A SHORT HISTORY OF THE JAPANESE AUTOMOTIVE INDUSTRY IN CANADA

Japan Automobile Manufacturers Association of Canada

A SHORT HISTORY OF THE JAPANESE AUTOMOTIVE INDUSTRY IN CANADA

Commemorating the 20th anniversary of the Japan Automobile Manufacturers Association of Canada 1984 – 2004

Second Edition 2009

CONTENTS

1. Early History of the Canadian Auto Industry ...... 6

2. Historical Development of the Japanese Auto Industry in Canada ...... 10

i) In the beginning, circa 1965 ii) 1970’s - Oil ‘shocks’: new demand for small, fuel efficient cars iii) 1980’s - Investments in manufacturing iv) 1990’s - Expansions & growth: vehicles & auto parts v) Into the 21st century – An integral part of the Canadian auto industry vi) The Impact of Japanese Automotive Investment in Canada vii) Canadian auto-related developments in Japan viii) JAMA Canada Chairmen, 1983 – 2008

3. A Collection of Personal Observations on JAMA Canada, Pacific Automotive ...... 22 Co-operation (PAC) and the Japanese Auto Industry in Canada The Hon. Edward C. Lumley, former Minister of Industry, Trade & Commerce, Government of Canada Barry C. Steers, former Canadian Ambassador to Japan Patrick J. Lavelle, former President, Automotive Parts Manufacturers’ Association of Canada Morley Bursey, Honourary Executive Director, Automotive Parts Manufacturers’ Association of Canada Slawek Skorupinski, former Director General, Automotive, Industry Canada Neil de Koker, President, Original Equipment Suppliers Association (OESA), former President, Automotive Parts Manufacturers’ Association of Canada

K. Kawana, former President, Nissan Canada & Chairman, JAMA Canada (1984 – 1986) S. Yoshioka, former Secretary General, JAMA Tokyo & Director, JAMA Canada S. Yanagisawa, former President, Toyota Canada & Chairman, JAMA Canada (1986 – 1989) Y. Nakatani, former President, Toyota Canada & Chairman, JAMA Canada (1996 – 2002) H. Takagi, former President, Pacific Automotive Co-operation (1992 – 1995) M. Obi, former President, Pacific Automotive Co-operation (1995 – 1997) T. Iwatake, Senior Director General, International Department, JAMA Tokyo & Director, JAMA Canada

4. Highlights & Timelines of JAMA Canada Members ...... 42

5. CAJAD – Canadian Association of Japanese Auto Dealers ...... 58 by Brian Caldwell, former Executive Director, CAJAD

6. Commentary – Four Decades of Automotive Progress ...... 62 by Dennis DesRosiers, President, DesRosiers Automotive Consultants Inc.

Appendices: 1. Snapshot of the Japanese auto industry in 2008 2. Japanese auto parts related operations in Canada

CHAPTER 1 EARLY HISTORY OF THE CANADIAN AUTO INDUSTRY

JAMA Canada celebrated its twentieth anniversary in 2004. That year was also notable for the 75th anniversary of diplomatic relations between Canada and Japan, as well as the 100th anniversary of the Canadian auto industry. It is fitting therefore to take a brief look at the early development of the industry in Canada.1

While a number of steam and electric self-powered pleasure carriages preceded the event, it was in Windsor, Ontario that the Canadian automotive industry was truly born in1904 when a group of local businessmen arranged with Henry Ford to ferry chassis from Detroit to Windsor. Wheels and bodies were assembled and 117 Ford vehicles were produced in the first year of operation.

Canada’s protective tariff induced the first US manufacturer to produce vehicles in this country for the Canadian and British Empire markets. Although Britain and the US had enjoyed free trade as the result of an 1854 agreement, the end of the US Civil War resulted in the abrogation of that accord and led to a US policy of tariff protection which was to last 30 years. It was ultimately echoed, in 1879, by the protectionist “National Policy” of the Conservative government of Sir John A. Macdonald, under which gasoline buggies fell heir to a 35 per cent tariff established to protect the Canadian carriage industry. Credit: Library and Archives Canada. In 1908 Canadian automotive pioneer Colonel “Sam” McLaughlin launched the McLaughlin Motor Car Company in Oshawa. Over the next few years, a rapidly-expanding North American automobile market attracted hundreds of new entrants, most of which disappeared after producing a prototype model. In Canada, the 35% tariff proved insufficient to protect an infant industry and all survivors were allied with American companies. An attempt to negotiate free trade with the US in 1910, although accepted by US Congress, cost the Liberals the 1911 election. Early McLaughlin Buick circa 1910. World War 1 drove motor vehicle production and made Canada the second largest producer in the world from 1918 until 1923. By 1922, Canadian vehicle production exceeded 100,000 units, with almost half destined for foreign markets. General Motors had been formed as the result of a merger between the McLaughlin and Chevrolet motor companies and, in 1924, Chrysler established production via Maxwell-Chalmers in Windsor, Ontario.

The motor vehicle had truly become part of the Canadian way of life.

5 Highlights in the History of the Canadian Auto Industry

1904: 117 vehicles assembled at the Ford plant in Windsor, Ontario

1914-18: War production results in 80,000 motor vehicles being produced in Canada in 1918; from 1918 to 1923, Canada is the second largest producer of motor vehicles in the world

Credit: Library and Archives Canada. 1926: The concept of Canadian content is introduced when import duties are cut and a drawback is introduced of 25% on materials used in the manufacture of vehicles provided that at least 50% of the cost of the finished vehicle is produced in Canada

1929: 262,000 motor vehicles produced in Canada, a milestone not to be achieved again for 20 years

1936: As the result of a Tariff Board study, a system of conditional free entry is implemented if parts were of a kind not made in Canada, and subject to content Body Plant Durant Motors 1930. requirements

1939-45: By 1943, the 500,000th unit of Canadian military motorized equipment rolls off the assembly line; from 1939 to 1943, capital employed increases by 142%, employment doubles to over 45,000 and industry salaries and wages increase by 222% to $100 million

1958: Old world producers are now exporters to the new world as even the US becomes a net importer of passenger vehicles. Canadian production of automobiles slides to a five year low of 297,373 while imports, mainly from the UK and Germany, total 100,000, about 35% of domestic production

1960: The Canadian Government established a Royal Commission on the Automotive Industry to look into the prospects of the motor vehicle industry in Canada. Dean Vincent Bladen, an economist and Dean at the University of Toronto was appointed to conduct the study

1961: The key recommendations of the Bladen report: • Elimination of the 7-1/2% excise tax on automobiles • A 10% duty on imported vehicles from the UK • Changing content requirements to ‘Canadian’ rather than ‘Commonwealth’ • Parts and finished vehicles could enter Canada duty free when imported by a manufacturer who achieved the required content • Content was to be established as a percentage of the total cost of manufacture of vehicles made in Canada, plus the value for duty of imported vehicles and replacement parts, linking content with sales rather than production • The revised content schedule for passenger cars was 30% up to 5,000 units, 50% for the next 30,000; 55% for the next 55,000; 70% for the next 100,000, and 75% for above 200,000

6 1962: After studying the Bladen Report, a Canadian Government Committee, chaired by Simon Reisman, recommended an export duty rebate program for key automotive components used in vehicle production

1963: Canada adopted a second duty rebate program, called the Drury Plan (after Minister of Industry Bud Drury), that included all automotive products, even though officials knew this would likely be challenged as an export subsidy under GATT. Almost immediately, petitions were filed with the US Treasury Department complaining about Canada’s duty rebate program

1964: A petition filed by Modine Manufacturing Co., Credit: Paul Martin Collection, Library and Archives Canada. a radiator maker in Wisconsin finally put pressure on officials in the US and Canada to negotiate a solution. In October, agreement in principle was reached on the Canada/US Automotive Products Trade Agreement

1965: The Auto Pact is signed by President Johnson and Prime Minister Pearson on Jan. 16, 1965 and passed into law in the US in October of that year and in Canada in May, 1966

1968: New milestones for the Canadian automotive industry: production, 1,179,983 vehicles; employment 50,000; payroll $35 million; Signing of the Auto Pact January 16, 1965. (l to r: Paul Martin Sr., exports, $2.6 billion, (eclipsing pulp and paper Secretary of State for External Affairs; Lester B. Pearson, Prime Minister by $1 billion to become the largest export of Canada; Lyndon B. Johnson, President of the U.S.; Dean Rusk, U.S. industry in Canada); capital expenditures in the Secretary of State). first four years of the agreement is $600 million with another $175 million is spent on repair

1973: Auto sales start slipping in the US due to the first energy crisis and a general downturn in the economy. The imbalance in auto trade, in favour of the US, goes over the half billion mark

1980: The Big Four register a combined loss of $4 billion. It’s no longer Canada versus the US… growing sales by offshore manufacturers, particularly the Japanese, lead to concern over the continued existence of the North American industry

1981: In May, Japan and the US announce a voluntary program to reduce Japanese passenger car exports to the US. Shortly thereafter, Japan and Canada agree to monitor vehicle exports to Canada so as not to disrupt the market in Canada

1982: Japan agrees to discussions on future cooperation with Canada, including parts sourcing and investment

1983: The Task Force on the auto industry tabled their report “An Auto Strategy for Canada”, including a recommendation requiring all automakers with significant market share in

7 Canada to invest in manufacturing in Canada as a condition of market access – in effect a local content requirement, which would contravene the GATT

1985: The Canadian wing of the US-based United AutoWorkers (UAW) formally separated and established the Canadian Auto Workers union (CAW)

1987: Chrysler acquired American Motors, including the new AMC assembly plant in Brampton, Ontario

1989: Canada and the US both implement the Free Trade Agreement (FTA)

1998: Daimler Benz merged with Chrysler Corporation to create DaimlerChrysler

1998 Japan and the European Union launch a dispute with WTO against discriminatory aspects of the Canadian Auto Pact

2000: WTO dispute settlement panel rules against Canada, upholding the claim that the Auto Pact is discriminatory

2001: Canada agreed to accept the WTO ruling and repealed the Auto Pact on February 19

2002: Minister of Industry, Allan Rock, announced the formation of the Canadian Automotive Partnership Council (CAPC) with representatives from vehicle and auto parts manufacturers, federal and provincial governments, labour, dealers and academia

2004: CAPC released their report, ‘A Call for Action: Canadian Auto Strategy’, analyzing the current state of the industry in Canada with recommendations for action on key issues

Note 1: Material in this section has been largely adapted from a 1982 paper by James Dykes, former President of the Motor Vehicle Manufacturers Association of Canada, entitled ‘Background on the Automotive Products Trade Agreement’. We are grateful to Mr. Dykes and the Canadian Vehicle Manufacturers Association for the use of this material.

Further references on the early history of the auto industry in Canada:

1. Colling, Herb, with Morgan, Carl. Pioneering the Auto Age. Windsor: Benchmark Publishing & Design. 1993.

2. Robertson, Heather. Driving Force: The McLaughlin Family and the Age of the Car. Toronto: McClelland & Stewart, 1995

3. Archived information on the Auto Pact, FTA, NAFTA and the history of the Canadian auto industry is available from the Canadian Broadcasting Corporation. The CBC maintains an archive of radio and television broadcast clips from the late 1950’s to the current day. The archive can be found at the CBC website http://archives.cbc.ca//300c.asp?id=1-73-326

8 CHAPTER 2 THE HISTORY OF CANADA-JAPAN AUTO SECTOR DEVELOPMENT

Dramatic changes have taken place in the auto industry in the past 40 years since Japanese automakers first set up business to distribute, sell and service vehicles in Canada. Consumer tastes, technology, manufacturing, supplier relations, trade policy, regulation, exchange rates, energy, environment, safety, design - as the saying goes, the only thing constant is change itself. One of the key elements in this ongoing evolution is globalization, where international competition and cooperation has intensified. At the same time, the growth and development of the multilateral trading system in the post-war period has created more open borders, as well as increased trade and investment through the reduction of tariffs and non-tariff barriers, inevitably leading to deeper international economic integration. The scope and scale of these changes have been dramatic. Perhaps the biggest single change has been the rise of vehicle and auto parts manufacturing in North America, which began in Canada with the opening of Toyota’s CAPTIN aluminum wheel plant in Delta, BC in 1985. Also, currency values have fluctuated significantly thorough this period, just one of the many factors behind the internationalization of the auto sector. For example, in 1982 the Canadian dollar traded for 201 Japanese yen. In 2004, the dollar was trading close to 87 yen. Who would have imagined in 1980 that Japanese automakers would be making over 4 million units a year in North America in 2004? Who would have predicted that Renault would come to the rescue of Nissan? Or who would have thought that Canada would become in 1993 a net exporter of ‘Japanese’ vehicles? In this section, we examine some of the key events in the development of the Japanese auto sector in Canada.

The Historical Context of Japanese Auto Sector Development in Canada, 1965 – 2004 i) In the beginning, circa 1965 1965: Nissan establishes a distribution office in Vancouver and Canadian Motor Industries (CMI) starts selling Toyota and Isuzu vehicles in Canada, marking the first Japanese brands to enter the Canadian market. 1965: Canada and the US sign the Automotive Products Trade Agreement (aka the Auto Pact) creating a conditional, sectoral, tariff-free trade agreement. The Auto Pact was the impetus for establishing a fully integrated auto industry in North America. For the US, the Auto Pact was a bilateral trade treaty that allowed duty free entry of parts and vehicles from Canada, providing those goods contained at least 50% North American content. Because this preferential treatment applied only to Canada, the US was obliged to seek a waiver in the GATT. Canada, on the other hand, decided they would implement the agreement multilaterally. Qualifying manufacturers could import parts and vehicles duty free from any GATT country as long as they agreed to meet certain ‘safeguards’: minimum levels

9 of production and Canadian value added in their operations in Canada. The Auto Pact in Canada was not classic free trade but rather an elaborate duty remission scheme that used trade liberalization for vehicle producers as the means to attract greater investment and exports from foreign automakers. The so-called ‘safeguards’ were somewhat controversial for two reasons: first, because Canada’s performance requirements were seen as promoting managed rather than free trade; and secondly, while the US viewed the safeguards as temporary, they were maintained by Canada on a more or less permanent basis as an assurance that Canada would get its “fair share” of investment and jobs. In 1965, while the US obtained a GATT waiver, Canada argued that the multilateral Canadian Auto Pact was GATT consistent. Moreover, there was no intent to discriminate against any other automaker that might want to participate under similar conditions. There were only five major automakers active in Canada at the time of the Auto Pact - the Big 4 US automakers including American Motors, and Volvo, with a small CKD plant in Nova Scotia. Due to the restrictive base year conditions in the Auto Pact, numerous other companies were offered similar treatment over the following two decades through Special Remission Orders, which contained similar conditions and somewhat lesser benefits as the original Auto Pact companies received. Remission programs were enhanced during the 1970’s and 1980’s and included virtually all automakers’ subsidiaries in Canada. 1968: Toyo Kogyo (Mazda) opens their second overseas sales and distribution office in Vancouver, British Columbia. 1969: Honda establishes a Canadian operation to sell motorcycles, soon followed by automobiles. ii) 1970’s - Oil ‘shocks’: new demand for small, fuel efficient cars 1970: Canadian Honda Motor Ltd. began importing their first car, the N600, with a 360 cc engine for the Canadian market. 1970: JETRO (Japan External Trade Organization) hosted a trade show in Toronto of Japanese automobiles and auto parts. The show included demonstrations of automotive R&D in Japan focused on producing safer and cleaner motor vehicles. 1973: First ‘oil shock’ sparked a dramatic rise in the price of Middle East (OPEC) oil and sent gasoline prices soaring. Arab members of OPEC put an embargo on oil exports to countries that supported Israel in the Yom Kippur War, which quadrupled the price of oil. Fear of gas shortages, rationing and significantly higher gasoline pump prices prompted consumers to look for smaller, more-fuel efficient vehicles. In response to OPEC, the US Government decided to reduce their dependence on imported oil by introducing mandatory Corporate Average Fuel Economy (CAFE) requirements in 1975 as well lower tailpipe emissions under the Clean Air Act. Canada would follow with similar legislation, although the CAFC (Company Average Fuel Consumption) program introduced in 1976 would have voluntary fuel consumption targets. Due to the integration of the auto industry, Canada’s CAFC targets have increased in lock-step with CAFE targets in the US.

