stc factpack automotive- canada
TRANSCRIPT
1
THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT INDUSTRY
CANADA
Fact Pack
Swedish Trade Council in Canada
2006
2
Overview Canadian Manufacturing Industry
Canadian Automotive Industry
Canadian Construction Equipment Industry
Recommendations
References
Appendices
CONTENT
Notes:1. The exchange rate in this report is: 1CA$ = SEK 6.5669 (as of June 1st, 2006)2. See Appendix 1 for definition of automotive terms used in this report.
3
THE AUTOMOTIVE INDUSTRY ACCOUNTS FOR 18.6% OF TOTAL MANUFACTURING SHIPMENTS IN CANADA
Total shipments of the Canadian manufacturing industry are more than SEK 4,015 billion (2005)
The average wage for a manufacturing industry worker in Canada is SEK 135.34/hour (2005)
There are approximately 97,860 companies* within the manufacturing industry in Canada (2005)
40,000 firms are directly tied to the automotive industry (manufacturing, sales, distribution, repair)
Manufacturing employs 1.9 million workers (2003) Automotive manufacturing – assembly and parts –directly employs 231,800 thousand workers (2005)
Canada’s 5 largest manufacturing industries (2005)Shipments value, SEK billions
The Automotive Industry is Canada’s largest manufacturing sector
Sources: Statistics Canada; Desrosiers Automotive Consultants
*Includes 37,275 owner-operated (non employers)and indeterminate
304.36
314.23
359.90
749.57
0 200 400 600 800
449.79
Primary Metals
Chemical
Petroleum/Coal Products
Agri-Food
Automotive(Assembly & Parts)
SEK billion
4
Overview Canadian Manufacturing Industry
Canadian Automotive Industry
Passenger cars and commercial vehicles
Commercial vehicles
Suppliers
Canadian Construction Equipment Industry
Recommendations
References
Appendices
CONTENT
5
THE CANADIAN PRODUCTION OF LIGHT AND HEAVY VEHICLES TOTALS SEK 458 BILLION
0
100
200
300
400
500
600
2001 2002 2003 2004 2005
Value of Shipments Total Exports Total Imports
33%
4%
5%
58%
Auto parts and
componentsSEK 240.5
billion
Motor Vehicle Body and Trailer
SEK 26.8 billionLight Vehicle
(Passenger Cars, Light Trucks) SEK418.5 billion
SEK billion
Canadian Automotive Industry Shipments
Canada exports about 76% of total automotive production, primarily to the U.S.
Heavy Vehicle(Heavy Trucks, Buses)
SEK 39.6 billion
Automotive Production by Sector in Canada (2005)
Sources: Desrosiers Automotive Consultants; Industry Canada; KPMG’s Guide to International Business Costs, 2006 edition
6
2.7 MILLION VEHICLES WERE PRODUCED IN CANADA IN 2005
VEHICLE MANUFACTURERSVEHICLE MANUFACTURERS
(Weight < 6.35 t)Key manufacturers
GMDaimler-ChryslerFordToyotaHondaCAMI Automotive
LIGHT TRUCKS*(1,267,353 vehicles)LIGHT TRUCKS*
(1,267,353 vehicles)
Key Bus manufacturersCanadian Bluebird CoachEntreprise Michel CorbeilMotor Coach IndustriesOrion Bus IndustriesPrévost Car IncorporatedNovabus Corporation New Flyer IndustriesA. Girardin Inc.
BUSES(Estimated 20,000** vehicles)
BUSES(Estimated 20,000** vehicles)
HEAVY TRUCKS(64,812 vehicles)
HEAVY TRUCKS(64,812 vehicles)
(Weight > 6.35 t)Key Heavy Truck mfrs.
Canadian KenworthInternational Truck & Engine CorporationSterling TrucksHino Motor Ltd
COMMERCIAL VEHICLES (1,332,165 vehicles)COMMERCIAL VEHICLES (1,332,165 vehicles) PASSENGER CARS(1,356,198 vehicles)
PASSENGER CARS(1,356,198 vehicles)
Key manufacturersGM Daimler-Chrysler FordToyota Honda CAMI Automotive
Sources: R&I; Estimate of bus vehicles based on manufacturer websites and telephone interviews
*Minivans, SUVs and pick-up trucks are categorized ‘light trucks’ in Canada although
they are mainly for non-commercial use.
