Workers at the General Motors plant in Oshawa work on a Camaro.Moe Doiron/The Globe and Mail
Vehicle production in Canada is poised to slump by as much as 25 per cent by 2020, as global auto makers invest heavily in rival auto centres such as Mexico, the United States and other growing markets.
Car makers built 2.454 million vehicles in Canada last year, but that number is forecast to slide by more than 600,000 – to 1.823 million by the end of the decade, Joe McCabe, president of auto consulting company AutomotiveCompass LLC, said Wednesday.
In North America, "Michigan, the southern U.S. and Mexico are winning at the expense of Canada," Mr. McCabe told the Automotive Parts Manufacturers Association of Canada annual outlook conference in Mississauga.
Mr. McCabe's presentation bolsters data revealed earlier this year, which showed that Canada won only 5 per cent of more than $42-billion (U.S.) in investment by auto makers in North America between 2010 and 2012.
It's the latest indication that Canada is on the road to becoming a second-tier player in an industry that provides tens of thousands of high-paying jobs, makes a huge contribution to exports, and represents about 2.5 per cent of Ontario's gross domestic product.
Canadian industry analyst Dennis DesRosiers has noted that several key indicators of the health of auto manufacturing in the country are showing declines – employment, balance of trade and investment.
A cut in production of 25 per cent would drop Canada to 14th spot among auto-making countries, compared with its No. 9 position last year.
Mr. McCabe's forecast shows big production declines at General Motors Co. and Chrysler Group LLC facilities in Canada.
Output at GM's factories is forecast to fall to 314,000 vehicles by 2020 from 683,000 last year. Chrysler's production is expected to fall to 440,000 units from 577,000.
The key question is what will happen with GM's complex in Oshawa, Ont., where one assembly plant is scheduled to close next year. Industry sources have said no new products have been allocated for the other factory, which assembles the Chevrolet Impala and Camaro and the Buick Regal and Cadillac XTS. Camaro production will be shifted to Michigan in 2015 and Impala is also assembled at a plant near Detroit.
A GM spokeswoman declined to comment on Mr. McCabe's production forecast.
The questions about Chrysler come as it tries to determine what to do with its Dodge Caravan and Chrysler Town and Country minivans, which are put together at a plant in Windsor, Ont., that has been operating on three shifts since the 1980s making one of the most successful products in Chrysler's history.
With the decline in the minivan market in North America, Chrysler plans to eliminate the Caravan and offer only the Town and Country, which raises questions about whether it will produce another vehicle in Windsor to maintain three shifts.
Vehicle production is expected to grow by 48 per cent in Mexico which, beyond the billions of dollars of investment being pumped into its economy, will get the added boost of luxury makers Audi AG and the Infiniti division of Nissan Motor Co. Ltd., assembling vehicles in the country before the end of the decade.
That means any advantage Canada could claim about producing higher-quality vehicles carries little weight, Mr. McCabe said.
His presentation came on the same day that GM Canada held an internal ceremony to recognize a quality award won by the Oshawa factory that is scheduled to close next year. The Oshawa consolidated plant won the J.D. Power and Associates silver award for new vehicle quality.
"Every day the plant keeps working gives us more chance to save it in the long run," Jerry Dias, president of the Unifor union, said in a statement issued after the ceremony.