Canadian Auto Rebound Lags Behind US as Loonie Continues to Rise

Canadian Auto Rebound Lags Behind US as Loonie Continues to Rise

While the United States’ auto industry continues to do a stellar job rebounding, the rise of Canada’s dollar has automakers turning their backs on the plants in Canada.

Reports are coming in that investment in Canada’s auto plants may fall to just $1.2 billion this year, the lowest since the mid-1980s. It’s also 62-percent lower than the past decade’s average according to Bank of Nova Scotia, which means Canada will continue to lag behind. To compare, Ford is planning to invest $13.3 billion in US plants over the next four years, leaving very little funding left for Canada’s plants. In fact, Ford this year closed their St. Thomas Assembly Plant in Ontario that had made their Crown Victoria and Lincoln Town Car.

This is a vast change of events compared to 2003, when Ontario, Canada was the largest North American producer of vehicles – taking the spot from the state of Michigan. But now their surging currency and companies in the US cutting labor costs has shifted investment back to the States.

Another factor impacting the spending is the fact that the US has a new labor agreement with the United Auto Workers (UAW), helping level the labor costs compared to foreign rivals. The Canadian Auto Workers (CAW) however are working with the automakers for a new contract for 2012. Unfortunately though, the CAW has fought many of the cost cuts the UAW has accepted.

[Source: Automotive News]