**In Canada bus production is included with heavy trucks
7
Overview Canadian Manufacturing Industry
Canadian Automotive Industry
Passenger cars and commercial vehicles
Commercial vehicles
Suppliers
Canadian Construction Equipment Industry
Recommendations
References
Appendices
CONTENT
8
TOTAL PASSENGER CAR PRODUCTION IN CANADA IS STABLE- Decline of North American Big Three against the rise of foreign OEM’s
Market share loss of North American Big Three (GM, Ford, Daimler-Chrysler) matched by gain of foreign OEMs
Foreign OEMs (Toyota, Honda) surpassed the Big Three sales of light vehicles (cars and light trucks) in Canada in 2003Big Three are undertaking major restructuring to combat shrinking market share
Government stepping up automotive investment promotion, especially to Japan and Europe
SEK 6 billion in federal and provincial government aid from 2004-2006Capital investments in Ontario at an all-time highRecently announced expansions by major auto makers and parts suppliers (see Appendix 3)
0
300,000
600,000
900,000
1,200,000
1,500,000
2001 2002 2003 2004 2005
Passenger Car Production in Canada Development the last 5 years
Vehicles
Sources: R&I; Desrosiers Automotive Consultants
9*Market share = % of vehicles sold in 2005 (does not add up to 100% due to share of market for other imported vehicles)
100%(Incl. with GM; Suzuki is separate)
Partly GM Worldwide Purchasing / Partly CAMI plant,
Ingersoll, Ontario
Passenger cars and light trucks
2,300CAMI Automotive(GM-Suzuki)
9.8%
11.1%
13.4%
13.7%
28.7%
Market Share*
Partly North American HQ, Ohio (U.S.A.) / Partly Honda
plant, Alliston, Ontario
Toyota Motor Manufacturing Inc., Cambridge, Ontario
Corporate HQ, Dearborn, Michigan
Corporate HQ, Auburn Hills, Michigan (U.S.A)
Partly GM Worldwide Purchasing / Partly Canadian
HQ, Oshawa, Ontario
Purchase decisions
100%
100%
100%
100%
100%
Foreign Ownership
Passenger cars and light trucks
4,900Honda
Passenger cars4,500Toyota
Passenger cars and light trucks
13,000 Ford
Passenger cars and light trucks
Passenger cars and light trucks
Business
11,000DaimlerChrysler
20,000 GM
EmployeesManufacturer
FOREIGN HEADQUARTERS MAKE PURCHASE DECISIONS OF ‘BIG 3’, WHILE JAPANESE AUTO MAKERS DELEGATE TO LOCAL PLANTS
Pass
enge
r Car
s
10
ONTARIO IS CANADA’S AUTOMOTIVE POWERHOUSE AND HOME TO ALL LIGHT VEHICLE ASSEMBLY PLANTS
66,783214,353
Lexus RX330Corolla, Matrix
Plant under construction (completion 2008)
Cambridge #1 Cambridge #2
Woodstock
Toyota
314,032251,161
312,482
Impala, Monte Carlo, Allure/LaCrosse,
Grand Prix Silverado, GMC Sierra
Oshawa #1Oshawa #2
Oshawa (Light Truck)
GM
165,256Torrent, Equinox,Suzuki XL-7
Ingersoll #2CAMI(GM-Suzuki joint venture)
Civic, Acura ELAcura MDX, Pilot,
Ridgeline
Freestar and MontereyNew Flex Mfg. Plant (completion 2006)
Crown Victoria, Grand Marquis
300M, Magnum, ChargerGrand Caravan, Town &
Country, Pacifica
Models and focus
192,853202,705
Alliston #1Alliston #2
Honda
118,112
150,450
Oakville
St. Thomas
Ford
291,888350,368
BramptonWindsor
DaimlerChrysler
Unit production
volume(2005)
PlantManufacturer
Source: Automobil Produktion
Ontario is North America’s top producer of light vehicles.
Ontario accounts for 97% of Canada’s total automotive production (2005) and has the highest concentration of the country’s population (see Appendix 2).
Canada ranks 8th in the world for light motor vehicle production (2003).
11
SOUTHWESTERN ONTARIO LIGHT VEHICLE* ASSEMBLY PLANTS
*Light Vehicle = Passenger Cars, Light Trucks
3
6
7
2
4
1
8
5
CAMI Automotive
DaimlerChrysler Brampton
DaimlerChrysler Windsor
Ford Oakville
Ford St. Thomas
GM Oshawa Car 1-2; Oshawa Truck
Honda Alliston 1-2
Toyota Cambridge 1-2
1
2
3
4
5
6
7
8
Light Vehicle Plants
Toronto
Michiga
n Stat
e(USA)
12
Buyer’s market
Buyer’s market
R&D Outsourcing
R&D Outsourcing
Outsourcing of high-value design and engineering by OEMs is on the riseGrowing collaboration between automakers and suppliers on parts and vehicle designSynchronized planning and execution (OEM Tier 1 Tier 2)Integrated R&D with OEM using concurrent engineering
Automotive OEMs are facing an increasingly consumer-driven marketFragmented vehicle market means firms must be able to react rapidly to changes in demandOEM’s are investing in flexible assembly plants that allow for quick change-over in production by building a number of models on a single platform
OEMs FOCUS ON IMPROVING PRODUCTION EFFICIENCY & SUPPLY CHAIN INTEGRATION
Competition between OEMs for market share is keeping profitability under pressureThe Big Three are struggling remain competitive against foreign OEMs that are rapidly gaining market share in North AmericaOEMs are putting the squeeze on their suppliers in an effort to reduce costs, as raising prices is out of the question
Fierce competition
Fierce competition
Trends within the Canadian passenger car industry
13
Overview Canadian Manufacturing Industry
Canadian Automotive Industry
Passenger cars and commercial vehicles
Commercial vehicles
Suppliers
Canadian Construction Equipment Industry
Recommendations
References
Appendices
CONTENT
14
GROWING DEMAND HAS RESULTED IN STEADY CLIMB OF HEAVY TRUCK PRODUCTION
1,050,000
1,100,000
1,150,000
1,200,000
1,250,000
1,300,000
1,350,000
1,400,000
2001 2002 2003 2004 2005Light Trucks Heavy Trucks (incl. Buses)
Commercial Vehicle Production in Canada Development the last 5 years
Vehicles High levels of freight movement and a strong economy are driving increased demand
In terms of value, 60% of Canada/U.S. trade is moved by truck (2005)Over 37,000 trucks cross the Canada/U.S. border each day
Hino Motors Canada recently became the first Japanese truck maker to locate an assembly plant in Canada (June 2006)
Canadian and U.S. governments passed regulations in 2002 to virtually eliminate heavy truck emissions of particulate matter by 2007, and nitrous oxides by 2010
NOTE: Light trucks data includes an estimated 70% non-commercial vehicles including mini-vans, SUVs, and pick-up trucks. Reported under commercial vehicles for the purposes of this report.
Sources: R&I; Canadian Trucking Alliance
15
100%Woodstock plant, OntarioLight and Heavy trucks
45*Hino Motors Ltd. (Division of Toyota)
Business Unit HQ, Redford, Michigan (U.S.A.)