10 1974: Hino Diesel Trucks established a Canadian sales office, including a CKD assembly operation in British Columbia. 1975: Honda introduced the Civic CVCC, the first vehicle to meet new tougher US EPA regulations on tailpipe emissions. 1976: Subaru opens its Canadian sales office in Vancouver with a focus on all-wheel drive vehicles. 1979: Suzuki begins automotive sales in Canada with the LJ 80 4x4 vehicle, followed shortly by the popular Suzuki Samurai 4x4 vehicle. 1979: Revolution in Iran and the US hostage crisis sparked a second ‘oil shock’ which sent oil prices skyrocketing (equal to US$100/barrel in 2004). Consumer demand shifted further toward more fuel-efficient and reliable vehicles, and was a factor in sending oil-dependent developed countries into a deep economic recession. iii) 1980’s – Rising market share & new investments in manufacturing 1980: The beginning of a deep economic recession in North America that would threaten the financial health of the US and Canadian auto industries. The US and Canadian governments rescued Chrysler from financial ruin with substantial loans. Credit: Fraser Wharves 1981: Japan’s Voluntary Restraint Agreement with US established to allow ‘breathing room’ for restructuring of the domestic industry to regain competitiveness. Exports were also restrained to Canada, but under a different format. 1982: Port action in Vancouver. A vehicle-by-vehicle inspection action by Canada Customs was designed to send a message to Japan according to Industry, Trade & Commerce Minister Ed Lumley. CAJAD (Canadian Association of Japanese Auto Dealers) was established to help respond to the slowdown and restraints imposed on Japanese imports. Canadian subsidiaries of Japanese automakers informally create JAMA Canada to address and promote collective Off Loading Vehicles at Fraser Wharves in concerns that threatened their business activities in Canada. Vancouver, B.C. A Federal Government Task Force comprised of ‘domestic’ manufacturers industry and union representatives was set up by Minister Lumley to report on the problems facing the industry and to propose strategic initiatives for the Canadian auto industry. 1983: Federal Government Task Force Report, An Auto Strategy for Canada, recommended that the Canadian Government mandate investment by all foreign automakers in Canada with rising levels of local Canadian content as a condition of market access. Local content rules were also being debated in the US Congress. Such overtly protectionist measures would not only have been contrary to GATT, but would also have resulted in higher prices for consumers, reduced competition and jeopardized a positive trade relationship with Japan. The provocative nature of the report did succeed in getting the attention of Japanese automakers and the Japanese government, and opened the door for bilateral discussions and negotiations.

11 1984: JAMA Canada formally incorporated in Canada as a non-profit association. JAMA Canada began informally in the early 1980’s as a result of several key issues that concerned all Japanese automakers in Canada. At the time, we felt compelled by force of circumstance to organize and coordinate a response to three separate but related events that threatened our business in Canada: First, the Canadian Government’s demand for restraints on vehicle exports from Japan following the Voluntary Export Restraint agreement between the US and Japan in 1981; Second, the Canadian Customs action at the Port of Vancouver in 1982, which effectively stopped the entry of Japanese cars into Canada by staging a vehicle-by-vehicle inspection slowdown; and Third, the Federal Government Task Force on the auto industry tabled their report in 1983 entitled “An Automotive Strategy for Canada”. This report recommended, among other things, protection in the form of local content requirements as a condition for access to the Canadian market. JAMA Canada was concerned that the rise of protectionism in Canada as well as the US would be detrimental to Canadian consumers as well as Japanese automakers, and would undermine the competitiveness of the auto sector in Canada. Pacific Automotive Co-operation, Inc. was also established in 1984: PAC was a unique organization, established only for Canada. PAC was incorporated as a joint venture Canadian company. PAC shareholders included eleven Japanese automakers (JAMA members) and twenty-one major Japanese auto parts makers (JAPIA members).The President and Vice Presidents of PAC were seconded from JAMA member companies, and reported to the PAC Steering Committee of JAMA in Tokyo. The main objective of PAC was to promote automotive investment in Canada and Takeshi Tarahira, support new business opportunities with Canadian auto parts suppliers. PAC’s main first President of PAC, activities included: 1984 • Invest in Canada seminars in Japan.

• PAC seminars (Workshop Diagnosis Programs) in Canada from 1986-1989.

• In 1990, PAC began a series of PAC-APMA Seminars jointly with APMA. Themes of the seminars included Kaizen (Continuous Improvement), Japanese Production Technologies, Supplying Japanese Automakers, Quality & Productivity, Lowering Cost through Waste Reduction, and Globalization. Special guest speakers included Shigeo Shingo (The Poka-Yoke System) and W. Edwards Deming.

• PAC planned several Canadian suppliers’ missions to Japanese Tier-1 companies in U.S.A. to promote Tier-2 business development.

• PAC began a series of Kaizen Seminars in 1987. A total of 105 companies participated in these seminars, which were run by JIT Automation. Seminars in French were held for the benefit of Quebec parts suppliers.

12 • PAC Canada Report (bimonthly from 1995-1997) introduced 80 Canadian parts manufacturers to Japanese auto industry, identifying some of the unique capabilities of these companies.

• PAC facilitated the participation of the APMA with JAMA/MEMA One-on-One events as well as USJAC conferences with MEMA and JAPIA.

• PAC Steering Committee met annually with APMA, as well as Federal & Provincial government officials to review activities. The exchange of information and open-minded communication through their visits greatly contributed to strengthening the Japan- Mr. Yutaka Kume, former President Nissan Motor Canada relationship and mutual understanding. Co. Ltd., and Hon. Ed Lumley, Former Minister of 1985: First wave of Japanese automakers’ investments in Canada Industry Trade and Commerce at the Opening 1985 - CAPTIN aluminum wheel plant (Toyota), Delta, B.C. Reception for PAC, 1984. 1986 - Honda of Canada Mfg., Alliston, Ontario 1988 - Toyota Motor Manufacturing Canada, Cambridge, Ontario 1989 - CAMI Automotive, Ingersoll, Ontario 1987: Canada and the US finalized negotiations on the Free Trade Agreement (FTA). JAMA Canada supports the liberalization of trade consistent with GATT principles; however, there were strong concerns about fair and equal treatment contained in the automotive provisions of the FTA. The main concern pertained to the two-tiered industry created by the FTA which allowed differential treatment and benefits between Auto Pact and non-Auto Pact companies in Canada. 1989: Canada / US FTA implemented. The FTA brought key changes in auto trade policy. In the FTA, there were about 190 companies named in an Annex that were eligible for Auto Pact, or Auto Pact-like preferential treatment. However, Honda, Toyota, Hyundai and others were excluded. Suddenly PAC Purchasing Opportunities Exhibition, 1985 automotive policy direction made a dramatic turn. In particular:

• The Auto Pact was closed to new entrants.

• Remission programs for non-Auto Pact companies were to be eliminated.

• At the same time, Auto Pact and other related Special Remission Orders and duty drawback programs would only continue until 1994. Obviously, Japanese automakers were very concerned about these sudden developments, particularly the closure of the Auto Pact, the termination of remission and drawback programs and the much tougher 50% direct cost of processing rule of origin for duty-free automotive trade with the US.

13 Clearly there was a significant change brought about by the negotiations with the US, because prior to the FTA, the US Big Three in Canada, along with the Auto Parts Manufacturers’ Association, took the position that the Auto Pact should apply to everyone. In the mid-1980’s, Canadian officials were proposing revised duty remission programs that were intended to allow new automakers with plants in Canada into full Auto Pact status on a step-by-step basis. Not only did these enriched remission programs not survive the FTA negotiations, all non-Auto Pact remissions were destined to disappear as a condition of the FTA. Moreover, the US was clearly concerned about Canada giving Auto Pact benefits to major competitors of the US Big Three such as duty-free access to the US market, as well as duty-free parts and vehicles into Canada from anywhere in the world, benefits that were not available in the United States. iv) 1990’s - Expansions & growth: vehicles & auto parts 1990 - 1996: Canada experienced a longer and deeper recession in the early 1990’s than the US due in part to the fall in commodity prices globally and Canada’s resource-based economy. The market slump in the auto industry cut vehicle imports from Japan by 75% from 295,000 units at the peak in 1987 to 70,000 units in 1995. The economic slump in Canada paralleled the post-bubble recession in Japan. The Japanese yen appreciated as high as 62 yen / Can$ in 1995. 1992: Honda strongly disputes the results of an FTA audit by US Customs that Canadian-built Honda cars did not qualify for FTA duty free treatment, which, if upheld, would have required Honda to pay over $20 million in duties from 1989 when the FTA came into effect. US Customs claimed that the Honda engine made in Ohio did not qualify as originating under FTA rules. By contrast, Revenue Canada deemed that the engine did qualify for duty free import to Canada for final assembly into the Honda Civic. At the same time, US Customs FTA audits of Toyota and CAMI were also raising concerns about unfair treatment, threatening automotive investment in Canada. With the strong support of the Canadian Government, the issue was finally resolved through the NAFTA negotiations which adopted a Canadian proposed net cost formula for the NAFTA automotive rule of origin. 1992 - 1993: NAFTA negotiations: unlike the US, the Canadian Government established consultations with the auto industry including representatives from JAMA Canada and individual Japanese automakers. There were two key issues for JAMA Canada in the NAFTA negotiations: changes to the rules of origin for automotive goods, and changes to the content requirements for qualifying goods. As a result of the Honda engine case in the FTA, Canadian proposals for adopting a net cost formula in the NAFTA were welcome. However, Japanese automakers were concerned about the significant increase in PAC - APMA Purchasing Seminar, 1993 the content requirement from 50% in the FTA to 62.5% in the NAFTA, as well as the push by the US auto industry for “tracing”, whereby automakers would be required to account for the value of all non- originating materials in a traded good.

14 1994: NAFTA brought Mexico into the FTA, changed the origin rules for autos & parts, extended drawback & remissions to 1996 and increased the regional content requirements. GATT Uruguay Round concluded which established the World Trade Organization (WTO) and reduced tariffs on industrial goods including motor vehicles and parts. Canada agreed to cut MFN tariffs on imports of motor vehicles over five years from the base rate of 9.2% in 1994 to 6.1% in 1999. 1996: After remissions & drawback ended in NAFTA, Canada passed Bill C-11 which removed tariffs on imported OE parts used in the production of motor vehicles. 1997: PAC closed when their mandate was completed. Communications & liaison functions of PAC transferred to JAMA Canada. Purchasing Liaison Group established by JAMA Canada to provide a “window” for government and industry in Canada into the Japanese auto industry. Japanese auto-related investment in Canada continued to expand: HCM and TMMC major expansions with second plants and new models. Since PAC was established, over thirty Japanese auto parts-related operations had set up in Canada. PAC Management Teams, 1984 - 1997

Period President Members

1984 - 1987 Takeshi Tanahira (Mazda) Tadatoshi Ueda (Toyota), Isao Seo (Honda), Noboru Takahashi (Nissan) 1987 - 1989 Kohachiro Suzuki (Honda) Shigeo Kato (Toyota), Hiroyuki Miyamoto (Mazda), Yoshitaka Kasai (Nissan) 1989 - 1992 Haruhisa Yamamoto (Toyota) Jun Umeda (Honda), Masafumi Iwami (Mazda), Makoto Yoshimoto (Nissan) 1992 - 1995 Hiroyoshi Takagi (Mazda) Hideo Masuda (Honda), Sadahiro Tanaka (Toyota), Masahiro Suzuki (Nissan) 1995 - 1997 Masahiko Obi (Honda) Yoshiro Matsushita (Nissan), Yoshihiro Kanegawa (Mazda), Toshihide Sanzen (Suzuki), Yoshihisa Fujimoto (Toyota)

1998: After two years of consultation with industry looking at various aspects of competitiveness in the Canadian auto sector, the Canadian Government released Automotive Competitiveness Report. The key issue in the report was the matter of reducing Canada’s MFN vehicle tariff. Cutting duties on finished vehicle imports would have addressed the discriminatory treatment that concerned some non-Auto Pact automakers, in particular Honda and Toyota. But Canada decided not to make any unilateral change to the MFN vehicle tariff. This prompted Japan & EU to launch a WTO dispute. 2000: In February 2000, the WTO panel report confirmed the Auto Pact in Canada to be inconsistent with WTO rules. Canada appealed the decision, but the findings were upheld in appeal and adopted by the WTO. Following a WTO Arbitrator’s Report in October 2000, the Canadian government decided to fully comply with the ruling.

