The Canadian auto sector is making long-term changes to pivot reliance away from the United States.
A February survey by KPMG revealed that 82 per cent of manufacturers and suppliers are adjusting their supply chain strategies in the wake of the trade war. But now, it’s becoming clearer what those new strategies look like.
“Government contracts for us, we’ve seen a bit of an uptick and we’re hoping to pivot that business greater into the direction of defence,” said Philip Turi, CEO of ITD Industries, in an interview with CTV Your Morning earlier this month.
ITD Industries manufactures container chassis, specialty trailers, and other automotive components. With many of its products affected by tariffs on steel, aluminum, and autos, it is relying more heavily on mobile command centres that are being sold to provincial governments in Ontario and Manitoba.
“This is rapidly deployable infrastructure that can be used for central command operations. We’ve built helipads. If you think about drone operations, launching drones have all been done out of our trailers,” Turi said.
While Turi admits he is nervous about the outcome of Canada-United States-Mexico Agreement (CUSMA) renegotiations, calling them “vital,” some of the changes his business is making will continue regardless of the outcome.
“Those changes towards new products, they’re going to carry on. We’re going to continue to sell those products into the Canadian market,” he said.
‘What can we do for other countries?’
Dave Power, KPMG’s national sector leader for automotive, says this is a pattern playing out across much of the industry.
“The thought that even if CUSMA gets renegotiated, that we’ll go back to where we were before the current trade discomfort with the United States, that’s just not realistic,” he said.
Canada currently has 15 active free trade agreements that cover 51 countries, according to the Trade Commissioner Service.
“The question is what can we do for other countries outside of the U.S. right now,” Power said.
In January, the federal government signed a memorandum of understanding with South Korea to collaborate on domestic electric vehicle manufacturing projects. An agreement the Liberals signed with China to allow 49,000 Chinese electric vehicles into the market at a tariff rate of 6.1 per cent is also aimed at generating increased joint-venture investment into Canada’s automotive manufacturing sector in the future.
‘Canada maintained strong positions’
Canada is one of the few countries in the world that has a fully integrated electric vehicle battery supply chain, earning us a ranking of second place in BloombergNEF’s Global Lithium-ion Battery Supply Chain ranking.
“Canada maintained strong positions in all supply chain categories but declined in battery manufacturing,” BloombergNEF reports.
That may change. There are signs of boosted battery manufacturing capacity in the future. Volkswagen Group and PowerCo SE are currently constructing a North American EV battery cell “Gigafactory” in St. Thomas, Ont. It’s expected to be completed in 2027, according to Infrastructure Ontario.
In the meantime, Ottawa is hoping to ramp up demand for electric vehicles domestically with its five-year EV affordability program that will offer rebates for individuals and businesses who purchase or lease battery EVs and plug-in hybrids.
“The automotive industry is resilient,” Power said. “Forty per cent of the companies we surveyed believe that they will come out stronger.”