Paccar Corporate HQ, Belleview, Washington (U.S.A.)
Corporate HQ, Cantera, Ohio (U.S.A.)
Purchase decisions
100%
100%
100%
Foreign Ownership
Heavy trucks1,100Sterling Trucks (owned by Freightliner, a division of DaimlerChrysler)
Heavy trucks758Canadian Kenworth (Division of Paccar of Canada Ltd.)
Heavy trucks
Business
1,500International Truck and Engine Corporation (Owned by Navistar)
EmployeesManufacturer
Com
mer
cial v
ehicl
es –
Heav
y Tru
cks
PURCHASE DECISIONS OF SOME LARGER FIRMS MADE BY FOREIGN HEADQUARTERS, BUT MANY OTHERS MAKE DECISIONS LOCALLY
*Present number of employees, plant is to be completed 2006.
16
100%St. Eustache plant, Quebec / Growing coordination with Volvo Bus Group
Purchasing, Göteborg, Sweden
Urban transit buses550Novabus (division of Prévost, a subsidiary of Volvo Bus Corporation)
100%Sainte Claire, Quebec, Canada Highway (coach) buses
1,435Prévost Car Inc.(sub. of Volvo Bus Corp.)
100%Mississauga plant, Ontario / Some through central purchasing of HQ,
Greensboro, North Carolina (U.S.A.)
Urban transit buses550Orion Bus Corporation (sub. of DaimlerChrysler)
0%HQ, Drummondville, QuebecMini school buses 200A.Girardin Minibus Inc
HQ, Winnipeg, Manitoba
Winnipeg, Manitoba
St Lin-Laurentides, Quebec
Corporate HQ Fort Valley, Georgia (U.S.A.) / Brantford plant, Ontario
Purchase decisions
100%
100%
0%
100%
Foreign Ownership
School buses3,000 Canadian Bluebird Coach Ltd.
School buses300 Entreprise Michel Corbeil
Urban transit buses
Highway (coach) buses
Business
2100New Flyer Industries Ltd.
2,000 Motor Coach Industries
EmployeesManufacturer
Com
mer
cial v
ehicl
es -
Buse
sBOTH FOREIGN- & DOMESTIC-OWNED CANADIAN BUS MANUFACTURERS MAKE KEY PURCHASE DECISIONS LOCALLY
17
MOST HEAVY TRUCK MANUFACTURERS ARE LOCATED IN SOUTHWESTERN ONTARIO AND QUEBEC
2,000ºClass 4-7 trucks
Woodstock, Ontario
Hino Motors Ltd. (division of Toyota)
24,000**A-line, L-line, Acterra
St. Thomas, Ontario
Sterling Trucks (owned by Freightliner, a division of DaimlerChrysler)
14,200*Class 5-8 trucks
Ste. Therese, Quebec
Canadian Kenworth (Division of PACCAR of Canada Ltd.)
40,000Class 7-8 trucks
Chatham, Ontario
International Truck and Engine Corporation (owned by Navistar)
Models and focus
Unit production
volume (2005)
PlantManufacturer
*STC Estimate (based on production of 71 trucks/day; 200 days/year)**STC Estimate (based on production capacity of 120 trucks/day; 200 days/year)ºPlant under construction for completion in 2006International Truck and Engine
Canadian Kenworth
Sterling Trucks
Hino Motors
Trailmobile
Manac
Sources: 2006 APMA Directory, Company websites and contacts
18
BUS MANUFACTURING IS FRAGMENTED INTO SCHOOL BUSES, URBAN TRANSIT BUSES AND COACH BUSES
Private information
Urban transit buses
St. Eustache, Quebec
Novabus (division of Prévost, a subsidiary of Volvo Bus Corporation)
1,000Urban transit buses
Mississauga, Ontario Orion Bus Corporation (sub. of DaimlerChrysler)
600Highway (coach buses)
Ste. Claire, QuebecPrévost Car Inc.(subsidiary by Volvo Bus Corporation)
Private information
Mini school buses
Drummondville, Quebec
A. Girardin Minibus Inc.
Urban transit buses
Highway (coach buses)
School buses
School buses
Models and focus
1,500 capacity*
Winnipeg, ManitobaNew Flyer Industries Ltd.
1,200 Winnipeg, ManitobaMotor Coach Industries (MCI) International Inc
2,500St Lin-Laurentides, Quebec
Entreprise Michel Corbeil
12,000Brantford, OntarioCanadian Bluebird Coach Ltd.
Unit production
volume(2005)
PlantManufacturer
Girardin Minibus
Motor Coach IndustriesCanadian Bluebird
New Flyer Industries
Michel Corbeil
Novabus
Orion
Prévost
Sources: 2006 APMA Directory, Company websites and contacts*Unit capacity does not reflect actual production numbers, which were not available.
