,000 vehicles with two months of production left to be counted, according to research done by DesRosiers Automotive Consultants Inc.

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Monthly production data, however, show that Ontario's lead is likely to be maintained although the gap has narrowed from past years.

Production at Michigan plants would need to surpass output in Ontario by 75,000 in each of November and December and that hasn't happened in a single month this year.

The biggest margin in Michigan's favour was in May when its plants produced 171,530 vehicles compared with 157,744 that rolled off assembly lines in Ontario.

The March earthquake and tsunami in Japan caused supply shortages that led to deep production cuts at Honda Motor Co. Ltd. and Toyota Motor Corp. plants in Ontario. Just as they were gearing up for big boosts in production during the fourth quarter, floods in Thailand again caused parts shortages, leading to cancellation of overtime and other trims in output.

There was no negative impact on Michigan because Japan-based auto makers operate no assembly plants in that state.

At the same time, the Detroit Three were raising production in Michigan as they captured some market share back from the Japanese companies and the effect of a shift in products took hold, such as compact cars rolling out of a Ford Motor Co. plant that once made full-sized sport utility vehicles.

Output in Michigan rose to 1.62 million vehicles in the first 10 months of the year, from 1.35 million in the same period in 2010. Plants in Ontario turned out 1.78 million cars, crossovers and minivans as of the end of October.

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Ontario's production has also been hampered by parts shortages that have led to shutdowns at the Chrysler Group LLC minivan factory in Windsor, Ont., and the closing in September of Ford's large-car assembly plant near St. Thomas, Ont.

But as the consulting firm and its president, Dennis DesRosiers, noted, the issue facing both Michigan and Ontario is the growth of auto manufacturing in the southern United States and Mexico.

Tennessee, for example, is now home to a Volkswagen AG plant and got a boost earlier this week when General Motors Co. said it will reopen a factory that was closed after the Detroit auto maker went into Chapter 11 bankruptcy protection in 2009.

Output in Mexico surpassed production in Ontario several years ago, Mr. DesRosiers said. "Now they're pushing three million [vehicles a year]and we're pushing two million."

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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