15 v) Into the 21st century: an integral part of the Canadian auto industry 2001: Canada repealed the Auto Pact on February 18, 2001. MFN tariffs on all non- NAFTA imported passenger vehicles remained at 6.1% compared to 2.5% in the US and 0% in Japan. On September 11, terrorist attacks on the US temporarily close the US border, creating chaos for the auto industry, particularly at the Windsor-Detroit border crossing. Tighter security stemming from 9/11 had brought the border issue into stark relief, but border congestion had been growing with the increase of NAFTA-based trade, particularly for the auto industry in North America that is highly dependant on just-in-time manufacturing and cross border trade. Over 80% of all auto-related production in Canada is exported to the US. At the same time, the majority of vehicles sold in Canada are imported from the US, Mexico, Japan, Korea and Europe. Credit: Windsor Star Photo 2002: The 25th and final Canada Japan Business Conference (CJBC) was held in Sendai, Japan. The CJBC decided this would be the last meeting under the current sectoral format. Joint committees of Nippon Keidanren and the Canadian Council of Chief Executives (CCCE) were formed to carry on bilateral discussions on ways and means to improve the bilateral trade and business relationship. Minister of Industry, Allan Rock, convened the ‘National Forum on the Automotive Industry’, which results in the creation of the Canadian Automotive Partnership Council (CAPC). The CAPC membership included Presidents of GM, Ford, DaimlerChrysler, Honda and Toyota (TMMC), as well as four Canadian auto parts manufacturers, a dealer representative, the President of the Canadian Auto Workers (CAW), Industry Ministers from Ontario, Quebec and the Federal Government and the President of the University of Windsor. The board of directors of CAJAD decided to wind up their association and closed the office in Toronto. 2003: TMMC begins production of the Lexus RX330 – the first Lexus built outside of Japan. At the same time, three new auto parts plants begin production in Ontario, bringing the total number of Japanese affiliated parts, materials and machinery plants in Canada to 46. 2004: Record levels of vehicle production, exports and sales in Canada in 2003 by Japanese affiliated automakers mark the 20th anniversary of JAMA Canada. 2005: With growing sales and production in Canada, Toyota announces a new $800 million assembly plant in Woodstock, Ontario to build the RAV 4 starting in 2008. Later in the year, Toyota announces capacity at the Woodstock plant would be increased to 150,000 units per year, and raises the total employment to 2,000. Investment also rises to $1.1 billion. Truck traffic on Ambassador Bridge (Windsor - Detroit), September 11, 2001

16 2006: Hino Motors Canada begins assembly of medium duty trucks at a facility in Woodstock, Ontario. Capacity will start at 2,000 units per year, all for the Canadian market, with 45 employees. Honda Canada announces a new 4 cylinder engine plant will be built adjacent to Honda’s vehicle plant in Alliston, Ontario. The $154 million plant will produce 200,000 engines per year with 340 employees. vi) The Impact of Japanese Automotive Investment in Canada: Twenty years ago, no Japanese automakers had yet begun production in North America. Today, Honda, Toyota and CAMI account for 30% of total vehicle production in Canada. Combined production capacity in Canada today stands at 840,000 vehicles per year. In 2004 over 670,000 of the 811,000 units produced were exported to the US and several other countries. And since 1986, over 7 million vehicles have been built in Canada at HCM, TMMC and CAMI. Over 5.5 million of those have been exported. Canada has been a net exporter of Japanese vehicles since 1993. Current direct and indirect employment in Canada stands at 58,100 comprised of 11,000 in vehicle manufacturing plants, 15,200 in parts/materials/machinery plants, about 1,900 at head & regional offices and 30,000 at about 1,000 dealerships across Canada. Japanese auto parts manufacturers have also been active in Canada in pursuit of new business opportunities with Japanese as well as other automakers in North America. In 2004, there were 48 plants operating in Canada supplying parts, materials, auto-related machinery and machine tools. With integration of the auto sector in North America as a result of NAFTA, Canada’s share of North American auto production stands at about 15%. By contrast, Canada accounts for about 9% of North American vehicle consumption, a situation that has given Canada a structural automotive trade surplus for the past 20 years. In 2004, Canada’s overall auto trade surplus stood at $7.7 billion. To get a clear picture of automotive trade in Canada, one must necessarily look beyond a simple bilateral analysis and take a multilateral perspective. On a bilateral basis, Canada has always had an auto trade deficit with Japan. But consider the fact that over 4 times the numberof vehicles were exported from Japanese affiliated plants in Canada in 2004 compared to the 167,000 that were imported by JAMA Canada members from Japan. Moreover, five of every eight Japanese brand vehicles sold in Canada are now built in North America. The steady growth of the Japanese auto industry in Canada over the past 25 years and the now expanding Canadian automotive presence in Japan has added depth to the range of mutual benefits. More intense competition ultimately improves products and broadens choice, which benefits consumers. Closer cooperation offers new business opportunities, technology sharing, lower costs and efficiency gains to name a few. There is no doubt that today the Canadian auto industry is stronger, more globally competitive and better able to meet the ever-increasing demands of the consumer. With a long-term commitment to Canada and Canadian consumers, Japanese automakers and parts makers have become an integral part of the social and economic fabric of Canada.

17 Vehicle Sales in Canada (1965 - 2007) Year Canada Japanese Vehicle Sales Total Passenger Cars Light Trucks Light Vehicles Total (incl. Heavy duty) Total NA Built Total NA Built Total NA Built Share % 1965 830,995 2,834 0 0 0 2,834 0 0.3 1966 827,431 2,742 0 0 0 2,742 0 0.3 1967 815,307 5,617 0 684 0 6,301 0 0.8 1968 889,453 14,731 0 1,562 0 16,293 0 1.8 1969 917,227 35,963 0 2,814 0 38,777 0 4.2 1970 774,372 65,569 0 4,562 0 70,131 0 9.1 1971 938,720 103,631 0 6,068 0 109,699 0 11.7 1972 1,059,091 106,500 0 13,121 0 119,621 0 11.3 1973 1,219,726 111,467 0 20,421 0 131,888 0 10.8 1974 1,246,887 87,609 0 18,821 0 106,430 0 8.5 1975 1,316,629 95,772 0 16,759 0 112,531 0 8.5 1976 1,291,463 101,558 0 13,948 0 115,506 0 8.9 1977 1,344,959 134,900 0 15,647 0 150,547 0 11.2 1978 1,366,544 113,166 0 13,413 0 126,579 0 9.3 1979 1,396,402 79,879 0 11,832 0 91,711 0 6.6 1980 1,263,807 138,107 0 21,474 0 159,581 0 12.6 1981 1,190,882 207,639 0 28,442 0 236,081 0 19.8 1982 920,403 177,483 0 33,079 0 210,562 0 22.9 1983 1,079,940 177,930 0 40,078 0 218,008 0 20.2 1984 1,283,502 166,632 0 41,779 0 208,411 0 16.2 1985 1,530,410 201,323 0 49,741 0 251,064 0 16.4 1986 1,515,920 202,328 0 53,009 0 255,337 0 16.8 1987 1,528,104 252,055 11,751 50,502 0 302,557 11,751 19.8 1988 1,562,670 256,269 19,239 51,486 0 307,755 19,239 19.7 1989 1,483,559 279,714 35,483 66,878 0 346,592 35,483 23.4 1990 1,314,118 284,180 54,197 68,526 0 352,706 54,197 26.8 1991 1,287,056 265,598 62,890 66,682 2,859 332,280 65,749 25.8 1992 1,227,841 245,412 63,017 57,751 3,018 303,163 66,035 24.7 1993 1,188,203 204,260 73,206 50,122 5,699 254,382 78,905 21.4 1994 1,254,872 193,633 102,453 41,709 11,611 235,342 114,064 18.8 1995 1,162,512 173,503 107,544 31,370 11,807 204,873 119,351 17.6 1996 1,199,509 182,745 134,422 36,131 13,089 218,876 147,511 18.2 1997 1,420,018 226,023 160,958 71,827 17,777 297,850 178,735 21.0 1998 1,428,207 246,335 147,799 84,904 29,260 331,239 177,059 23.2 1999 1,540,379 266,055 160,100 99,867 43,137 365,922 203,237 23.8 2000 1,586,054 282,666 175,790 101,760 43,614 384,426 219,404 24.2 2001 1,597,875 319,576 197,111 112,591 45,519 432,167 242,630 27.0 #2002 1,731,823 358,107 212,606 128,540 56,484 486,647 269,090 28.1 2003 1,625,050 358,557 229,801 135,446 61,866 494,003 291,667 30.4 #2004 1,574,803 360,645 239,405 134,385 68,311 495,030 307,716 31.4 2005 1,630,142 374,106 247,579 140,288 78,631 514,394 326,210 31.6 #2006 1,666,008 389,974 244,930 157,858 83,086 547,832 328,016 32.9 2007 1,690,345 408,849 254,741 171,490 108,420 580,339 363,161 34.3 # “up-dated” data Sources: DesRosiers Automotive Consultants, Statistics Canada & company data

Production / Exports (Honda, Toyota, CAMI) PRODUCTION EXPORTS PRODUCTION EXPORTS 1986 443 300 1997 383,433 292,103 1987 15,685 9,000 1998 396,490 312,565 1988 50,630 37,520 1999 599,389 482,198 1989 107,966 78,484 2000 620,988 494,530 1990 209,982 161,071 2001 617,086 497,517 1991 326,984 240,190 2002 641,775 488,801 1992 319,215 249,660 2003 671,248 510,575 1993 342,215 303,424 2004 811,577 676,530 1994 364,178 309,362 2005 881,454 721,132 1995 380,269 320,268 2006 901,109 709,681 1996 365,826 297,152 2007 871,470 691,156

[Note] 1989–1998 estimated for CAMI Source: JAMA Canada [Note] 1986 & 1987 figures from Ward’s (estimated export data)

18 Vehicle Imports (Shipments) from JAPAN from US/MEXICO (NAFTA) TOTAL TOTAL Passenger Cars Trucks Passenger Cars Trucks 1981 199,951 46,517 246,468 1982 152,906 38,597 191,503 1983 164,863 48,075 212,938 1984 176,415 42,713 219,128 1985 197,012 55,553 252,565 1986 222,129 62,744 284,873 1987 241,539 54,155 295,694 1988 222,459 60,524 282,983 4,000 0 4,000* 1989 236,927 57,981 294,908 10,300 0 10,300* 1990 237,951 46,884 284,835 15,100 0 15,100* 1991 246,411 41,217 287,628 22,300 0 22,300* 1992 243,055 32,461 275,516 31,500 0 31,500* 1993 155,978 18,776 174,754 40,200 0 40,200* 1994 105,268 9,371 114,639 61,852 10,051 71,903 1995 69,712 3,410 73,122 64,577 11,929 76,506 1996 69,647 644 70,291 67,586 10,697 78,283 1997 140,189 846 141,035 75,915 18,892 94,807 1998 144,922 833 145,755 76,990 23,826 100,816 1999 166,262 917 167,179 58,049 29,974 88,023 2000 167,000 894 167,894 75,383 32,376 107,759 2001 187,901 917 188,818 97,523 27,082 124,605 2002 233,633 1,028 234,661 92,895 34,118 127,013 2003 190,888 1,342 192,230 108,596 44,405 153,001 2004 165,211 1,647 166,858 119,687 40,666 160,353 2005 190,249 1,250 191,499 123,661 56,079 179,740 2006 224,998 1,823 226,821 115,471 47,998 163,469 2007 237,872 1,775 239,647 150,375 74,275 224,650

JAMA JAMA Canada *est. 19 vii) Canadian auto-related developments in Japan:

• In a ‘coals to Newcastle’ scenario, Honda of Canada Manufacturing was the first automaker to export finished vehicles in significant volumes for the domestic market in Japan. Shipments of the upscale version of the Odyssey minivan, called La Great began in 1999.

• I.W. Foam Corporation - a joint venture between The Woodbridge Group and Inoac - now has about 6 plants in Japan as a result of recent acquisition of a number of Ikeda Bussan facilities. IWFC plants are producing automotive moulded polyurethane foam using proprietary foam technology developed in Canada by Woodbridge.

• ABC Group Japan opened a technical centre in Hamamatsu in 1999 for the design and development of thermo-plastic components for customers in Japan. The facility has testing and prototype manufacturing capability. ABC produced a prototype for a thermo-plastic prop shaft boot for the Japanese market.

• F&P Manufacturing has adopted hydroforming technology developed in Canada by Vari-form Inc. at their recently expanded plant in Tottenham, Ontario. F&P is a key structural component supplier to HCM in Alliston. This hydroforming technology is now being used at F&P Manufacturing’s mother plant in Japan.

• Magna International was among the first Canadian auto parts companies to open a sales/engineering office in Tokyo in the early 1990’s. Since then, Magna has recently opened a new office in Nagoya to support its growing business in the Tokai region, and is planning further expansions of their operations in Japan

viii) JAMA Canada Chairman 1984-2008

Y. Togo (Toyota Canada) 1983–1984 (Prior to incorporation) Y. Kawana (Nissan Canada) 1984–1986 S. Yanagisawa (Toyota Canada) 1986–1989 R. Hoshino (Nissan Canada) 1989–1990 T. Kunii (Toyota Canada) 1990–1995 A. Hyogo (Honda Canada) 1995–1996 Y. Nakatani (Toyota Canada) 1996–2002 S. Takagi (Honda Canada) 2003–2004 K. Tomikawa (Toyota Canada) 2004–2007 H. Kobayashi (Honda Canada) 2007–2008

20 A COLLECTION OF PERSONAL OBSERVATIONS ON JAMA CANADA, PACIFIC AUTOMOTIVE CHAPTER 3 CO-OPERATION (PAC) AND THE JAPANESE AUTO INDUSTRY IN CANADA

Observations on the 20th Anniversary of JAMA Canada The Hon. Ed Lumley, Vice Chairman, BMO-Nesbitt Burns; and former Minister of Industry, Trade & Commerce, Government of Canada

I am pleased to have been afforded the opportunity to offer some comments on the twentieth anniversary of the establishment of JAMA Canada. The Canadian automotive industry has changed in significant and fundamental ways over the past twenty years. As Canada’s Minister of International Trade and Minister of Industry, Trade and Commerce in the early 80’s, I had the responsibility and opportunity to participate in the revitalization and restructuring of our automotive industry. Early in the The Honourable Ed Lumley decade a successful, vibrant auto industry in Canada – one with the diversity and health enjoyed today – was less than certain. Indeed it was in dire straits and was classified as a ‘sunset’ industry by many of our leading economists. It is gratifying to know that the vitality of the industry today can, in many ways, be traced to the seeds that were planted almost a quarter of a century ago.

When I first became Trade Minister in 1980, the department I inherited was only a few months old. This presented a golden opportunity to develop the goals and the policy framework from the ground floor. What was readily apparent was our need to increase substantially our trade and investment relations with countries other than our major trading partner, the United States. My early analysis indicated that one of my highest and most urgent priorities was the Far East – especially Japan, the world’s second largest economic power.

Fortunately for me our Ambassador to Japan at the time was one of my early mentors in International Trade – Mr. Bruce Rankin. An avid supporter of Japan and a forceful critic of Canada’s effort in improving the bilateral trade relationship, Bruce made me aware in no uncertain terms that I must start traveling to Japan on a regular basis. He told me I’d need to take “at least ten trips before anyone in Japan will take you seriously about your desire to improve Canada/Japan relations”. It was indeed a daunting task but one which, thanks to Bruce and his successor Ambassador Barry Steers, proved to be outstanding advice. As Ambassador Rankin said, “until your Japanese colleagues recognize you in the airport, you are just a number that visited from country X”.

Each time I went, I was never sure my Japanese colleagues were glad to see me; I did not always bring glad tidings. However, I think they learned to respect our approach and appreciate what it was we were trying to achieve. I am sure that twenty trips to Japan by yours truly during that period indicated our sincere desire to improve our commercial relationship.