19
Pollution RegulationPollution
Regulation
DemandGrowth
DemandGrowth
Increasing production of commercial vehicles the result of demand growth (2001-2005)Commercial vehicle production growth rate has been much higher than for passenger vehicles*Cyclical nature of truck market demand is expected to lead to some decline in 2007
New generation of smog-free heavy trucks will begin introduction to the market in 2007 Increased costs and payload penalties will be associated with the new equipmentNegative impact on truck sales in 2007 expected to arise from a related “pre-buy” mentality
CONSOLIDATION OF THE COMMERCIAL VEHICLE INDUSTRY AS LARGE GLOBAL PLAYERS ACQUIRE DOMESTIC PLAYERS
Global manufacturers have entered the North American bus market through acquisition of several domestic bus manufacturers
Volvo AB brought Novabus and Prevost under the same ownershipDaimler-Chrysler acquired Orion Bus Industries along with other U.S. bus manufacturers
Globalization / ConsolidationGlobalization / Consolidation
Trends within the Canadian commercial vehicle industry
*Production of medium/heavy trucks grew 32.5% in 2004 and 26.3% in 2005, compared with -0.3% in 2004 and 1.6% in 2005 for passenger cars. (Souce: Ward’s AutoInfoBank)
20
Overview Canadian Manufacturing Industry
Canadian Automotive Industry
Passenger cars and commercial vehicles
Commercial vehicles
Suppliers
Canadian Construction Equipment Industry
Recommendations
References
Appendices
CONTENT
21
THERE ARE OVER 900 AUTOMOTIVE SUPPLIERS IN CANADA- Magna International is the world’s 9th largest auto parts supplier
There are 900+ auto parts suppliers in Canada (T1 and T2)Ontario-based Magna International is one of the top 10 largest automotive suppliers in the world There is a very high concentration of automotive suppliers in Southwestern OntarioMany of the companies have less than 500 employees, including subsidiaries of foreign-based companiesCanada is a world leader in:
Injection and blow moldingHydroforming Ferrous and non-ferrous castingPowder metal coating and facbricationSystems and component integrationStamping
Geographical concentration of automotive suppliersCanadian automotive suppliers
Automotive suppliers are highly concentrated in Southwestern
Ontario, where all of Canada’s vehicle manufacturers are located!
Sources: Ontario government; Statistics Can; Industry Canada
Concentration:
High
Medium
Low
22
MAGNA INTERNATIONAL IS CANADA’S LARGEST AUTO PARTS SUPPLIER
Cables, sensors, semi conductors, control units
Magna InternationalSiemens VDO AutomotiveAffinia Brake PartsSolectron InvotronicsOmron Dualtec Automotive Electronics Inc.
Power train, exhaust systems, engines
Magna InternationalLinamar Corp.Dana CanadaSiemens VDO AutomotiveWescast Industries Arvin Meritor CanadaTenneco Automotive
Cockpit, seats, dash-board, air conditioning
Magna InternationalABC GroupSpectra Premium Industries Woodbridge GroupLear CanadaDenso Mfg. Canada
T1 SUPPLIERST1 SUPPLIERS
Electrical systemsElectrical systems Interior equipmentInterior equipment PropulsionPropulsion BodyBody Running gearRunning gear
Body, roof, glass, doors, lighting etc.
Magna International Linamar Corp.ABC GroupFlex-N-GateDana CanadaThyssenKrupp Spectra Premium IndustriesWoodbridge Group
Suspension, brakes, axles, steering, tires
Magna InternationalLinamar Corp.TRW CanadaThyssenKrupp Arvin Meritor CanadaTenneco AutomotiveAffinia Brake Parts
23
HQ, Mississauga, OntarioSeating foam and other interior foam parts1,000Woodbridge Group
Cambridge, OntarioSteering and suspension components; emissions control1,000Tenneco Automotive
HQ, Windsor, OntarioMetal stampings, tubular assemblies, weldments and systems1,200ThyssenKrupp Fabco
HQ, Troy, MichiganChassis component assemblies, bumper and light truck frames1,900ThyssenKrupp Budd Canada
St. Catharines, OntarioSteering, suspension components2,355TRW Canada
4 plants in Southern Ontario (decisions made locally)
Electronic/electrical controls, manifolds, fuel modules1,900Siemens VDO Automotive
St. Catharines, Ontario / Corporate HQ, Farmington Hills, Michigan (U.S.)
Chassis components3,000Dana Canada
HQ, Toronto, OntarioPlastics, blow and injection molded for interior / exterior systems4,000ABC group
13 mfg. locations in Ontario (decisions made locally)
Body moulding for exterior systems3,482Flex-N-Gate
HQ, Boucherville, Quebec
HQ, Brantford, Ontario
HQ, Guelph, Ontario
HQ, Aurora, Ontario
Location
Fuel tanks, radiators and air conditioners1,115Spectra Premium Industries
Exhaust manifolds, powertrain components1,900Wescast Industries Inc.
Machined components and modules for engines, transmissions and chassis
8,087*Linamar Corporation
Stamping, interior/exterior systems, trim, electrical/ electronic systems and parts, powertrain components
Business22,000Magna International
EmployeesManufacturer
MOST MAJOR T1 SUPPLIERS MAKE PURCHASE DECISIONS IN ONTARIO
T1 S
uppl
iers
* An additional 3,000 new jobs over the next 5 years was recently announced on May 12, 2006.
24
Oakville, OntarioSwitch/electrical control units (switch assemblies for power seats/windows, instrument panels, moon roof limit switches,
other micro-switch based assemblies)
400Omron Dualtec Automotive Electronics Inc.
Scarborough, OntarioMotion controls, electronic control modules, instrument clustersand displays, actuators, telematics modules, driver interface
switches
750Solectron Invotronics
Kitchener, OntarioSeating and interior trim700Lear Canada Ltd.
Guelph, OntarioAir conditioners300Denso Manufacturing Canada, Inc.
Tilbury, Ontario
Mississauga, Ontario
Location
Brake system parts375Arvin Meritor Canada
Electrical equipment components including connectors, ignition systems, wiring components, and brake parts
Business750Affinia Canada Corp.
EmployeesManufacturer
SOME OF THE KEY GLOBAL T1 SUPPLIERS HAVE SMALL- TO MEDIUM-SIZED MANUFACTURING OPERATIONS IN CANADA
T1 S
uppl
iers
25
T1 SUPPLIERS ARE STRATEGICALLY LOCATED TO PROVIDE JUST-IN-TIME DELIVERY TO MAJOR ASSEMBLERS IN CANADA & THE U.S.
