We now have capital expenditure estimates for 2006 for the automotive sector in Canada (Vehicle Assembly, Automotive Parts and Truck Body and Trailer Manufacturing) and the results are very positive. See attached.
Total new and repair expenditures are forecast to increase by over $300 million in 2006 and exceed $4.8 billion. Only during the building boom of the late 1990's when Honda, Toyota and Suzuki were adding plants into Canada and GM, Ford and DCX were retrofitting plants were expenditures higher. Capital expenditures this decade are averaging about $4.5 billion per year versus $3.6 billion per year in the 1990's.
This is further indication that the Canadian automotive sector is NOT in crisis. The OEM's and their suppliers would not be committing close to $5 billion per year in capital to Canada if they did not see a positive future for the Canadian automotive sector. An industry in trouble would never invest at this level. New plants are being built and old plants retrofitted. Almost all of this investment is in Ontario with some supplier investment in Quebec. This means that Ontario should be able to continue its record of being the number one geography in North America for the production of new vehicles. Ontario out-produced Michigan for the first time two years ago and will be less affected than Michigan by the restructurings announced by Ford and GM. So Ontario will continue to grow its automotive manufacturing base while almost every other jurisdiction in North America struggles to maintain it's automotive manufacturing base or adjust to less vehicle and parts production in its area.
We expect significant investments on the supplier side to follow the Toyota investment into Canada and to continue to grow to supply existing Honda, Toyota and Suzuki plants in Canada. Indeed Canada is proving to be an excellent place for overseas suppliers to locate for all the "new domestics" who have come to North America to build vehicles. We expect "new domestic" vehicle production in North America to exceed 8 million units by the end of the decade up from about 6 million units in 2005. About a hundred overseas suppliers have chosen Canada as their base of operations to supply these "new domestic" plants and this number will grow over the next few years.
Moreover, with known announcements through to the end of the decade we expect these capital expenditures to be at the very least maintained if not grow into the $5 billion plus range to the end of the decade. The only possible downside is that some of this capital is targeted at reducing labour costs so employment levels are unlikely to grow by the same amount or grow relatively modestly. But a highly efficient, high productivity industry has a strong future even if there is little employment growth.
UPDATE---There is no company specific information but very little of this is targeted towards Windsor ... the DCX paint plant and a few other smaller parts sector investments. Windsor Essex county is definitely not getting anywhere near what other jurisdictions in Ontario and Quebec are receiving.
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