During those early years, the Canadian auto industry was really suffering. Tens of thousands of autoworkers were out of work, the sales of automobiles were seriously declining, and imports represented a growing share of the shrunken market. I was getting all kinds of pressure to legislate content, but I knew it wasn’t the right solution in the long-term. Instead, I thought Japanese manufacturers should give serious consideration to investing in our country. In Canada, we have always had a quality workforce. I told potential Japanese investors “I guarantee you that you will make a good return on your investment”. I said “you will do better investing in Canada than probably

21 any place else in the world”. I acknowledged that our market was not gigantic, but I encouraged them to look at what the Big 3 were doing – how they invested disproportionally in Canada and challenged them to consider why that was the case.

That was one of my main arguments for investing in Canada. I was speaking as a businessman, not just as a politician. I wanted the Japanese automotive industry to be a mainstay of the Canadian business community just like their American and European competitors. The fact was, however, my confidence in Canada, in Canadians and the ability of foreign investors to be a success in Canada was not having any impact with these hoped-for investors.

On the contrary, Japan had entered into a voluntary ‘quota’ agreement with the US but refused to enter one with Canada on a relative basis; this exacerbated what was already a serious situation in our domestic market. Thus we needed to do something to dramatically emphasize our sincere desire to ensure the long-term viability of our automotive industry.

On one of my trips to Japan, I learned about some boatloads of European vehicles sitting in the harbour in Tokyo. They had been sitting there for a considerable period because they did not meet a regulatory standard. That’s when the light went on. We could do something similar to help make our point. We would demonstrate our resolve by slowing down the delivery of Japanese vehicles to Canada.

No question it was not a tactic without risk and I took my lumps in Parliament, in the public and especially in the media. But at the end of the day I was convinced we were doing the right thing, and fortunately for me, our Prime Minister, Cabinet and caucus colleagues were fully supportive.

During that time I recall giving a speech in Japan where I outlined the importance of Japan to the world. I explained that Japan was an economic powerhouse and as such, they had to assume the responsibility that came with the territory, part of which was being sensitive to the countries to which they were exporting. I also made it clear that if they invested in Canada they would be welcomed the same as anyone else. But I also expressed to them that Canada would expect to be treated like their other major consumer markets, i.e. serious consideration should be given to investing as well as exporting.

Some thought our approach was anti-Japanese, but we were not anti-anything; we were pro-Canada. Canada is a great country – a great place to invest. I was convinced of it then. I’m even more convinced today.

The solution to this delicate situation was due in large measure to the substantial efforts of two very distinguished and power Japanese businessmen, the President and CEO of Nissan, Mr. Takashi Ishihara and the President and CEO of Toyota, Dr. Shoichiro Toyoda. Mr. Ishihara, as Chairman of JAMA, was instrumental in our negotiations wherein we finalized a voluntary ‘quota’ agreement for Canada.

On the investment issue, our arguments also eventually gained traction. Before we left government in 1984 my officials, lead by Mr. Gordon Ritchie, in partnership with the government of Ontario under the leadership of Premier Bill Davis, had secured a major investment commitment from Honda for Alliston and had commenced negotiations with both Toyota and Suzuki. During our ill-fated election campaign that year we made the decision not to announce these negotiations in order to gain political points. We recognized that doing so might jeopardize the projects and fortunately for Canada, Mr. Mulroney’s government was successful in finalizing the negotiations. By foregoing the short-term

22 political opportunity I believe we not only helped to nail down those particular investments, but also reinforced the long-term automotive footprint in Canada.

One of the major factors in those and other positive actions taken during this period was JAMA’s decision to establish a new vehicle called PAC (Pacific Automotive Co-operation), which would be initiated in Canada to facilitate and enhance investment, parts sourcing, etc. between our two automotive industries. I sincerely believe that the creation of PAC and the various representatives from all the Japanese automotive companies who served in Canada during this period played a significant role in the many successes that have been achieved over these past twenty years. This, coupled with the commencement of JAMA Canada later that same year, has indeed facilitated what is considered one of the cornerstones in the Canadian economy – our automotive industry.

I am honoured to have placed a part in the transformations that were starting to take hold in the Canadian automotive assembly industry during those days. It truly was a remarkable period. Clearly, the foundation of our argument – that Canada is indeed a good place to invest – has proven correct. Workers, consumers, government and investors have all reaped the benefits. I look forward to watching what the next twenty years will bring.

On JAMA Canada’s 20th Anniversary Barry Connell Steers, former Canadian Ambassador to Japan

It became obvious to me while in residence in Tokyo, as Canada’s ambassador to Japan, as it did to so many who were interested in the automotive trade, that the quality of manufacture, excellence of design, combined with highly competitive pricing of Japanese automobiles and trucks, was responsible for the surge in sales to Canada. It was also obvious that this shift was not something transitory. Thus something had to be done. In our experience neither country could benefit by raising obstacles to the sales in Canada. It became essential that we encourage Japanese manufacturers to begin Barry Connell Steers manufacturing in Canada. We were confronted with either the loss of employment in the manufacture of automobiles and trucks, or the benefit of obtaining the excellence of design and quality of manufacture of Japanese automobiles on Canadian soil.

It was very reassuring to me from the first round of calls on the manufacturers in Japan that they too realized the awkward position we would be in were they not to manufacture in Canada. One after another, the major corporations began examining how they could meet their interests and satisfy Canadian needs. It was a pleasure to establish an association with Mr. Ishihara, then chairman of JAMA.

The establishment of Japanese automobile manufacturing in Canada was a major step forward, but at the time it didn’t seem so; it seemed like a perfectly natural thing to do and I was pleased to call on Mr. Ishihara of JAMA and on the leadership of the manufacturers. How pleasant it was to discuss with them the establishment of manufacturing plants in Canada. And I don’t recall any major setbacks as they moved forward in close collaboration with us toward what has become enormously successful manufacturing in Canada, highly profitable to Japan and highly profitable to Canada.

23 Looking back at that period to remember how closely I worked with Minister Ed Lumley, he not only had a deep interest in Canada’s trade, but its continued innovation and industrialization.

I remember a luncheon with the Toyoda family while they were making their decision to begin manufacturing in Canada. Not long after leaving their home I decided to buy a Toyota Tercel, altered to perform best on the “right side of the road”. I am pleased to be able to tell you that I am still driving it nearly twenty years afterward alongside the very latest Toyota Sienna.

It is reassuring and very rewarding to see the continuing growth and strength in the relationship between our two countries, our governments and industries as we work in partnership in enhancing world standards. Over the years, JAMA has become more and more important to Japan, but when you look at it, also to Canada in its understanding between our two countries.

As I look back on my almost nine years as ambassador from March 1981 to November 1989, the time seemed so short as there was always so much to do, so much to achieve.

On JAMA Canada’s 20th Anniversary Patrick J. Lavelle, former President, APMA and Deputy Minister, MEDT, Ontario

For several years as President of the Automotive Parts Manufacturers’ Association of Canada, I strived to internationalize the independent parts industry of this country. That meant encouraging Canadian manufacturers to export to countries other than the United States and to encourage non-Canadian manufacturers and vehicle assemblers to locate in Canada.

Throughout the late 70’s and early 80’s in concert with the Canadian government, I led trade missions of Patrick J. Lavelle parts manufacturers to most of the major vehicle manufacturing countries in the world – France, Germany, Italy and of course, Japan, which was emerging as the world’s second largest producer of vehicles.

In the 80’s, when Japanese imports were beginning to take a larger and larger share of the North American market, I took, on behalf of the Canadian industry, over a dozen missions to Japan, meeting with JAMA and JAPIA, encouraging two-way trade and investment. Out of this PAC was formed, and ultimately several of the major vehicle manufacturers – Honda, Toyota and Suzuki – decided to establish vehicle assembly operations in Canada. And as a result, a number of Japanese auto parts manufacturers followed the assemblers with the encouragement of industry as well as federal and provincial governments.

Ironically, when I left the APMA and became Deputy Minister of Economic Development & Trade for the province of Ontario, I negotiated with representatives of Toyota on behalf of the province the establishment of a vehicle production facility in Cambridge. Later still we encouraged Suzuki/General Motors to locate in Ingersoll.

The establishment of these facilities in Canada was a great accomplishment for Canada, and the Japanese producers – both vehicle and parts, have more than lived up to their commitments to Canada.

I am very proud to have played a small role in these achievements both on behalf of the APMA and the government of Ontario.

24 On JAMA Canada’s 20th Anniversary Morley B. Bursey, Honourary Executive Director, APMA

I remember very well when the Association was formed in 1984 – a period when Canada’s relations with the automotive industry in Japan were at a low ebb. At the time, I was Executive Director of the APMA (Automotive Parts Manufacturers’ Association of Canada) having taken over the management of the Association in 1980 temporarily for three years while Patrick Lavelle, President, represented the Ontario Government in Paris. I continued as Executive Director for many years, and was very involved in promoting trade relations with Japan’s automotive vehicle manufacturers on behalf of Morley B. Bursey Canada’s automotive parts industry.

This involved many Trade Missions to Japan, participation in Trade Fairs there, Government to Government representations and numerous meetings with each of Japan’s automotive vehicle manufacturers in an effort to sell them Canadian automotive parts (original equipment). At that time Japan was increasing its export sales of automotive vehicles each year to Canada and seriously reducing sales by American-owned vehicle plants in Canada and the United States, a threat to our automotive agreement (Auto Pact) with the United States.

Eventually, Canada and the United States imposed import quotas on Japanese vehicles in an attempt to correct the situation. Import quotas continued for two years, when they were terminated. JAMA Tokyo, after much negotiation, agreed to establish representation in Canada to pursue efforts to remedy the position. I recall Pat Lavelle’s and my luncheon meeting in 1984 with JAMA’s representatives from Japan at the National Club in Toronto when we negotiated the terms under which PAC (Pacific Automotive Co-operation) would operate in Canada. PAC was appointed by JAMA Tokyo and consisted of one senior representative from each of the four major automotive vehicle manufacturers in Japan – Toyota, Nissan, Honda and Mazda and was situated in Toronto. Through the cooperation of PAC and the efforts of the APMA (who held monthly meetings with PAC), our automotive parts trade with Japan eventually started.

It so happened that while negotiations with JAMA Tokyo were taking place, a joint venture of General Motors and Suzuki of Japan established CAMI, the first Japanese interested automotive vehicle manufacturing plant in Canada at Ingersoll, Ontario. As a result of our cooperation with PAC however, Honda established a manufacturing plant at Alliston, Ontario. I had the great pleasure of attending the opening of that plant and witnessing the first car come off the line. This was followed later by Toyota who located its operation in Cambridge, Ontario. Over the years, since these first Japanese automotive manufacturing ventures started in Canada, our automotive parts trade with Japan and Japanese-owned plants in Canada has increased considerably, thanks to a great extent through the establishment of PAC and the cooperation of JAMA both in Japan and Canada. PAC terminated its operation in Canada in 1997.

It was a great pleasure for me, in my years with the APMA to have worked with PAC and through its cooperation to have helped make this possible.

Congratulations on your 20th Anniversary, and may you continue for many years in the future.

25 On JAMA Canada’s 20th Anniversary - Some Observations on PAC Slawek Skorupinski, former Director General, Automotive Branch, Industry Canada

The following are some observations based on several years of working with PAC to improve the Canada – Japan automotive relationship:

• PAC was a unique organization that provided Canada with a window to the Japanese automotive industry at a senior level at a time when Japan was very much focused on the relationship with the US Slawek Skorupinski • PAC was not the only window and complemented efforts by the Canadian government to promote investment, and by the Canadian parts industry to promote sales of Canadian parts

• PAC’s efforts focused almost exclusively on the sourcing issue and on helping Canadian parts manufacturers understand how to sell to Japanese OEMs

• PAC staff could act as independent advisors and mentors to Canadian parts companies who could ask questions and seek advice without feeling threatened by a potential customer

• From a government perspective, PAC was a source of information and advice and often acted as a partner in organizing targeted events

• PAC seminars, plant visits, one-on-one meetings, etc. were very useful in helping to develop the Canada-Japan auto relationship

• PAC staff were devoted to the objective and worked hard to achieve measurable goals

• Annual meetings between PAC and the government were a useful mechanism to track progress and develop some benchmarks to measure progress

• There were often questions raised as to the effectiveness of PAC, including several reviews, but in the end it was always concluded that PAC should continue

• When PAC was finally wound up, all parties agreed that the relationship had matured to the point where normal commercial relationships would suffice and special arrangements were no longer necessary

• We always felt that PAC spent a lot of time educating the Japanese auto community about Canada which was not well known since most of the focus was on the US

• Conversely, PAC educated the Canadian parts industry about Japanese requirements, processes, operational methods, etc. This made it easier for Canadian companies to prepare proposals as they could obtain advice in a non-threatening environment before approaching customers

Prior to PAC the onus was on the government and parts industry to develop commercial relationships with Japanese companies. PAC took the government out of the equation in many cases and enabled commercial relationships to develop.

26 Personal Observations on the 20th Anniversary of JAMA Canada Neil De Koker, President, Original Equipment Suppliers Association (OESA), former Chairman and President, APMA

The investments by the Japanese automotive industry in Canada have been of major importance to Canada and especially to the Canadian automotive parts industry. These investments have provided a significant level of manufacturing and assembly diversity that is representative of the automotive vehicle market in North America. As a result, the Canadian automotive supplier community has had a direct opportunity to diversify their customer base in line with the changes in this vehicle market. Neil De Koker

I worked and lived in Canada from 1985 to 1995. In the early years, as an executive of Magna International, I observed the value of PAC and JAMA Canada directly as organizations that could provide important information about doing business with the Japanese vehicle manufacturers. Most importantly, the PAC and JAMA staffs were able to provide introductions to appropriate individuals at the Japanese manufacturers to help start a business relationship.

PAC was a particularly useful organization in the early years of Japanese expansion in North America. The executives at PAC were loaned executives from Mazda, Toyota, Honda, and Nissan and, therefore, were particularly useful in assisting Canadian automotive suppliers. PAC coordinated various visit programs to Japanese vehicle manufacturers which were always well attended by Canadian suppliers.

Probably the most significant single program coordinated by PAC was the annual PAC Seminar which was held in cooperation with the APMA. This seminar brought high level executives from the Japanese automotive industry to Canada each year. The Seminar provided Canadian suppliers the opportunity to meet Japanese industry executives, learn about doing business with the Japanese and better understand their business culture. As the President of APMA, I had the opportunity to serve as the moderator of these excellent conferences.

It should be noted, that the PAC organization and the annual PAC seminar also provided an opportunity for the Canadian supplier industry to help the Japanese industry better understand the mentality of North American suppliers. I believe the high level executive presentations and discussions at the PAC seminar were a very useful tool for reaching a better mutual understanding of value to all participants.

