Transportation equipment accounts about 17% of Canada’s manufacturing base but roughly one-third of Ontario’s. A collapse of GM, Chrysler and Ford would loom large in the economy – the Detroit big three still dominate motor-vehicle production in Canada. That said, a fundamental change in Canada’s auto industry over the last 20 years provides a certain buffer for the Ontario economy.

A Statistics Canada study reports that other automakers (Japanese-owned for the most part) increased their share of motor-vehicle output from virtually zero in 1987 to 35% in 2006. And contrary to the popular view, they now use fewer imported parts in their vehicle exports from Canada than the once-big three: 46% versus 77%. So although the overseas-based producers account for only 35% of total output, they account for more than half of Canada’s total net exports of auto products (in 2006, $6 billion versus about $4 billion for the Detroit three). In short, Ontario’s automotive eggs are not all in one basket.

Mounir R. El-Ayari, CIM, FCSI, C.h. P. Strategic Wealth
Investment Advisor
Associate Portfolio Manager
e-mail: mounir.el-ayari@nbf.ca