Southwestern Ontario Flex-N-Gate
Lear
Linamar
DanaWescast
Siemens
Spectra
TRWWoodbridge
ABC
Magna
Southern Ontario is at the doorstep of Michigan State, the
2nd largest producer of light vehicles in North America!
ThyssenKruppBudd
ThyssenKrupp FabcoAffinia
Brake Parts
Solectron
TennecoAutomotive
OmronDualtec
Denso
Arvin Meritor
26
SOME OF THE LARGER T2 SUPPLIERS ARE FOREIGN-OWNED SUBSIDIARIES IN CANADA
Cables, bus systems, embedded systems
Magna InternationalATS Automation Tooling Sytems Inc.Dupont Canada3M Canada Company Tyco Electronics Canada Ltd.
Power train, exhaust systems, engines
Dupont Canada Martinrea InternationalStackpole Ltd.Valiant Corp.Schaeffler Canada Maxtech Manufacturing
Cockpit, seats, dash-board, air conditioning
ATS Automation Tooling Systems Inc.Valiant Corp.Spectra Premium Industries Van-Rob Guelph ToolBend All Automotive
T2 SUPPLIERST2 SUPPLIERS
Electrical systemsElectrical systems Interior equipmentInterior equipment PropulsionPropulsion BodyBody Running gearRunning gear
Body, roof, glass, doors, lighting etc.
Dupont CanadaWaterville TGAGS Automotive SystemsThyssenKrupp FabcoSpectra Premium IndustriesTechform Products
Suspension, brakes, axles, steering, tires
ATS Automation Tooling Sytems Inc.Martinrea InternationalTRW Canada Schaeffler Canada ThyssenKrupp Fabco
NOTE: In Canada, T1 and T2 terms refer to products/components rather than companies, as many of the key T1 suppliers are also T2 players.
27
Mississauga, OntarioPowder metal parts for engines, transmissions 1,500Stackpole Ltd.
St. Catharines, OntarioSteering, suspension components2,355TRW Canada
Markham, OntarioElectrical/Electronic connectors, switches, circuit breakers330Tyco Electronics Canada
Aurora, OntarioStampings, welded and mechanical assemblies850Van-Rob Stampings Inc.
HQ, Waterville, QuebecBody sealing systems (rubber weather stripping)1,800Waterville TG
HQ, Cambridge, OntarioElectrical/Electronic systems and components (starters, alternators, instrument clusters, swithces, fuses and circuit breakers)
4,100ATS Automation Tooling Systems Inc.
Stratford, OntarioDeep groove ball bearings (transmission, wheels, axles)854Schaeffler Canada Inc.
HQ, Vaughan, OntarioFluid Handling Systems, hydroforming parts, metal fabrication, stamping3,000Martinrea International
Cdn. HQ, London, OntarioElectrical and Electronic connectors and cables2,0503M Canada Company
Waterloo, OntarioMetal products (screws, brake parts)660Maxtech Manufacturing
HQ, Windsor, OntarioHyrdoforming and Tool & Mold components for interior/exterior 1,400Valiant Corporation
HQ, Toronto, OntarioMetal stampings, metal painting, control parts1,750 AGS Automotive Systems
Cdn. HQ, Mississauga, OntarioElectronic products, fuel cell parts, liners, plastics, paint and coatings3,300Dupont Canada
HQ, Penetanguishene, Ontario
HQ, Ayr, Ontario
Guelph, Ontario
Location
Rods (door lock, torque) 700Techform Products
Hose assemblies, wire products
Metal stampings
Business
700 Bend All Automotive
750 Guelph Tool
EmployeesManufacturer
PURCHASE DECISIONS OF KEY T2 SUPPLIERS ARE MADE LOCALLY
T2 S
uppl
iers
28
Process of integration in the automotive parts industry apparent throughout North AmericaA few larger, more diversified companies are acquiring the smaller players and offering a broader range of products (ie Magna, Linamar)Number of firms in the North American automotive supply chain has declined from 30,000 to 8,000 over the past 15 years
Growing Delegation of
Tasks
Growing Delegation of
Tasks
ConsolidationConsolidation
AUTOMOTIVE SUPPLIERS ARE TAKING ON HIGHER LEVELS OF RESPONSIBILITY IN R&D AND DESIGN
Trends within the Canadian Automotive supplier industry (T1 and T2)
Production has been shifting toward where the sales are madeForeign suppliers are relocating to Canada*, with 100+ Japanese and European parts suppliers in Canada and growingTraditional local suppliers find it difficult to compete with non-unionized foreign suppliers that have new facilities, low legacy costs, new technologies, and young well trained workers
Global “Localization”
Global “Localization”
*See Appendix 4 for overview of Canada’s attractive business environment.
Increasing delegation of responsibilities (R&D, design, assembly) from OEMs to suppliersEmergence of “Tier 0.5” suppliers (Magna) who assemble Tier 1-level products, essentially assuming responsibilities that were once the domain of the OEMEach tier looks to its suppliers to assume new responsibilities
29
Overview Canadian Manufacturing Industry
Canadian Automotive Industry
Canadian Construction Equipment Industry
Manufacturers
Suppliers
Recommendations
References
Appendices
CONTENT
30
CANADIAN CONSTRUCTION EQUIPMENT PRODUCTION TOTALED SEK 11.6 BILLION IN 2003
Construction Equipment Shipments in Canada
Source: Statistics Canada (data on Construction Equipment Manufacturing Shipments not available for 2004 and 2005 as of yet)
SEK billion
Imports satisfy most of Canada’s demand for construction equipment.
Canadian market is highly fragmented, with few manufacturing plants across Canada.
Mainly small- to medium-sized companiesMost of larger manufacturers are foreign-owned
The United States is the largest exporter of construction equipment to Canada (2005).