Through the effective relationship with PAC and JAMA Canada, and the support of the Canadian government, the APMA was able to develop a strong “Japan Automobile Strategy”. This strategy included many elements that provided opportunities for Canadian suppliers to develop their business relationships with the Japanese OEMs and suppliers. Annual auto parts missions to Japan were a vital tool for suppliers to gain an understanding of the direct business opportunities and the requirements for growing their business with these potential new customers. Participating in and exhibiting at the Tokyo Motor Show coupled with previously arranged visits and meetings with Japanese suppliers and OEMs all served to promote the growth of the Canadian supplier industry.

On a personal note, the creation and presence of PAC in Canada demonstrated the absolute importance and priority of building relationships by the Japanese automobile industry with Canada and the Canadian supplier community. It was very clear that the future of working together as

27 customers and suppliers had to be based first and foremost on personal relationships to achieve mutual understanding and the trust and respect necessary to succeed in a business relationship. PAC was a significant financial commitment by the Japanese automobile industry to achieve these relationships.

I remember once when Tom Kawamura, then the President of Toyota Motor Manufacturing Canada, took me to visit several Toyota suppliers in Japan. He wanted me to directly observe and understand how suppliers and Toyota worked together to meet very challenging productivity and quality goals that could only be achieved in a spirit of mutual trust and respect and total open information sharing. It was a demonstration of collaboration that I have promoted within the entire industry ever since. The overall industry could achieve significant improvements in quality, efficiency, warranty and customer value, if we could somehow achieve this level of collaboration.

Today, as the numbers show, the presence of the Japanese auto industry in Canada has contributed significantly to making the Canadian automotive industry stronger and better situated to compete in a global industry environment. I am grateful for the opportunity to have played a small role in the development and growth of the relationships that have made this possible. I also appreciate the opportunity that it afforded me to learn the importance of collaborative and cooperative relationships between suppliers and OEMs and what it can mean to overall productivity and profitability.

Celebrating the 20th Anniversary of JAMA Canada Yoshikazu Kawana, former Chairman, JAMA Canada, former President, Nissan Canada Inc.

I extend my heartfelt congratulations to JAMA Canada, upon the celebration of the 20th anniversary of its foundation, together with my most profound respect to everyone connected with the organization. Your efforts have been instrumental in helping to maintain strong ties of Canada-Japan friendship, while making an outstanding contribution to industrial cooperation between the two nations.

Yoshikazu Kawana At this time, my mind drifts back to the night before the official launch of JAMA Canada. This was a politically hot time, dating the early 1980s, when the sharp growth in Japanese car imports had emerged as a political problem. We initially sought to cope with the matter as a member of the Automobile Importers of Canada (AIC). However, with the target of the criticism coming to focus on Japanese cars, the Japanese companies that had advanced their operations to Canada at the time decided to get together and determined to face the issue and discuss viable countermeasures as JAMA Canada.

The results of those deliberations included the compilation of a paper prepared primarily by then- Assistant to the President of Toyota Canada Shinji Sakai, and then-Marketing Manager Chris Cooke at Nissan Canada, detailing the solid contributions that sales of Japanese vehicles in Canada were making to the Canadian economy and the negative impacts the possible restrictions on Japanese car import would bring. This article was used as the key tool in mounting strong public relations appeals to the Canadian government, the Canadian Vehicle Manufacturers Association, the Canadian arm of the UAW and other industry bodies, while also targeting newspapers, television and the mass media in general. We, then Toyota Canada President Mr. Yukiyasu Togo, other representatives and I, visited the Department of Industry Trade & Commerce in Ottawa to speak with Minister Ed Lumley, and protested

28 strongly the moves aimed at placing controls on Japanese car imports into Canada. JAMA also arranged for officials from its Washington D.C. office to take part in the effort to resolve the local problems. At length, a request was likewise filed with JAMA in Tokyo for strong support in working out the issues. In response, approval was received to establish JAMA Canada, only the second overseas office for JAMA after that in the United States, despite the relatively small scale of the Canadian market.

The inauguration party for the new organization to be called Pacific Automotive Co-operation or PAC was held in Toronto, with then Vice President Yutaka Kume of Nissan Motor Company dispatched to Canada to represent the JAMA headquarters and announce the launch of the new office. This event proved instantly effective in attracting attention to the activities of JAMA and its new Canadian operation. This was followed by the sponsoring by PAC a series of seminars for Canadian partsmakers and the advancing of other positive industrial cooperation activities. In addition to this, the expansion to Canada by the direct investments into the manufacturing sector by Japanese auto companies helped forge even closer ties between Japan and Canada at all levels, from sales through production.

It is patently clear that JAMA Canada has played a major role in building up the outstanding ties that exist between Canada and Japan today. For this and other reasons, I congratulate JAMA Canada on the 20th anniversary of its inception, and wish the organization redoubled growth and achievement over the years to come as well.

Pacific Automotive Co-operation (PAC) ~ a Unique Achievement in the History of Canada-Japan Industrial Cooperation Shigehira Yoshioka, former Executive Director of Japan Automobile Manufacturers Association and former Director, JAMA Canada

The Beginnings: Viewing the U.S. and Canada as One When Japan implemented voluntary restrictions on exports of Japanese passenger cars to the United States, the Canadian government became extremely wary that the focus of vehicle shipments from Shigehira Yoshioka Japan would shift to the Canada market.

Shortly thereafter, and without any prior notice, the Canadian authorities instituted a slowdown on customs clearance for Japanese cars at Vancouver, Canada’s major western port. At the time in 1981, with exports being restrained to the US, Canadian officials concluded that rising Japanese car exports to Canada was a sign of diversion, which prompted what quickly became known in the auto industry in Japan as the “Vancouver harassment”.

The Menace of Trade Protectionism After living through war in the Middle East and two oil crises, the United States experienced an explosive boom in sales of small, fuel-efficient cars, and a sharply corresponding decline in demand for the type of made-in-America vehicles that came to be known derisively as “gas guzzlers”. This pushed the U.S. automobile industry into dire straits, with the need for relief and rebuilding from this slump emerging as a theme requiring a swift response. U.S. automakers and labor unions demanded that relief measures be mounted, and filed an appeal with the International Trade Commission (ITC) toward that end.

29 The ITC issued its ruling on that matter in the fall of 1980, within which it concluded that the sudden rise in import car sales in the United States was in fact not the root cause of the struggles being experienced by the U.S. auto industry. Rather, it placed the blame for that situation on the failure of U.S. automakers to develop the caliber of fuel-efficient cars that consumers wanted to buy. The ITC earned stellar praise for this verdict, and was extolled as the conscience of America as a country devoted to upholding the principle of free trade.

Nevertheless, with the highly visible expanding loss of jobs in core industries, the debate over industrial relief and rebuilding soon escalated into a political issue. For its part, the U.S. Congress commenced deliberations on an import regulation bill that took direct aim at Japanese cars, with the argument for protecting a country’s own industry as the top priority gradually emerging as the mainstream mindset in the congressional sector.

To avoid a full-fledged shift in this direction, the Japanese government and industry made the decision to act first in introducing the voluntary restrictions on U.S.-bound vehicle exports mentioned at the outset.

Japan-Canada Negotiations The ban on customs clearance at Vancouver was eventually lifted as the result of government-level talks between Japan and Canada. However, this failed to ease the fears of the Canadian government that Japan posed a serious threat to Canada’s domestic industry. As a result, it applied strong pressure on Japan to limit large-volume exports of finished vehicles, as well as provide assistance and cooperation for the Canadian parts industry.

Against this backdrop, the Ministry of International Trade and Industry, which underscored the importance of Japan’s trade ties with Canada as a key component of the North America automobile industry, demanded that the Japanese auto industry take a cautious approach in exporting to Canada. Specifically, this referred to exercising self-restraint in shipping cars to the Canadian market. It addition to that, the ministry also issued strongly worded appeals to the Japan’s automakers to initiate a broad- based plan of industrial cooperation with the Canadian auto industry.

Unprecedented Government-Industry Talks The Canadian Minister of Industry, Trade & Commerce at the time was Ed Lumley, a man who brought considerable personal knowledge and experience in the economic field to his government post. Motivated by this background, Lumley issued a direct appeal to Chairman Takashi Ishihara of the Japan Automobile Manufacturers Association (JAMA), in which he invited Ishihara to travel to Canada for discussions of bilateral industrial cooperation. Minister Lumley met Ishihara at the airport upon his arrival in Toronto, and from there they traveled to Mr. Lumley’s cottage in the Thousand Islands near Kingston. This was the scene of an extremely frank change of views on the most feasible approach to industrial cooperation between Japan and Canada, and especially measures aimed at strengthening the Canadian auto parts industry.

Upon his return to Japan, Ishihara gathered together the leaders of the Japanese motor industry and explained the results of his discussions with Minister Lumley. During this session, he stressed the critical importance of responding to Lumley’s request for special policies of industrial cooperation.

Clearly, this meeting was realized as a result of the strong requests from Minister Lumley for such an encounter. In essence, these bilateral talks comprised high-level diplomatic negotiations between a

30 cabinet minister from one country and a top leader of the business community from the other. To those of us in the automobile industry, not to mention leaders in other business fields as well, this was a rather startling development that was extremely unusual if not unprecedented.

PAC Launch Team Following these talks, JAMA formed a study team comprised of experts to debate the questions of what types of measures would be of greatest benefit under these circumstances, what formats would be best to adopt, what useful examples exist in other industries and other key themes. The extensive discussions that ensued led to the conclusion that the most effective approach would be to establish a liaison body linking the Canadian and Japanese auto industries. The concept was for such an organization to serve as the core for expanding communication and exchange, leading to concrete progress and results.

In view of the nature of these goals, in addition to automakers, major parts and component manufacturers were also invited to participate, with a corporate organization capable of advancing specific programs in Canada established in Toronto. The team of experts visited Toronto several times, where they consulted with colleagues stationed in Canada, local consultants and other informed parties about the preferred scale of the local corporation to be established, the type of activity organization needed, registration procedures, where to locate and other important points. This work eventually led to the establishment and registration of PAC as a Canadian corporate organization.

The official opening ceremony for PAC was held in June 1984. Attending from the Canadian side were Minister Lumley, Charles Stedman, Director General of the Automobile, Marine & Rail Division at Industry, Trade & Commerce, Patrick Lavelle, President of the Automotive Parts Manufacturers’ Association and others. Those on hand from the JAMA side included Executive Committee Chairman Yutaka Kume and Executive Managing Director Nakamura. Also invited were various diplomatic representatives and other dignitaries, who all gave their blessings to the launch of PAC.

When the team of experts, of which I was a member, originally arrived in Toronto, it had been snowing heavily from the night before, with the entire city having been transformed into a white landscape. However, the snowplows were at work from the early morning hours, steadily clearing the main thoroughfares and the approaches to buildings. As a result, by the time people were ready to begin their morning schedules, automobiles were already motoring along the roads as usual. I just happened to wake up early, while it was still dark outside, and gazed outside my hotel window. The snow-removal brigade seemed to have emerged out of nowhere to begin the work, and rapidly cleared away the accumulated snow. I remember being extremely impressed with their speed and efficiency. That was well over 20 years ago, back in February 1983.

PAC Activities The PAC office in Toronto was comprised of four executives each from a major Japanese automaker, who were stationed there on a standing basis, with a support organization also set up in Japan. Along with local support staff, PAC commenced efforts in automotive related information services, the convening of various types of meetings and seminars, programs to improve the efficiency of operations at Canada parts plants, introductions of the Canadian industry to the Japan side, participation in Japan-Canada business leader conferences and other activities.

Through these and other contributions, the exchanges and trust between the industries of Canada and Japan were enhanced, corporate tie-ups and mergers began to get off the ground, business transactions

31 were expanded and productive investment was promoted. Such progress eventually led to the major local production operations in Canada. During these years, the Canadian government worked diligently to furnish an astounding amount of meticulous and invaluable support.

In time, PAC completed all phases of the work that it had been conceived to perform, and was finally dissolved in 1997. However, a portion of PAC’s critical functions, communications and liaison continues to be carried on by JAMA Canada today.

JAMA Canada 20th Anniversary Reflections ~ The Auto Pact & the FTA: The Significance and the Impact on Japanese Automakers in Canada Susumu Yanagisawa, former Chairman, JAMA Canada and President, Toyota Canada Inc.

For a period of nearly six years from September 1983 to June 1989, I was stationed in Toronto as the president of Toyota Canada and was inevitably involved in dealing with Canada-Japan and Canada- U.S. automobile trade issues.

In reviewing the Canadian automobile industry, one cannot do so without mention of the U.S.-Canada Susumu Yanagisawa Automotive Products Trade Agreement known as the “Auto Pact”. This agreement was completed and signed in January 1965 by Canadian Prime Minister Lester Pearson and U.S. President Lyndon Johnson after months of intense negotiations between the United States and Canada who were at fierce odds over automobile trade in 1964. The pact exerted a profound impact on Canada-Japan automotive trade over the years that followed.

From the Japanese perspective, the major issue related to the so-called ‘Canadian Safeguards’. The formulas of the safeguards are complex, but in essence required automobile manufacturers to achieve as a condition for duty-free imports into Canada 1:1 ratio of production-to-sales in Canada for passenger cars as well as 60% CVA (Canadian value-added). These were requirements that offered clear advantages to the Canadian side.

Nearly two decades later, in October 1987, the Canada-U.S. Free Trade Agreement (FTA) was concluded with tariff free trade on qualifying goods starting in 1989. With regard to the automobile trade which became a very high profile theme of the negotiations, both countries agreed not only to continue the Auto Pact in Canada, but also to limit the companies eligible to participate in the Auto Pact to those who were able to meet the conditions in the 1989 model year the year the FTA was implemented. According to the informed sources, the government of Ontario and the Big 3 U.S. automakers were united in keeping the Auto Pact intact and pressured both governments to protect it as untouchable.

As a consequence, even if Toyota and Honda were to expand production in Canada and thus satisfy the requirements of the Auto Pact, they would not have been able to obtain duty-free status under the FTA agreement. This was clearly a violation of GATT, and I made numerous trips to Ottawa as a representative of JAMA Canada to present the Japanese case to get the understanding and consent of Canadian government hoping that our position would somehow be reflected FTA. In the end, however, we could not match the political clout of the Big 3 U.S. companies. I remember the candid comment of Charles Stedman, General Director of

32 Transportation Industries Division, Department of Industry, Trade and Commerce at the time, who told me: “I came away with the impression that the Big 3 are always hiding behind U.S. negotiating team”.

Under the FTA agreement a ‘blue ribbon’ automotive panel comprised of members of both countries was created to deliberate on some problems that may arise in future out of changes in the North American automotive industry environments. Canadian Prime Minister Brian Mulroney appointed me to serve as a member of the panel from the Canadian side, and the first meeting of Canadian panel was held in June of 1989. This was just prior to my return to Japan at the end of June, and since it was likely to be my first and last appearance in such a meeting, I decided that I would clearly speak my mind. Today, I still have clear memories of vigorously stating our views regarding the problems of FTA for Japanese automakers in Canada.

