Flavio Volpe, the new president of Automotive Parts Manufacturers Association, says auto parts makers can build on their strengths to grow.Michelle Siu/The Globe and Mail
Retaining Canada's existing auto assembly plants is crucial to keeping the country's auto parts industry healthy, but Canadian companies can also compete globally, says the new head of the Automotive Parts Manufacturers Association.
"Our guys have really come on in terms of globalization – being able to go to market and compete for product programs in other jurisdictions," Flavio Volpe said in his first interview since taking over as head of the association this month.
Mr. Volpe takes over from Steve Rodgers, an industry veteran who was appointed president of the group in 2010.
Mr. Rodgers came on as auto parts makers were still struggling to recover from the recession of 2008-2009, when vehicle production in North America collapsed, Chrysler LLC and General Motors Corp. went into chapter 11 bankruptcy protection and both the assembly and parts sectors of the auto industry shed tens of thousands of jobs.
The industry has recovered, but parts makers now face the challenge of adapting to the southward shift of the industry in North America as tens of billions of dollars in investment get pumped into Mexico and the southern United States and production grows in those regions.
Sales by Canadian parts makers have recovered to prerecession levels – $24.5-billion last year, compared with $24.3-billion in 2008 and $18.9-billion when the recession hit its trough in 2009. Employment in the industry rose to 89,000 from 68,000 in 2010. But neither shipments nor jobs have returned to the peaks hit in the early 2000s, according to data compiled by DesRosiers Automotive Consultants Inc.
Parts makers need to build on their strengths to grow, said Mr. Volpe, who joins the association after three years as managing director of solar energy company Wirsol Solar Canada. Prior to that, he was chief of staff for Sandra Pupatello when she was Ontario's minister of economic development before she left the cabinet in 2011.
Ontario is unique, he said, in that it is the only jurisdiction in Canada and the United States that is home to assembly plants operated by five different auto makers.
"This industry has a 100-year plus footprint here and with that 100 years of history comes a refinement of a skill set, quantitative and qualitative, that underpins our competitiveness," he noted.
Nonetheless, Canadian parts makers are following their customers southward, as illustrated by Magna International Inc. of Aurora, Ont., breaking ground last week on a new plant in Tennessee to make seats for a General Motors Co. assembly plant in that state. Mexico will be an even bigger magnet, with new plants opened earlier this year by Honda Motor Co. Ltd., and Mazda Motor Corp., and announcements of new plants since then by BMW AG and Daimler AG.
In order to compete as auto makers' doors "are being hammered on every day by our competitors," Canadian companies also have to find a way to get their feet in those doors, Mr. Volpe said.
One of the ways the association helped that happen was to co-ordinate 14 Canadian suppliers, the University of Waterloo and Toyota Motor Manufacturing Canada Inc. to develop the Connected Car, a version of the RX350 assembled by Toyota in Cambridge, Ont., that carries technology developed by the companies and serves to demonstrate the companies' capabilities.
The vehicle will be on display in Detroit next week as part of the Intelligent Transportaton Systems conference and at a Ford Motor Co. technology show in Dearborn, Mich., the following week.
"One of the things [parts makers] said was 'we can't get attention, we can't get the auto makers to look at us,'" Mr. Rodgers said.
The vehicle has opened doors at the auto makers, he noted.