U.S. accounts for 62% of Canada’s total imports, followed by Japan (13.8%) and Sweden (4.6%).0
5101520253035
2001 2002 2003 2004 2005
Construction Equipment Manufacturing ShipmentsConstruction Equipment ExportsConstruction Equipment Imports
31
HEAVY CONSTRUCTION EQUIPMENT IS MAINLY IMPORTED* –DOMESTIC MANUFACTURING IS LIMITED TO SMALLER FIRMS**
CONSTRUCTION EQUIPMENTCONSTRUCTION EQUIPMENT
ROAD(Est. 1600 vehicles)
ROAD(Est. 1600 vehicles)
Key manufacturers:Volvo Motor GradersLondon Machinery Inc.
Graders, asphalt pavers, asphalt mixers
MINING(Est. 520 vehicles)
MINING(Est. 520 vehicles)
Key manufacturers:Mining Technologies Int’lLovat Inc.SandvikBoart Longyear Inc. Breaker Technology
Wheel loaders, drills, haulers
Key manufacturers:Thomas EquipmentKomatsu International Canada Inc.
EARTH MOVING(Est. 5,700 vehicles)EARTH MOVING
(Est. 5,700 vehicles)Excavators, wheel loaders, backhoe loaders, Skid steer loaders, haulers
LIFTING(Est. 1100 vehicles)
LIFTING(Est. 1100 vehicles)
Key manufacturers:Skyjack Inc. Weldco-Beales Mfg.Liftking IndustriesKaverit Steel and Crane
Mobile cranes, forklifts
*Major manufacturers, such as Caterpillar and John Deere, operate their own dealerships in Canada and import all products.
**Each sub-sector has several small and locally-based players with under 100 employees.
32
MOST CONSTRUCTION EQUIPMENT PLANTS PRODUCE RELATIVELY LOW VOLUMES & MAKE PURCHASE DECISIONS LOCALLY
Private information**
300
Not available
60
100-150
Private information
1,500
250
4,000
Not availablePrivate information*
1,500
Private information
Production vol.
Corporate HQ, Oshkosh, Wisconsin (U.S.) / Cdn. HQ, London, Ontario
HQ, Edmonton, Alberta
HQ, Thornbury, Ontario
HQ, Woodbridge, Ontario
Burlington plant, Ontario
HQ, Etobicoke, Ontario
Partly HQ, Japan / Partly Candiac plant, Quebec
Canadian HQ, North Bay, Ontario
Centreville plant, New Brunswick
HQ, Sudbury, Ontario
HQ, Edmonton, AlbertaGoderich plant, Ontario
HQ, Guelph, Ontario
Purchase decisions
Concrete Mixers
Cranes
Loaders, breakers, mining equipment
Forklifts
Loaders
Tunnel boring machines
Small- and medium-sized wheel loaders
Drilling equipment
Mini skid steer loaders
Drills, loadersTruck-mounted cranes
Motor Graders
Scissor lifts
Models and focus
120
125
130
150
200
250
300
400
400
480
500800
900
Employees
North Bay, OntarioBoart Longyear Inc.
Sudbury, OntarioMining Technologies InternationalEdmonton, AlbertaWeldco-Beales Manufacturing Inc.
Guelph, OntarioSkyjack Inc. (division of Linamar)
Thornbury, OntarioBreaker Technology Ltd.
Woodbridge, OntarioLiftking Industries Inc.
Burlington, OntarioSandvik Mining and Construction Canada Inc.
Etobicoke, OntarioLovat Inc.
Goderich, OntarioVolvo Motor Graders Limited
London, OntarioLondon Machinery Inc. (sub. of OshKosh Truck Corp.)
Edmonton, AlbertaKaverit Steel and Crane
Candiac, QuebecKomatsu International Canada Inc.
Centreville, New Brunswick
Thomas Equipment
PlantManufacturer
*SEK657 million sales revenue (2005); **SEK355 million sales revenue (2005)
33
MANY OF THE LARGER MANUFACTURERS OF CONSTRUCTION EQUIPMENT IN CANADA ARE LOCATED IN SOUTHERN ONTARIO
Komatsu
Volvo Motor Graders
Thomas Equipment
Lovat Inc.London Machinery Inc.
Mining Technologies Int’l
Sandvik
Breaker Technology
Boart Longyear
Liftking Industries
Skyjack Inc.
Kaverit Steel & Crane
Weldco-Beales
34
Overview Canadian Manufacturing Industry
Canadian Automotive industry
Canadian Construction Equipment Industry
Manufacturers
Suppliers
Recommendations
References
Appendices
CONTENT
35
CONSTRUCTION EQUIPMENT MANUFACTURERS IN CANADA RELY ON IMPORTS AND/OR SMALL, LOCALLY-BASED SUPPLIERS
Cables, sensors, semi conductors, control units
Undercarriage and body
Gerdau Ameristeel Manitoba Metal
Power train, engines, exhaust systems, axles
SUPPLIERSSUPPLIERS
Electrical systemsElectrical systems Propulsion and running gear
Propulsion and running gear Steel constructionSteel construction HydraulicsHydraulics
All kind of hydraulic cylinders
Bosch Rexworth Canada Corp.Hyco CanadaPullmaster Winch Corp.
AccessoriesAccessories
All kind of hydraulic cylinders
Cascade Canada Ltd.
Due to a lack of publicly available data / industry associations / company listings for construction equipment vehicle manufacturers or their suppliers in Canada, it was not possible to provide more information for the purposes of this report. However, Canada has
a number of manufacturers of attachments and accessories for the construction equipment vehicle market, which are listed in Appendix 5.
36
Guelph, OntarioForklift accessory parts (hydraulic valves, stop drop valves, clamps)
200Cascade Canada Ltd.