In Pursuit of the Proper Recognition Yoshio Nakatani, former President, Toyota Canada Inc., former Chairman, JAMA Canada

During my tenure as Chairman of JAMA Canada from 1995 to 2002, the biggest task I imposed on myself was how to gain the proper recognition of Japanese automobile industries contribution to Canadian economy and society.

Japan’s direct investments to auto production in Canada, which started in 1980s, have rapidly expanded in 1990s and their contribution to the Canadian economy has been growing year by year Yoshio Nakatani in the areas of job creation, purchase of materials and parts, and export to the USA. JAMA Canada repeatedly emphasized this by saying that we are producing more than we sell, and we are exporting more than we import.

Despites of the enormous efforts made by Japanese Auto Manufacturers, we were not properly recognized either by Canadian Government or by Canadians in general.

In the history of Canadian Auto Industries, all the time Japanese auto manufacturers had been treated as “Import”, whereas GM, Ford and Chrysler had been named as “Domestic”, and people had simply accepted this categorization without thinking of the change of Canadian Automobile business environment over past 40 years. The problem was that under the name of “Domestic” they had been enjoying the preferential import tariff treatment since 1965 when the Auto Pact was concluded between U.S. and Canada. To be more specific, the Big 3 companies could import, under the Auto Pact, any models from any outside countries with free import tariff as a kind of reward to their investment to Canada, whereas Japanese companies like Toyota and Honda had to pay a 6.1% tariff when importing vehicles from Japan, despite their investment in this country.

In February 1997, when I was given the opportunity to speak at Canadian Auto Industry Conference, I raised the issue first time for open discussion to the public.

I said:

• This is not only unfair, but it is discriminatory. This duality in Canadian auto policy is contrary to the principle of non-discrimination set out by GATT and WTO.

33 • I recognize the contribution made by “Big Three” in the history to develop the Canadian Auto Industry infrastructure. But government policy should be based on what is best for the future, not on what was best in the past.

• I also appreciate the enormous contribution of the “Big Three” to the Canadian economy today, but the government policy should not be based on size or volume, it should be based on principle.

• If we are foreign-owned companies, they are also American-owned companies. Why are you Canadian calling them as “Domestic”? Is Canada a part of U.S.?

• Only the difference between them and us is that they are old investors to this county and we are new investors. By discriminating new investors from old ones, why can you bring more new investment to this country?

I raised the issue, primarily to gain the proper recognition of JAMA member companies’ efforts in this country; but at the same time, I had a confidence that this is a very necessary argument for the future of Canada to make Canadian business more competitive in the international arena by adopting more open and non-protective trade policy.

At the initial stage, it was a kind of the war declaration of no hope to win since the Big Three were too powerful and too influential for long time to industries policy-making and naturally they do not easily give up the benefit they had been enjoying. But, I continued to appeal my views to the public for their understanding and support by fully utilizing the media of newspapers, radios and TV programs.

In 1998, Japanese Government brought this issue to the Dispute Settlement Panel at WTO and after the lengthy process of settlement, WTO finally made judgment that the Canadian Tariff Policy is discriminatory and they instructed that Canadian Government should take necessary actions to eliminate the discrimination.

Following this, the government made announcement in 1999 that they will change the tariff policy so that every auto manufacturer should pay the same rate of 6.1 percent tariff when they import the vehicle from outside of NAFTA countries, regardless of AUTO Pact members or not, regardless of the amount of investment, and naturally regardless of the name of the company.

Since JAMA Canada and I had been asking for Zero tariff policy to be applied to everybody, this final settlement made by Canadian Government was not totally satisfactory for us. However, I think that the battle we fought has ended with the great victory on our side, because the level playing field, which we had been asking from the beginning, has been finally realized. I still feel very honored to hear people whispering about me “That is the guy who killed the Auto Pact”.

34 My Three Years with PAC Harry Takagi, former President, Pacific Automotive Co-operation, Inc.

For the three-year period from March 1992, I served as the fourth-generation director of the PAC office in Toronto. Coincidentally, my son had participated in a language-training program in Toronto through the end of the previous year, and I had visited him there several times. Though I was familiar with the city as a result, I never dreamed that I would ever end up working and living there. I was directly appointed to the PAC post from my position at a Mazda joint venture body parts manufacturing company in Michigan, and incidentally became the first president of the office to come Harry Takagi from a specialized engineering background.

Of the Japanese personnel, including myself, who were transferred in from the four companies of Mazda, Honda, Nissan and Toyota, two were on temporary loan from their companies’ respective purchasing groups. I definitely feel that their presence was a major reason that our contacts with local parts makers went so smoothly. It was also quite fortunate for me that Neil de Koker, President of the Automotive Parts Manufacturers’ Association of Canada (APMA) at the time (currently President of the Original Equipment Suppliers Association (OESA) of the United States), was an engineer by background. This was a key factor, I feel, in our ability to forge and maintain extremely friendly ties with that body.

For example, both of our organizations maintained the custom of holding general meetings once each year, and Neil and I invited each other to appear as special guests at these gatherings. I also met with the officials in charge of the automotive bureau at the Canadian government’s Industry Canada as frequently as possible, and used those contacts to pursue fruitful information exchanges.

Those of us stationed at PAC hailed from companies that were market rivals back in Japan, where it would have been unthinkable for such a group of people to work together in the same office. In that sense, this was a truly rare and precious experience. After my assignment there, at the request of the Japan Automobile Manufacturers Association (JAMA), for two years I served in a supporting capacity at the Society of Motor Vehicle Manufacturers and Traders of Britain. My experience at PAC was a tremendous help in that work as well. In addition to that, I also benefited from the extensive backup given by the Japan side in all of my activities at PAC, and I am deeply grateful for that critical support.

During the latter half of my term at PAC, the bilateral automobile issues between Canada and Japan moved toward resolution, with the result that the objectives for establishing PAC in the first place were steadily achieved. Based on our keen awareness of this progress, we embarked on the work of reforming the organization, with one phase of that comprised of reducing by half the number of full- time personnel on loan from the four automakers mentioned above. One reason for this was to lower the economic burden of the Japan side. During the term of Masahiko Obi of Honda, who became the president of PAC after me, the corporate organization was effectively dissolved, with its core operations coming to be pursued in a different format.

I often reflect on the three years that I spent in Toronto as the director of PAC. At the risk of sounding somewhat judgmental or even prejudiced, I feel that any businessperson who is sent to Canada on their first overseas assignment will find it difficult to be truly satisfied with the location of any subsequent postings – regardless of what country they may be dispatched.

35 As the world knows, Canada is a country blessed with a vast and magnificent natural environment, and I truly enjoyed going on car trips for my summer holidays or on weekends during other times of year when the weather was great. Among my particularly memorable Canadian journeys was the visit to Moosonee, a fur-trading town from days of old located on James Bay, which can only be reached by weaving your way through a primeval forest area on the Ontario Northland Railway. Another was the trip by car to Manitoulin Island on Lake Huron, which is famed as the world’s largest freshwater lake island.

In the fall, the brilliant golden hues of the “maple tree routes” along the main roads, as well as the red and yellow tints expanding throughout the Agawa Valley, provide breathtakingly beautiful landscapes that certainly take no backseat to the autumnal tints seen in Japan.

If I have any regrets at all, it would be that I was unable to savor the sight of the Aurora Borealis, a legendary natural phenomenon that similarly eluded me even upon a trip to Finland. Someday, I dearly hope to be able to experience that visual spectacle.

Although I am now retired, I continue to try to travel to Canada about once a year. As you can well imagine, therefore, if asked to recommend the best countries in the world for long-term stays, I would never hesitate to put Canada at the top of my list.

Fond Memories of My Years at PAC Masahiko Obi, former President, Pacific Automotive Co-operation, Inc.

In retrospect, the 1980s was a truly memorable decade for those of us in the automobile industry for many reasons. Not the least of these developments was the surge in trade friction related to Japanese car exports, which occurred around the same time as the sharp rise in the value of the yen. In 1982, furthermore, operations commenced at the Honda automobile assembly production plant in the United States, with other Japanese automakers soon following suit with launches of their own manufacturing Masahiko Obi plants in various locations around America. In the rush to supply parts and components for these facilities, a steady stream of Japanese partsmakers also advanced their business operations to U.S. shores soon thereafter.

As this came to pass, requests were received from the government of Canada, an excellent export market for fully assembled vehicles, for feasibility studies on industrial cooperation. As a result of the investigations that were in fact conducted in that direction, in 1984 the 11 member companies of the Japan Automobile Manufacturers Association teamed up with their 21 counterparts in the Japan Auto Parts Industries Association to jointly finance the establishment of Pacific Automotive Co-operation Inc. (PAC), with the objective of advancing constructive industrial cooperation. The specific activities of PAC covered a truly broad range, including strengthened cultivation of the Canadian auto parts industry, expanded transactions and investment with Japanese automakers and parts manufacturers, campaigns to encourage business advances to Canada and other areas.

One manager each from Toyota, Honda, Nissan and Mazda, four automakers that are keen business rivals back home, selected from personnel primarily in charge of purchasing operations at their respective firms, were dispatched to Canada to serve as local PAC representatives and engage in joint work duties for the sake of promoting industrial cooperation. The President of PAC was appointed on a

36 rotating basis from Toyota, Honda and Mazda, serving terms of three years (the Nissan reps, meanwhile, concentrated on coordinating support on the Japan side). While this was an extremely unique undertaking, it should also be easy to imagine that the struggles and the pressures of this work far exceeded those of normal local representatives of Japanese companies or organizations.

I personally served as a member of the study team around the time that PAC was launched, although I was later posted to Britain and had no further association with PAC or its operations for quite some time. I certainly never imagined, therefore, that in the spring of 1995, some 11 years after PAC was founded, I would be named from Honda to serve as the fifth (and as it turned out final) President of PAC.

Following my appointment, Japan’s “strong yen recession” grew more severe, prompting various action plans and measures in response. To help reduce our expenses, for example, we immediately relocated the printing phase of the “Canada Report”, a publication issued once every two months, from Japan to Canada. The maple leaf design used on the cover, incidentally, was kindly furnished to us by the Canadian government.

In addition to the PAC-APMA Seminar and the quality improvement program continued up to that point, I made the decision to take tours of the production plants of Canadian partsmakers with many of my colleagues from Japan. This was rooted in my conviction that such a program would be beneficial for all Japanese automakers. We also interviewed the owners of these companies, conducting joint visits to over 80 companies in all, including Tier 2 firms. During the limited term of my appointment, I strived to introduce the results of all of these visits in “Canada Report”. I am proud to say that the publishing of these introductory articles paved the way for the forging of a number of business relationships.

During these years, both Toyota and Honda announced plans to build their second plants in Canada, with a steady increase in the unit production of Japanese automakers in Canada emerging hand in hand with the ongoing expansion of local procurement. In 1996, based on the judgment that PAC industrial cooperation activities had more than achieved their initially declared goals, a proposal for the dissolving of PAC was tendered from the local side. Understanding and approval for this plan were obtained from the Japanese and Canadian governments and other pertinent sectors, with PAC operations brought to a smooth and harmonious conclusion in June 1997. One portion of the PAC business platform was carried on by JAMA Canada.

During the 13 years since the inception of PAC, the cumulative total of 21 representatives stationed there carried on a rigorous series of efforts and programs. This work followed a diligent trial-and-error process, in which we greatly benefited from the strong support of the Japan side, to determine areas and activities beneficial to the Canadian auto parts industry. I believe, therefore, that PAC played an instrumental role during this important transitional period, and as it turned out I was personally on hand for both the foundation and the dissolving of PAC.

Meanwhile, although I only served as the head of PAC for two and a half years, my time in Canada holds many fond personal memories as well. One concerns my wife, an expert in the pastime of patchwork quilting, who put on her first-ever “one-woman show” during our stay. This four-month-long exhibition took place at the Joseph Schneider Haus Museum, located in an old Mennonite home originally built in 1820 in Kitchener that is now a Canadian government designated historical monument, at the recommendation of a Canadian friend and the museum’s curator. I might also add that both my wife and I were kindly made honorary members of the museum.

37 Another wonderful memory is that Canada is where we first met our future daughter-in-law, during the final year of our stay. This wonderful young woman was on a working holiday in Toronto, and first became acquainted with my wife. Today, she is the mother of our darling 4-year-old grandchild, making our time spent in Canada a truly precious milestone for our entire nuclear and now extended family.

On the business front, Canada-based production by Japanese automakers has traveled a road of steady expansion over the years, and now comprises an indispensable presence for the Canadian motor industry as a whole. Looking back now, I appreciate more than ever the wisdom of the Canadian government and the local parts industry in enthusiastically asserting the superiority of Canada as a potential production stronghold for the North American market from the very start. I am also doubly impressed that the Japan side responded to these overtures with the establishment of PAC, and the decisions by individual automakers to expand production operations to Canada. During my time at PAC, I was able to both witness and experience first-hand the culmination of these efforts in the form of resounding successes for Canada and Japan alike.

As a PAC alumnus, I am confident that the Japanese auto industry in Canada will continue to make a strong contribution to the causes of Canadian-Japanese prosperity and friendship in the years ahead. It is in this upbeat spirit, therefore, that I add my own personal salute to the many voices of congratulation on the illustrious occasion of the 20th anniversary of the foundation of JAMA Canada.

JAMA Canada: Saluting 20 Years of Progress Toshihiro Iwatake, Senior Director General, International Department, Japan Automobile Manufacturers Association (former Deputy General Director of JAMA USA) Member, Board of Directors, JAMA Canada

I extend my heartfelt joy and congratulations on this occasion, as JAMA Canada proudly commemorates the 20th anniversary of its foundation.

Back in 1983, at the time that JAMA Canada was first launched, I was stationed at the JAMA Toshihiro Iwatake Washington D.C. Office, and it seems just like yesterday that I was making regular monthly trips between Washington and Toronto in support of the new undertaking up north. This came at a time when the world was still reeling from the impact of the two oil crises of the 1970s, and the subsequent slowdown in the global economy. The motor industry was also hard hit by these developments, with the developed automotive countries of the United States and Europe moving to adopt protectionist policies. Japan also continued to earn criticism surrounding the issue of foreign exchange, and for the Japanese automobile industry, I remember that this marked the beginning of the demands to move to localized overseas production, hand in hand with the need to adopt full-fledged external communications and public relations activities.

In the United States at that time, highly fuel-efficient Japanese cars steadily expanded their market share, supported by robust user demand for compact and economic cars in the wake of the oil crises. The U.S. automakers, in contrast, were extremely reluctant to embark on the development of smaller cars, due to the low profit rates of such vehicles. With the outbreak of the second oil crisis in March of 1979, Japanese cars began to sell in truly explosive fashion. The U.S. Big 3

38 automakers took note of this shift, with General Motors marketing the “X-Car” as a full-scale compact and other efforts made to respond to the demand for smaller vehicles. The American auto industry as a whole, however, listed an all-time record deficit of $4.2 billion. In January 1980, Chrysler effectively went bankrupt, with the federal government authorizing a loan guarantee plan to bail out that automaker.

