“The Detroit Three are in much better financial shape than three years ago. General Motors and Ford are now profitable, and Chrysler appears poised to begin making real money soon. That success has lead to plans to spend billions of dollars on North American plants, but Automotive News reports that our friends to the north aren’t seeing much of the money.
Ford, GM and Chrysler are reportedly planning to spend at least $13.3 billion in the U.S. in the next four years, but investment in Canadian plants is dropping fast. In fact, there was only $1.2 billion in plant spending in Canada in 2011, down 62 per cent versus the average of the last decade. A big reason for the decline in spending is the strength of the Canadian dollar and the relative weakness of the U.S. dollar.
Automakers are also spending more in the U.S. thanks to a new labour agreement with the United Auto Workers, which helps level labour costs compared to foreign rivals. Meanwhile, automakers and the Canadian Auto Workers are now working on a new contract for 2012. The CAW has so far fought many of the cost cuts that the UAW has accepted.
To make matters worse for the Canadian auto climate, Ford closed the St. Thomas plant that once built the Lincoln Town Car and Ford Crown Victoria, and GM has reportedly announced plans to build two models in the U.S. that are currently being built in Canada.
We’re guessing that while the Canadian announcements have been few and far between in the past year or two, that could change if the CAW makes a few concessions at the bargaining table in 2012. If not, auto jobs in Canada could be in real trouble.”