The Economic Contributions of the Japanese Brand Automotive Industry to the Canadian Economy, 2001 – 2016
JAMA Canada is releasing a new report examining the economic contributions by the Japanese automotive industry in Canada over the last 15 years. The study was prepared by Greig Mordue, Associate Professor at McMaster University and Brendan Sweeney, Project Manager at the Automotive Policy Research Council at McMaster University.
Summary of the findings:
– In 2001, the Japanese-brand automotive industry in Canada directly employed 50,667 people.
– By 2016, it directly employed 85,678 people, an increase of 35,011 (69.1%) over 2001.
– Direct, intermediate and spin-off employment of almost 203,000
– In 2016, direct employees generated more than $5 billion in income, $1.5 billion in EI premiums, CPP/QPP contributions and Personal Income Taxes.
This report illustrates the extent to which the shape of the Canadian auto industry has changed in the post-NAFTA era. As in the US and Mexico, investment in Canada by offshore headquartered companies has grown significantly, resulting in benefits for local suppliers, but also leading to new investment in parts manufacturing. The story has been obscured in the high level statistics on Canadian automotive production as the growth of Japanese investment has been offset by retrenchment of US automakers and parts makers.
In 2016, Japanese brand production in Canada exceeded 1 million vehicles for the first time, representing about 44% of total light vehicle output, up about 91% from 535,500 units in 2000. Now a fully integrated part of the Canadian auto industry, Japanese automakers have played a key role in maintaining the footprint of the sector through a period of global restructuring and technological change.
Going forward, this has some important implications for industry strategy and trade policy in Canada:
– how to encourage continued investment in the sector?
– how to play a larger role in global supply chains?
– what is the intersection between NAFTA and other modern trade agreements such as CETA and TPP?
– how to align the needs of the North American market while maintaining flexibility to pursue other national policy objectives (e.g. carbon reduction), as well as remain open to new advanced technologies and new market opportunities (e.g. cross-cumulation provisions with other preferential trade partners)?