As this critical situation developed, there was growing sentiment within the United States, with the focus on labor unions and the Congress, to place restrictions on Japanese vehicle imports. In June 1980, the United Auto Workers Union and Ford Motor Company teamed up to file a case with the United States International Trade Commission, demanding limits on Japanese car imports based on Article 201 of the Trade Act. Fortunately for us, the International Trade Commission refused to recognize the cause-and-effect relationship between car imports and the damage to industry. The commission concluded: “The current troubles (damages) of the U.S. automobile industry have not been caused by the sharp increase in Japanese cars, but rather by the fact that the U.S. auto industry itself failed to respond to the swift change in the demand structure in favor of compact cars.” This was a victory for the Japanese side, insofar that we avoided the fate of having one-sided import restrictions put into place by the U.S. authorities.

As might be expected, however, there were factions in the labor unions and U.S. Congress that were displeased with this ruling. Spokespersons for that cause claimed that if it was impossible to introduce import restrictions through administrative measures, then imports should be curbed on the force of new legislation. This prompted a series of proposals for import restriction bills by influential members of the Congress – among them Senator Donald Riegel of Michigan, and Senator John Danforth of Missouri.

The Japan side reacted to the pressure for limits on imports by holding U.S.-Japan government level talks, dispatching to America parts procurement study missions organized by JAMA, the decisions by Honda and Nissan to build manufacturing plants in the U.S. and other actions and countermeasures. However, these efforts were not enough to weaken the political pressure, with the passage of an import restriction bill (the Local Content Bill) appearing likely. Then in May of 1981, a compromise was hammered out to avoid the enactment of such a law. The Japanese government agreed that, in return for a U.S. Presidential veto of the Local Content Bill, Japanese automakers would voluntarily restrict their U.S.-bound passenger car exports to a combined total of 1.68 million vehicles per year. In this way, therefore, a so-called voluntary export restriction (VER) measure was put into force.

During this time, within the scope of our relationship with Canada, Japan became concerned that under the impact of the voluntary restrictions on exports to the U.S., shipments of Japanese cars to Canada were likely to increase sharply. Based on this worry, in June 1982 the Japanese government adopted measures to voluntarily hold the growth in exports to Canada to within 10 percent of the previous year’s performance. Canada expressed tentative approval of this decision, but was also concerned about the series of decisions by Japanese automakers to expand to and invest in the U.S. As a result, and in the interest of attracting such investment to Canada as well, the Canadian side commenced studies of policies aimed at promoting production of Japanese motor vehicles domestically in Canada.

39 Mr. Ed Lumley, the Canadian Minister of Industry at the time, established the “Task Force on the Canadian Automobile Industry”. UAW Canada President Bob White and Canada’s Automotive Parts Manufacturers Association President Pat Lavelle were appointed co-chairs, and directed to spearhead specific studies into strategic policies to raise local content and to produce vehicles domestically in Canada. There were no powerful free trade support groups in Canada at the time, and unlike the United States, there was also no brisk tone of opposition to the placing of restrictions on imports. In view of this, and out of fear that the debate might become one-sided, Toyota Canada President Yukiyasu Togo formed the Canadian Association of Japanese Auto Dealers (CAJAD), launching a grassroots campaign by the dealers to protest to local legislators about import restrictions.

As long as the debate was limited to import restrictions, the dealers would be willing to dig in and fight for their business interests as a life-and-death struggle. However, when the issue turned to domestic production and local content, this evolved into a problem of how to actually build vehicles. As such, it was a matter requiring action on the part of the manufacturers. Strictly speaking, from the dealers’ perspective, access to “Made in Japan” products was not an absolute necessity. That is, “Made in Canada” would also be acceptable as long as the dealers were supplied with cars that would sell well. Likewise, because they were not well versed in the actual production of the vehicles, it proved difficult for the dealers to effectively participate in the debate over local content. Therefore, we faced the question of under what name to unite in expressing the opposition of the Japan side toward local content requirements as recommended by the Lumley Task Force Report tabled in 1983. We consulted with the JAMA Tokyo Office on this quandary, and eventually determined that forming a JAMA Canada Group was the best option. Based on that judgment, therefore, JAMA Canada came into existence.

Taking to heart the experiences in the United States, the Canada side favored full representation for JAMA Canada at JAMA Tokyo. Tokyo, however, was extremely busy dealing with the issues of trade friction with the U.S. and Europe, safety regulation measures for Saudi Arabia and other market problems. This created difficulties in stationing full-time personnel in Canada, making it necessary to resort to a system of limited support from the Washington D.C. Office. As it turned out, however, this actually speeded up the move to localization, leading to the establishment in 1984 of PAC, a company formed to promote cooperation between the Canadian and Japanese auto industries. This stance furnished pivotal assistance for the advances in implantation to Canada by Honda, Toyota and CAMI, and is one of the key factors behind the success of JAMA Canada in steadily forging and expanding its legacy of progress and credibility over the two decades to follow.

Again, I congratulate JAMA Canada on the twentieth anniversary of its foundation, and look forward to continued vision and redoubled accomplishment by this fine organization over the years to come.

40 CHAPTER 4 HIGHLIGHTS & TIMELINES OF JAMA CANADA MEMBERS

HINO MOTORS CANADA, LTD. – Timeline

1974: Hino was first established in Canada through a joint venture with Marubeni Corporation, who had Hino Motors obtained a significant order for Hino trucks from C.P. Express. This order was shipped C.B.U. from Canada, Ltd. Japan and included Hino’s KB and KL models. The new company was called Himac Motors, a 395 Ambassador Dr. wholly owned subsidiary of Marubeni Corporation, Japan. Mississauga, Ontario 1976: Himac established an assembly plant in Coquitlam, British Columbia. L5T 2J3 1982: Hino Motors Ltd., Japan purchased 20% of Himac Motors Ltd. 1983: Himac contracted Inland Kenworth group to assemble trucks at their Skagit manufacturing plant. Inland Kenworth’s Truck Dealership located in Vancouver was appointed Hino’s first dealer in Canada. Nine other Dealers were later signed across Canada in the first year. Himac’s Canadian Head Office was initially established in Vancouver. Hino made a full production change to their LA & LB series. North American manufacturers such as Ford, International and Dodge had just discontinued their “Cab over Engine” model trucks. Hino was the only C.O.E. and midrange truck manufactured and sold in Canada. 1984: Himac discontinued assembly in Coquitlam and Hino’s head office was moved to Toronto. Hino began importing fully assembled trucks into Canada from Japan through Annacis Island, Vancouver. 1985: Full cab change took place with the introduction of the first “F” type truck which was fitted with Hino’s new direct injection, “H.O.” Series diesel engine. This truck became very popular with owners and 1974 Hino KL drivers alike. It was not uncommon for customers to see over 1,000,000 kilometers before major repair. 1992: Hino Motors Ltd, Japan, purchased 100% of Himac Motors, and renamed it Hino Diesel Trucks Canada Ltd. 1997: Hino introduced the next generation 1998 “F” Series C.O.E. truck with the technologically, highly advanced “J Series” engine. 2003: Hino launched their “new concept” conventional style truck, discontinuing their previous C.O.E. models. The new concept truck produced at Toyota’s TABC plant in California will now form the “back bone” for Hino’s Canadian and US sales. 2004: Hino delivered its 10,000th truck sold in Canada to General Cartage. Hino Canada achieved the highest sales award from Japan having sold more than 1,000 trucks in F-Series, 1998 one year. Hino celebrated its 30th Anniversary at the Fairmont Royal York Hotel in Toronto inviting customers and dealers from across Canada. Hino Canada is currently represented by 31 dealers across the nation offering customer service in most major cities. 2005: Hino Canada announces that they will open up a new truck plant in Woodstock, Ontario. 2006: Hino Canada produces its first truck in Canada in April 2006; and later the same year assembles the 1,000th truck from the Woodstock Plant. Hino achieves annual record sales in Canada of over 1,500 trucks. Hino Hybrid concept vehicle, 2005 Model

Himac Motors Plant in Coquitlam B.C., 1976 Hino Motors Sales Canada new head office in Hino Flatdeck258MDL Mississauga, 2004

41 HONDA CANADA INC. – Timeline 1969 Honda Canada established to market motorcycles and power equipment. 1973 Honda Civic introduced in Canada. 1976 Honda Accord introduced in Canada. 1979 Honda Prelude introduced. Honda Canada Inc. 1984 Plans announced to begin production of Honda vehicles in Canada. 715 Milner Avenue New zone office complex opened in British Columbia to service Western Canada, incl. warehouse Scarborough, Ontario and technical training center. M1B 2K8 1986 Acura division established - the first Japanese manufacturer to offer an upscale automotive line. Honda of Canada Mfg. Acura Legend and Acura Integra introduced to Canada. 55 Tottenham Road, 1987 Honda Canada Finance Inc. established to provide stable financing for consumers of Honda’s Box 5000, Alliston, products and its dealers. Ontario L9R 1A2 1990 Honda sells more than 100,000 cars in Canada during the year, the first of the “new” manufacturers to do so. 1991 New zone office complex opened in Quebec to serve that province, incl. advanced technical training center and warehouse. 1-millionth Honda vehicle sold in Canada. 1994 Exports of Civics begin including shipments to Brazil and Taiwan. 1998 Throughout the year, more than 250,000 customers purchase a Honda product (motorcycle, auto, ATV, marine engine or power equipment). 1974 Honda Civic 1999 Odyssey wins AJAC “Truck of the Year”, Acura TL wins AJAC “Car of the Year”. CVCC Exports of Canadian-built Odysseys begin, including shipments to Japan. 2000 The Honda Insight, North American’s first gasoline-electric hybrid is launched in Canada. 2001 2 millionth Honda vehicle sold in Canada. 2002 Plans announced to sell Civic Hybrid in Canada: to complement the Honda Insight and reinforce Honda’s commitment to the environment. 2003 Honda’s cumulative auto production worldwide reached 50 million units. 1999 Odyssey wins 2004 Honda announces return to sponsoring the Honda Michelin Series. Honda originally launched the AJAC “Truck of the series in 1975 and continued for 17 years. Year” 2006 Honda announces a new 4-cylinder engine plant to open in 2008 next to the Alliston assembly facility with an annual capacity of 200,000 engines. The engine plant will employ 340 associates, with a total investment of $154 million. Honda Civic and Honda Ridgeline, both built in Alliston, win the Automotive Journalists Association of Canada (AJAC) Car of the Year and Truck of the Year Awards respectively. The Honda Civic Hybrid also wins the AJAC Award for Alternative Power Vehicle. 2007 The Honda Civic was the best selling passenger car in Canada in 2006 for the ninth year in a row. 2006 Honda Civic - The Acura RDX (Technology Package) was named the 2007 Best New Utility Vehicle by the (AJAC) as well as the best new SUV/CUV ($35,000 - $65,000). Canada’s No.1 Passenger Car for 9 Consecutive Years (1998-2006)

2006 Honda Ridgeline

42 HONDA OF CANADA MFG. - Timeline 1984 Honda Motor Co. Ltd. announced plans for vehicle manufacturing operation in Canada. 1986 On November 3rd, Honda becomes the first Japanese carmaker to manufacture in this country when the first Canadian-built Honda Accord is driven off the assembly line at the new Alliston plant. 1988 Civic Hatchback production launch for North American markets. 1989 Stamping facility added in Alliston. HCM production reached the 100,000th vehicle. Honda Canada Inc. 1992 Civic coupe added to production. 715 Milner Avenue 1993 In May, HCM production reached the 500,000th vehicle. Scarborough, Ontario 1995 In April, HCM becomes one of the first automobile manufacturers in North America to receive ISO M1B 2K8 9002 certification, an internationally recognized quality standard. Honda of Canada Mfg. 1996 On June 25th, Honda of Canada Mfg. is awarded a J.D. Power “Silver Plant Quality Award”, issued 55 Tottenham Road, based on the results of owners’ Initial Quality Study. Box 5000, Alliston, Acura EL production begins for the Canadian market. Ontario L9R 1A2 1997 In June, HCM produces its one millionth vehicle. 1998 In September, HCM receives certification in ISO 14001, an international environmental standard. On September 30th, HCM Plant 2 is officially opened, building the Odyssey minivan for North America and a special model “LaGreat” for export to Japan. 1999 In May, HCM receives the “Outstanding Business” award from the Recycling Council of Ontario for its waste minimization efforts. Plant 2 expansion to include a new sport utility vehicle (Acura MDX and Honda Pilot) for North American markets. 2000 Acura MDX is launched and only produced in Alliston for worldwide distribution. 2001 On May 1st, HCM produces its 2 millionth vehicle, a green Honda Odyssey. Acura MDX rolls off the 2002 On March 5th, HCM is recognized at the Voluntary Challenge and Registry (VCR) awards ceremony line in Plant 2 as “Best New Submission”, along with receiving a “Gold Champion Level Reporter” status for energy conservation. 2003 HCM receives ‘Leadership Award’ for auto manufacturing category at the VCR awards ceremony in recognition of significant reduction targets to reduce environmental impacts. 2 millionth Civic built in September.

HCM associates tree planting and stream clean-up results in 60,000 trees planted from 2003–2007

Plant under construction, 1985

Engine plant under construction, June 2007

Plant 1, Alliston HCM today - Plant 2 is Honda’s lead plant for large truck production

43 HONDA OF CANADA MFG. - Timeline (cont.) 2004 HCM’s 3 millionth vehicle built in January. HCM announced a new sport utility truck (SUT) will be built in Plant 2, to replace Odyssey which was shifted to Honda Alabama plant. 2005 Production of Honda’s first truck, the Ridgeline, starts in Alliston. Offering innovation, the Honda Ridgeline features the world’s first huge In-Bed Trunk™ and is only produced in Alliston for worldwide distribution. 2006 In May, HCM announces and begins construction of an engine plant. Production reached the 4 millionth vehicle and HCM celebrates its 20th q anniversary in Canada. 2007 For the first time for Honda in North America, a Honda plant, that had only produced light trucks, also produces a passenger car on the same assembly line in Alliston.