Hydraulic planetary winches and drives for mining and earthmoving vehicles
Hydraulic cylinders and valves for cranes, material handling equipment and road vehicles
Hydraulic power units and manifolds for construction equipment
Steel components manufacturer for earthmoving and road vehicles
Business
Surrey, British Columbia
50Pullmaster Winch Corporation
St. Wenceslas, Quebec
120Hyco Canada
Welland, Ontario240Bosch Rexworth Canada Corporation
Selkirk, Manitoba500Gerdau Ameristeel Manitoba Metal
Purchasing decisions
EmployeesManufacturer
SMALL-SIZED CONSTRUCTION EQUIPMENT SUPPLIERS MAKE PURCHASE DECISIONS LOCALLY
Supp
liers
37
SUPPLIERS OF CONSTRUCTION EQUIPMENT ARE WIDELY DISPERSED IN CANADA
Hyco Canada
Pullmaster Winch
Gerdau AmeristeelManitoba
Bosch RexworthCanadaCascade Canada
38
Growing Canadian demand for construction equipment is increasingly met by importsAmerican manufacturers dominate imports of construction equipment to CanadaThe number of major construction equipment manufacturing facilities in Canada is decliningSweden has ranked as the 3rd largest exporter of heavy equipment into Canada since 2002 with 4.6% share in 2005 (USA had 61.6% and Japan 13.8% share of imports in 2005).
Demand growth
Demand growth
Market fragmentation
Market fragmentation
Import-basedImport-based
Construction equipment is a highly fragmented market with a diverse customer baseLarger global manufacturers like John Deere and Caterpillar dominate the Canadian market, operating their own dealerships in Canada that import all productsCanadian manufacturers are small and tend to be specialized
Canadian construction equipment market experienced rising demand from 2003-2005Strengthening of Canadian economyRenewed growth in the industrial, commercial and institutional (ICI) construction sector, especially in the oil and gas sectors (many new large-scale projects)
THE CONSTRUCTION EQUIPMENT SECTOR IS DOMINATED BY IMPORTS- Increasing share of imports are coming from Sweden
Trends within the Canadian Construction Equipment industry
39
Overview Canadian Manufacturing Industry
Canadian Automotive industry
Canadian Construction Equipment Industry
Manufacturers
Suppliers
Recommendations
References
Appendices
CONTENT
40
RECOMMENDATIONS FOR DOING BUSINESS WITH THE CANADIAN AUTOMOTIVE INDUSTRY
3.3.
2.2.
1.1.
Country specific
3.3.
2.2.
1.1.
Industry specific
Consider Canada due to its similarities in geography, climate and business environment to that of Sweden
Invest in Canada, where the overall cost of doing business is the lowest among G7 Countries*
Benefit from geographic proximity to USA and a well-integrated market within North America. Use Canada as a gateway to the larger U.S. market.
Establish a diverse customer base beyond “Big Three” and target growing foreign auto assemblers & suppliers in Southern Ontario
Focus on opportunities in high-value design and engineering, as automakers increase outsourcing to suppliers
Utilize competitive advantages as a new foreign entrant over less efficient domestic automotive players that have higher legacy costs, unionized work force, older facilities and technology, etc.
*Competitive Alternatives: KPMG’s Guide to International Business Costs, 2006 edition.
41
Overview Canadian Manufacturing Industry
Canadian Automotive Industry
Canadian Construction Equipment Industry
Manufacturers
Suppliers
Recommendations
References
Appendices
CONTENT
42
HOW CAN STC IN CANADA SUPPORT COMPANIES TO DO BUSINESS IN CANADA
To investigate market dynamics, players, potential and competitiveness for Swedish firms
Customer AquisitionCustomer Aquisition
Distribution search
Distribution search
Market CheckMarket Check
Country specific
Pre Aquisition analysis
Pre Aquisition analysis
Supplier search
Supplier search
Company establishment
Company establishment
LegalLegal
To assist with identification of potential companies for acquisition in a confidential manner (without disclosing the identity of the Swedish client at initial stage) and to help with background checks and legal matters
To assist with identification of potential suppliers based on a profile defined by Swedish clients
To assist with incorporation of a company, immigration and management transfer, site selection, staffing, opening bank accounts and to provide referral to business service providers
To provide referral to reputable law firms or experienced lawyers with expertise on the subject matter, when needed. Among examples are assistance with contracts/agreements, trademarks, patents, and incorporation.
To scan the market for potential candidates and to narrow down the search into a few interesting and intereteddistributors / partners for a face to face meeting with Swedish firms
To assist with business development and sales before, during and after the market entry & establishment
43
CANADA IS AN ATTRACTIVE MARKET AND STC HAS HELPED MANY SWEDISH COMPANIES TO ENTER OR ESTABLISH
WHY CANADA?Ontario is an automotive powerhouse and at the door step “Big Three” and also home to other Asian car makersSound economy and politically stable Excellent infrastructure Among most competitive countries to do business in G7 with 5.5% cost advantage over USA*Talented and skilled workforce with the lowest labor cost among G7 countries*No significant trade barrier for majority of products/servicesStill within reach by phone during business hours to communicate with clients/partnersNo significant cultural barrier compared to many other countriesThe largest U.S. trading partner with more than $1billion trade / day!
*Competitive Alternatives: KPMG’s Guide to International Business Costs, 2006 edition.
44
Overview Canadian Manufacturing Industry
Canadian Automotive Industry
Canadian Construction Equipment Industry
Manufacturers
Suppliers
Recommendations
References
Appendices
CONTENT
45
APPENDIX 1: DEFINITIONS
Shipments (value of) Summation of value of shipments produced by establishment, receipts of custom and repair revenue.
Light truck Vehicle weighing less than 14,000 lbs (or 6.35 tons)
Medium-duty truck Vehicle weighing from 14,001 to 26,000 lbs (or 6.35 to 11.79 tons)
Heavy-duty truck Vehicle weighing from 26,001 to 33,001 lbs (or 11.79 to 14.97 tons). Also included off-highway trucks.
