A Multi-Scalar Analysis of Restructuring in the Canadian Automotive Industry Supply Chain, 2005-2014

Résumé:

The Canadian automotive industry underwent significant changes between 2005 to 2014. Many of these changes were the result of the recession of 2008-09. The paper examines these changes in order to 1) provide a detailed profile of the Canadian automotive industry today, 2) profile the nature and extent of change in the Canadian automotive industry during this period, and 3) discuss the implications of these changes on the industry moving forward. It also comments on the shortcomings of using government data that relies on the North American Industrial Classification System (NAICS) when studying and profiling the complex automotive industry supply chain.
Data for the paper is drawn from a database of 21 Original Equipment Manufacturer (OEM) assembly and parts production facilities and 592 independent parts supplier plants that operated in Canada between 2005 and 2014. The database tracks information related to several variables, including parent ownership, nationality of ownership, location, employment, unionization, and product category (including NAICS codes reported to the Canadian government and qualitative descriptions of the product(s) produced at that plant). These variables are tracked over time and can provide both static ‘snapshots’ of the industry and longitudinal analyses of change over time.
The data illustrate several important changes in the structure and composition of the Canadian automotive industry between 2005 and 2014. The number of OEM assembly plants fell from 12 to 11, while the number of OEM parts production facilities fell from 9 to 6. OEM employment fell from nearly 48,000 in 2005 to just over 36,000 in 2014. Employment losses were concentrated at GM and Ford. Employment at Toyota, who added a production facility during this period, increased, and employment at Honda and Fiat-Chrysler remained relatively stable. Union density within OEMs decreased from approximately 80 per cent in 2005 to approximately 60 per cent in 2014. This is largely related to job losses at GM and Ford and increases at Toyota, which surpassed GM as the largest Canadian OEM employer in 2014.
The data also illustrate important changes in the structure and organization of the independent automotive parts manufacturing industry between 2005 and 2014. The number of independent parts supplier plants fell from 562 to 390, and employment in these plants fell from just over 128,000 in 2005 to 89,000 in 2014. Employment losses were concentrated among US-owned supplier plants, which employed over 38,000 people in 2005 and only 13,000 in 2014. Conversely, employment in Japanese-owned supplier plants increased from just over 10,000 in 2005 to 15,000 in 2014. Moreover, Chinese-owned independent parts suppliers, which had no operations in Canada in 2005, now employ approximately 3,600 people. Union density in the independent parts supplier industry also fell considerably, from 35 per cent in 2005 to 20 per cent in 2014.
The paper examines these changes through the lens of global production network theory (GPN). In so doing, it builds on research that draws upon GPN theory to examine industry restructuring at the continental or global scale. The paper also situates the Canadian automotive industry, which is concentrated in the province of Ontario, within its national context and within the Great Lakes cross-border region in order to examine the relationship between restructuring at the regional and continental scales. It also makes several empirical conclusions of interest to policy-makers and industry stakeholders. First, the economic impact of the Canadian automotive industry (measured in employment) is larger than government data suggests. Second, the composition of the industry changed considerably over the past decade, and Japanese-owned OEMs and parts suppliers play an increasingly prominent role in the Canadian industry, and Chinese-owned firms now comprise a substantial part of the industry. Finally, the paper argues against NAICS-based analyses of the automotive industry, which, due to the complexity of the supply chain and the likelihood that several important sub-sectors (e.g. glass, die casting, rubber) will be categorized in NAICS codes other those than pertaining to motor vehicle parts manufacturing, tends to diminish its impact.