How important is the Automotive Industry to Canada?

First Ford Mustang Shelby GT350 rolls of the line in Flat Rock, Michigan (Bill Ford attending)

The U.S. bail-out of General Motors and Chrysler in 2009 by President Obama with the use of loan guarantees was viewed by many pundits as reckless and in opposition to the principles of capitalism.

Regardless of one’s view on the financial lifeline thrown by the Democrats, the importance of the auto industry to both Canada and the US is beyond question.

Extruded Aluminum

Before judging a government’s support for the auto industry, it’s worth arming oneself with a rudimentary understanding of its scope. As it is in the US, the auto industry in Canada is a key driver of our economy and a vital contributor to our economic stability.

It’s reported that auto manufacturing represents 10% of Canada’s manufacturing GDP (gross domestic product) and 13% of its total merchandise exports.

Perhaps more importantly, the automotive industry directly employs approximately 125,000 Canadians, who produce a new car roughly every 14 seconds, which represents 14% of all vehicles manufactured in North America.

PHEV battery pack

In addition to those directly engaged in automotive production, the industry employs another 400,000 or so folks indirectly. Those Canadians are employed by more than 670 suppliers from other industries, including the information and technology sectors.

Well aware of the importance of the auto industry to Canada’s financial health, the federal government selectively contributes repayable funding to support innovation in emerging technologies that advance our stake in the global automotive industry.

These investments typically employ Canadians while also developing cleaner, more sustainable products and practices within the respective recipient industries.

The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development

An example of such is the recent $18.2 million contribution split between Astrex Inc. ($17.0M) to establish a facility to produce lightweight high-strength aluminum automotive components, and GBatteries Energy Canada Inc. ($1.2M) to develop longer-lasting batteries for electric vehicles.

The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development had this to say about these recent contributions:

“The investments made today in Astrex and GBatteries will lead to new products and services that are more energy efficient, emit lower carbon emissions and promote healthier communities. The investments will give middle-class Canadians working in the auto sector the opportunity to design and build the cars of the future. In the process, they will develop the skills that prepare them for the jobs of the future. That’s how innovation leads to a better Canada.”

SOURCE Innovation, Science and Economic Development Canada

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