Truck class: In Canada, truck manufacturers also use a class system to designate trucks of various gross vehicle weight ratings:
Class 1 and 2 vehicles: Less than 10,000 lbs. (or 4.54 tons)Class 3, 4, and 5 vehicles: 10,001 to 19,500 lbs. (or 4.54 to 8.85 tons)Class 6 vehicles: 19,501 to 26,000 lbs. (or 8.85 to 11.79 tons)Class 7 vehicles: 26,001 to 33,000 lbs. (or 11.79 tons to 14.97 tons)Class 8 vehicles are 33,001 lbs. (or 14.97 tons) or more.
Sources: http://strategis.ic.gc.ca/epic/internet/inauto-auto.nsf/en/h_am00614e.html#T andhttp://www.tc.gc.ca/pol/en/report/TruckActivity/Chapter3.htm
46
APPENDIX 1: DEFINITIONS (continued)
Tier 1 SupplierManufacturer to the vehicle assemblers who are responsible for delivery of the finished assembly, product development and continued technology renewal.
Tier 2 SupplierProducer of parts providing value-added to minor sub-assembly.
Tier 3 SupplierSupplier of engineered materials and special services, such as rolls of sheet steel, bars and heat treating, surface treatments.
NOTE: In Canada, T1 and T2 tend to define products/components rather than companies, with many of the key suppliers considered both T1 and T2.
Source: http://strategis.ic.gc.ca/epic/internet/inauto-auto.nsf/en/h_am00614e.html#T
47
Area: 9,984,670 km2
High population concentration along Canada’s southern
border with the U.S., especially in Southern Ontario & Quebec
APPENDIX 2: CANADA’S POPULATION DENSITY (2001)
48
APPENDIX 3: NEW INVESTMENTS IN CANADA’S AUTOMOTIVE ASSEMBLY SECTOR
Recent string of major investments contributes to favourable outlook of Canada’s automotive sectorOver SEK 46 billion in new auto investments in Ontario announced since 2004 Canada is consistently receiving 20% of new North American assembly investmentsGovernment is highly proactive in investment promotion to automotive manufacturers, with SEK 6.6 billion in government aid since 2004
Ontario auto investments
(2004-July 2006)
SEK 99 millionSEK 1.0 billionHonda
Not availableSEK 427 millionToyota Boshoku (parts supplier)
SEK 6.7 billionSEK 46.9 billionTotal
SEK 39 millionSEK 657 millionNemak
SEK 427 millionSEK 1.8 billionNavistar
SEK 806 millionSEK 5.0 billionDaimlerChrysler
SEK 820 millionSEK 7.2 billionToyota
SEK 292 millionSEK 7.2 billionLinamar
SEK 1.3 billionSEK 7.2 billionFord
SEK 2.9 billionSEK 16.4 billionGeneral Motors
Government aidProject valueCompany
Source: Federal and Ontario governments
49
APPENDIX 4: CANADA’S BUSINESS ENVIRONMENT
Canada ranks second in the G7 as a low-cost investment location for the automotive sector.Compared to the U.S., lower construction costs (-8%), lower office lease costs (-15%), lower transportation costs (-28%), and lower energy costs.
Canada has an attractive business environment for foreign investmentBudget surplus and low inflationLowest interest and depreciation costs in the G7
Canada offers the lowest labour and benefit costs in the G7, with a nearly 12% advantage over the U.S.Wages generally lower than most U.S. states
Canada is well-integrated into the U.S. transportation system
Source: Competitive Alternatives: KPMG’s Guide to International Business Costs, 2006 edition
“Canada’s OE parts sector has always found it easyto work with overseas-based parts suppliers.”
Dennis Desrosiers, Desrosiers Automotive Consultants Inc.
50
Langley, British ColumbiaRockbreaker equipment accessories200Thiessen Equipment Ltd. (subsidiary of Atlas Copco)
Thornbury, OntarioAttachment for underground vehicles130Breaker Technology, Inc.
Mirabel, QuebecLoader, excavator and forklift attachments50Garier Inc.
Duncan, British ColumbiaAttachments for earthmoving vehicles and cranes80Pro Mac Manufacturing
Edmonton, Alberta Attachments for earthmoving, lifting, and road vehicles
300Weldco-Beales Manufacturing
Surrey, British ColumbiaBuckets, couplers, blades, and forks for earthmoving and road vehicles
360CWS-IMAC
Mississauga, OntarioLoader and excavator attachments35Nye Manufacturing
Waterloo, Ontario
Hartland, New Brunswick
Burlington plant, Ontario
Etobicoke, Ontario
Edmonton, Alberta
Purchase decisions
Blades for earthmoving and road vehicles75Valley Blades Ltd.
Attachments for earthmoving and road vehicles75Craig Manufacturing
Parts for underground loaders
Parts for underground vehicles
Blades and other parts for earthmoving vehicles
Business
200Sandvik Mining & Construction Canada Inc.
250Lovat Inc.
380Black Cat Blades Ltd.
EmployeesManufacturer
APPENDIX 5 (1/2): MANUFACTURERS OF CONSTRUCTION EQUIPMENT ATTACHMENTS
Construction equipment attachment manufacturers tend to be small, locally-based players in Canada
51
APPENDIX 5 (2/2): MAKERS OF CONSTRUCTION EQUIPMENT ATTACHMENTS ARE LOCATED THROUGHOUT CANADA
Black Cat Blades
CWS-IMAC
Nye Mfg.
Weldco-Beales
Craig
Pro-Mac
Valley BladesSandvik
Garier
Lovat Inc.
Breaker Technology
Thiessen Equipment