Canadian Auto Productivity Increases

Anthony Fontanelle
August 1, 2007

The Canadian auto industry is still booming in spite predictions that Canadian auto buyers will slow down this year. In fact, based on the trend, it is expected that Canadian auto sales will post an increase this year over 2006 figures. The reason for this is the continuing healthy economy of the country.

Another indication that the country’s auto industry is in good shape is reported recently by The Business Edge. According to the Ontario paper, the productivity in the auto industry in Canada has increased more than in the United States. The facts were announced by Scotiabank which is formally known as The Bank of Nova Scotia.

According to reports, the lead of the Canadian auto sector over the United States’ increased by eight percent last year. In 2005, Canada leads the United States by five percent. The reports stated that the time required for workers in Canadian auto assembly facility to assemble a vehicle became better by 3 percent. This increase is said to be 50 percent more than the increase in the overall economy of Canada.

Carlos Gomes, an auto industry specialist for Scotiabank, says: “The widening of Canada's productivity lead in auto assembly reflects a record $10 billion in machinery and equipment investment, mostly robotics and automation, over the past four years.”

Gomes added: “Given the more than 40-per-cent appreciation of the Canadian dollar, which has sharply eroded the competitive advantage of Canada's manufacturing sector, rising investment in machinery and equipment and ongoing productivity gains are crucial to ensure the competitiveness of Canada's manufacturing base.”

An example of the increasing productivity efficiency in Canada, the Business Edge reported that truck output in Oakville and Oshawa assembly plants have increased by more than 60 percent. This increase in truck production though might seem contradictory to the demand for smaller vehicles. With more trucks being produced, automakers will be forced to offer discounts for them in order to attract the attention of auto buyers.

The increase in productivity in the Canadian auto industry means that production of auto parts for Canadian consumers such as those at Starter Canada will also increase. The increase in production also means that the increasing demand in the Canadian auto market will be met.

The value of the loony may be increasing but analysts fear that it will soon come to an end. But for now, Canadian auto buyers are still buying more vehicles. With a healthy economy, the number of people having successful careers will be able to afford to buy new cars.

This increase may put a stop to the trend which saw Canadian consumers buying their cars across the border. This strategy is used by consumers since in comparison they can buy cars in the United States cheaper.

The increased car buying in Canada is also the result of the discounts being offered by automakers to consumers in the country. With more consumers staying away from large vehicles such as pickup trucks and SUVs, automakers are faced with the problem of getting rid of their produced light trucks. The answer, of course, is offering discounts. With these discounts, Canadian auto buyers are attracted to buy these large vehicles. The healthy economy of the country though is what allows automakers to offer discounts for their vehicles.

Source:  Amazines.com