44 MAZDA CANADA INC. - Timeline

1968 Mazda Canada is incorporated as Mazda Motor Corporation’s second overseas subsidiary, Mazda Canada Inc. headquartered in Vancouver, BC. Mazda begins sales operations with dealer network in British 55 Vogell Road, Columbia and Alberta Richmond Hill, Ontario 1978 As dealer network expands across Canada, Mazda Canada Inc. moves headquarters to L4B 3K5 Scarborough, Ontario to better service its retail network. 1986 2nd generation Mazda RX-7 introduced and named “Best New Sports Car” by Automobile Journalists Association of Canada. 1989 Mazda MX-5 Miata introduced. MPV minivan introduced and wins “Best New Light Truck/Van/Sport Utility” from Automobile Journalists Association of Canada. 1990 4-wheel-drive MPV introduced and wins “Best New Light Truck/Van/Sport Utility”, from Automobile Journalists Association of Canada. 1991 Mazda MX-3 Precidia introduced, named “Best New Sporty Car” by Automobile Journalists Association of Canada. Mazda introduces 3rd generation RX-7, named “Best New Performance Car” by Automobile Journalists Association of Canada. 1994 Mazda introduces Millenia luxury sedan, first automotive application of Miller-cycle engine, wins “Best New Luxury Car” by Automobile Journalists Association of Canada. 1997 Mazda consolidates North American operations into one integrated organization comprised of two companies, Mazda Canada Inc. and Mazda North American Operations. 1998 Mazda B-Series compact pickup truck named “Best New Pickup Truck” by Automobile Journalists Association of Canada. 1999 3rd generation Protegé introduced and wins “Best New Economy Car” from Automobile Journalists Association of Canada. 2000 Tribute Sport-Utility-Vehicle introduced and wins “Best Light Truck/Van/Sport Utility” from Automobile Journalists Association of Canada. Mazda introduces “Zoom-Zoom” brand message 2001 Tribute wins “Canadian Truck of the Year” from Automobile Journalists Association of Canada. Protegé named “Best New Economy Car” by Automobile Journalists Association of Canada. 2002 Mazda Canada sells 1,000,000th vehicle. MazdaSpeed Protegé wins “Best New Sports Coupe” (under $35,000) from Automobile Journalists Association of Canada. 2003 Mazda6 sedan introduced and wins Motoring 2003 “Car of the Year” and “Best New Family Car” from Automobile Journalists Association Canada. RX-8 introduced and named “Car of the Year” by Le Guide de l’Auto and “Best New Sports/Performance Vehicle” from Automobile Journalists Association of Canada. Mazda3 introduced and wins “Best New Economy Car” and Mazda3 Sport wins “Best New Sporty Car <$35,000 from Automobile Journalists Association of Canada

Mazda Canada Head Office

45 MAZDA CANADA INC. - Timeline (cont.) 2004 The Mazda6 Sport and Mazda6 Sport Wagon arrive in Canada and are voted by the Automobile Journalists Association Canada as the “Best New Family Car” and “Best New Station Wagon”, respectively. Mazda Canada head office moves to Richmond Hill, Ontario. Mazda Canada sets an annual sales record of 73,888 vehicles sold in 2004. 2005 Mazda5 is introduced and wins “Best New Multi-Purpose Family Vehicle” by the Automobile Journalists Association of Canada” Mazda Canada launches its highest performing, best handling sedan ever: the MAZDASPEED6. 3rd-generation MX-5 debuts in Canada along with a limited edition model. Mazda Canada sets second consecutive annual sales record by selling 77,867 vehicles in 2005. 2006 MAZDASPEED3 is introduced and wins “Best New Sports Car Under $50,000” from the Automobile Journalists Association of Canada. Mazda’s first crossover vehicle, the CX-7, is introduced. The popular Mazda3 and Mazda3 Sport receive a facelift. Don Romano appointed as President, Mazda Canada, Inc. Mazda Canada set its third consecutive annual sales record by retailing 81,007 vehicles in 2006. 2007 Mazda introduces its first 7-passenger, 3-row crossover SUV: the CX-9. 2nd-generation Tribute is launched.

46 MITSUBISHI MOTOR SALES OF CANADA INC. (MMSCAN) - Timeline 2002 Mitsubishi Motor Sales of Canada, Inc. (MMSCAN) is established as the exclusive Canadian sales, Mitsubishi Motor marketing and distribution subsidiary of Mitsubishi Motors Corporation in Japan, with its head office Sales of Canada, Inc. in Mississauga, Ontario. 2090 Matheson Blvd. MMSCAN markets a full line of Mitsubishi Motors’ brand passenger cars and sport utility vehicles – Mississauga, Ontario consisting of seven distinctive models. L4W 5P8 2004 Mitsubishi establishes itself as having the best and most comprehensive warranties in the world today – with a 5-year or 100,000 kilometre bumper-to-bumper in addition to a 10-year or 160,000 kilometre limited powertrain warranty and a 5-year/unlimited km roadside assistance plan – proving the confidence Mitsubishi has in its products and its intention of being part of the Canadian landscape for years to come. 2005 Mitsubishi Motors Corporation in Japan grants its Canadian operation greater independence. Now the division no longer reports into its American counterpart but reports directly to the head office in Tokyo, Japan.

Commitment to expand its dealer network over the past three years – from 18 to 56 dealers – is 2008 Mitsubishi achieved. Lancer GTS 2006 Launched all new 2006 Eclipse Coupe and Eclipse Spyder in Canada in time for summer. Launch of 2006 Lancer Sportback – a compact wagon exclusive to the Canadian market. Introduced the 2007 Galant Ralliart edition that will satisfy performance enthusiasts with a robust 256HP 3.8L MIVEC engine mated to a silky-smooth 5-speed automatic transmission with Sportronic™ shift function. Introduced the 2007 Endeavor Special Edition. A defining model in the midsize crossover segment, the Endeavor combines all the best qualities of a SUV with the driving characteristics and handling of a passenger car. Appointment of new President & CEO, Mr. Koji Soga, an experienced senior executive with almost 38 years of leadership roles in Product Planning, Overseas Marketing and Corporate Strategy with Mitsubishi. DRIVEN magazine votes the all new 2007 Galant Ralliart as one of the eight greatest cars in their annual Gift Guide. 2007 MMSCAN reports year-to-date sales up 5.4% with 10,957 vehicles sold in 2006. MMSCAN announces pricing for its 2007 lineup that is among the most competitive in the industry. Introduces the all new 2007 Outlander compact sport SUV to the Canadian market. Introduces the all new 2008 Lancer compact sedan to the Canadian market. Unveiled Concept X, a concept vision of the next generation Lancer Evolution, at the Canadian International Auto Show in Toronto. Lancer Evolution X will become available in Canada in early 2008.

Head office and staff of Mitsubishi Motor Sales of Canada in Mississauga

47 NISSAN CANADA INC. - Timeline 1965 In January, Nissan becomes the first Japanese-based auto maker to incorporate in Canada and sets up office in Vancouver. The company, originally named Nissan Automobile Company (Canada) Ltd., starts with six employees, signs 84 dealers in the first year and sells more than 1,200 Datsuns, a mix of Datsun 312s and Datsun pickups, the first compact pickups available in North America. 1966 Ontario Region office opens. Nissan Canada Inc. 1967 Nissan Canada grows to 26 employees, opens a Quebec Region office and introduces the 5290 Orbitor Drive, Datsun 510. Mississauga, Ontario L4W 4Z5 1968 Annual sales hit 3,600 units, putting Nissan among the top 10 importers in Canada. 1969 Datsun 240Z unveiled and company moves into the No. 2 spot among importers. 1971 The 100,000th Datsun reaches Canada as Datsun becomes the No. 1 selling import in Canada. Prairie Region office opens in Calgary, and Ontario Region moves into a new 12-acre complex in Downsview. 1973 Transport Canada and the U.S. Environmental Protection Agency rate Datsun 1200 tops in fuel economy. It subsequently gains enormous popularity with the advertising slogan “Datsun saves.” 1981 Nissan decides to market vehicles worldwide under Nissan nameplate. 1982 Nissan Canada moves into new headquarters in the business heartland of Ontario and adds forklift Versa Hatchback division. Staff has grown to 250. 1985 Marine department is formed to market Nissan outboard motors. 1987 Revamped car lineup and a fresh “customer first” initiative pushes sales to a record 54,000 vehicles. 1989 The head office of Nissan Canada moves to a stunning new headquarters building near Pearson International Airport. 1990 Company celebrates its 25th anniversary in with opening of a new Central Region office and parts warehouse. Nissan Canada introduces its new luxury division, Infiniti. 2005 Nissan Altima 1993 The Nissan Canada Foundation is launched, dedicated to helping Canadian seniors and enhancing their quality of life. 1996 Nissan’s annual overseas production passes the 10-million vehicle mark. 1999 Nissan and French auto maker Renault enter a comprehensive global alliance aimed at achieving profitable growth for both companies. The agreement creates the fourth largest auto maker in the world. Renault’s executive vice-president Carlos Ghosn was appointed Chief Operating Officer of Nissan. 2001 Mr. Ghosn’s Nissan Revival Plan dramatically changes Nissan fortunes, bringing the company back G35 Sedan to profitability and making Mr. Ghosn somewhat of a folk hero in Japan. 2002 Nissan Canada posts its best sales in a decade with a revitalize the Nissan lineup that includes an unprecedented number of outstanding new vehicles, such as the spectacular new 350Z sports car and the Nissan Murano crossover SUV. 2002 was the best year by far in the history of the Infiniti Division of Nissan Canada. Sales were up by more than 85 percent over 2001. 2003 Nissan wins three major Canadian awards as new 350Z sports car was named Car of the Year and the Best New Design of the year by the Automobile Journalists Association of Canada. At the same time, the new Murano crossover SUV was named Truck of the Year. To win all three major AJAC Sentra awards is unprecedented in the 19-year history of the awards. Nissan enters the hot full-size pickup market with the Nissan Titan and the first full-size SUV, the Nissan Armada.

Nissan Canada Head Office

48 NISSAN CANADA INC. - Timeline (cont.) 2004 Nissan Canada prepares to celebrate its fourth decade in Canada on a high note, coming off the best sales year in the company’s history. Calendar year sales jumped 7.5 percent over a stellar 2002. Combined Nissan and Infiniti car and truck sales for 2004 totaled 69,534 vehicles versus 64,661 sold in 2002, breaking all previous sales marks. Infiniti Canada reported an extraordinary 28.2-percent increase over 2002. By the end of 2004, Nissan Canada had chalked up more than 1.5 million vehicle sales – 1,482,064 Nissan vehicles and 41,237 Infinitis. The company currently spends more than $650-million a year in Canada to pay for parts, materials, service and support of Nissan products in Canada. Nissan Canada and its dealers – 140 Nissan dealers and 30 Infiniti retailers - are adding substantially to the economy, providing more than 4,800 jobs directly related to selling and servicing Nissan products across Canada. Total staff head count at NCI including Randstad has grown to 325 (290 full-time; 35 Randstad). Total dealer employment is 4,500. 2005 Nissan Canada had a record breaking year selling 70,983 units, beating the previous record of 69,534 set in 2004. The Infiniti M45, Nissan X-Trail, Titan and Frontier all broke records in total units sold for their models. Nissan introduced the all-new Versa to the lineup, its foray into the entry level category. After launching in 1990 with two models, Infiniti celebrated its 15th anniversary as a luxury offering in Canada with five models and 29 exclusive retailers. In 2005, NCI continued to grow with 290 full-time employees and the addition of six Nissan retailers bringing the total to 146. 2006 Nissan Canada sponsored several groups and events including Algonquin College and the Mountain Bike Festival. The Nissan Canada Foundation hosted the Docks 5K Run for the second consecutive year in Toronto. A Halifax Infiniti dealer Paul O’Regan was presented with the prestigious Canadian Automobile Dealers Association (CADA) Laureate Award. Nissan embraced a new marketing approach and took 10 young Canadians across the county in a one-of-a-kind road trip contest to showcase the all-new Versa. Nissan made significant changes to its line up with an overhaul to the Sentra, Altima, Maxima and Quest models and added the all-new Altima Hybrid and Infiniti G35. At year end, NCI had 147 Nissan and 29 Infiniti retailers and a headcount of 290 full-time staff members.

49 SUBARU CANADA, INC. - TIMELINE 1972 Fuji Heavy Industries introduces the world’s first mass-produced four-wheel-drive passenger car. The Subaru, Canada Inc. first Subaru vehicles are imported into Canada, distributed by LBI to a small network of 12 dealers in 560 Suffolk Court British Columbia and the Prairies. Mississauga, Ontario 1978 LBI, with headquarters in Vancouver, B.C., is authorized by Fuji Heavy Industries (FHI) to sell Subaru L5R 4J7 vehicles across Canada; new national dealer network sells 2,721 Subaru vehicles in first year. 1986 Subaru becomes first Group N (unmodified) entrant ever to finish the World Rally Championship’s Safari Rally in Kenya, and goes on to win the Safari Rally for eight consecutive years in the Group N category. Subaru introduces full-time four-wheel driving system with centre differential. 1989 FHI establishes Subaru Canada, Inc. (SCI), and a new head office located in Mississauga, Ontario. SCI introduces first Subaru Legacy as 1990 model. 1990 Legacy named “Best New Sedan” by Automobile Journalists Association of Canada (AJAC). 1991 Legacy Turbo named “Best New Family Sedan” by AJAC

Subaru Forester 1992 Introduction of first Impreza sedans and sportwagons as 1993 models. Subaru wins North American Rally Cup and Canadian Rally Championship. 1994 Subaru worldwide elects to focus exclusively on All-Wheel Drive, eliminates front-wheel drive cars from lineup. 1995 Legacy named “Best New Van/Wagon” by AJAC. Subaru wins first of three consecutive World Rally Championship (WRC) manufacturers’ titles, and Subaru World Rally Team driver Colin McRae is drivers’ champion 1995 First Outback introduced as 1996 model. 1996 Legacy named “Best New Wagon” by AJAC. Subaru Legacy GT 1997 Introduction of first Subaru Forester as 1998 model. Subaru sales in Canada jump to over 9,000 units. 1999 Introduction of all-new 2000 Legacy and Outback. Outback named “Best New Wagon” by AJAC. Fuji Heavy Industries named Most Improved Car Company by FT Automotive World magazine, a publication of Britain’s Financial Times newspaper. Canadian Subaru sales reach over 13,000 units. 2000 Launch of Outback with all-new 6-cylinder engine and first-ever Subaru Vehicle Dynamics Control system. 2001 Subaru introduces all-new performance flagship – rally-bred 2002 Impreza WRX. Outback H6-3.0 VDC named Best New Intermediate SUV of the Year by AJAC. Subaru Outback 2002 SCI’s network of 100 Canadian dealers sell 17,236 Subaru vehicles to Canadians in the sixth consecutive year of record sales. 2003 Introduction of all-new 300-hp Impreza WRX STi. Subaru teams win sixth Canadian Rally Championship and third North American Rally Championship. 2004 Introduction of all-new 2005 Legacy and Outback. AJAC names Forester 2.5 XT “Best New SUV” of 2004. SCI breaks ground for new corporate headquarters and Parts Distribution Centre in Mississauga. Subaru Tribeca

Mr. Katsuhiro Yokoyama, President, Subaru Canada, Inc.

Subaru Canada Head Office in Mississauga

50 SUBARU CANADA, INC. - TIMELINE (cont.) 2005 Industry Awards & Accolades: Insurance Institute for Highway Safety • Gold designation for occupant protections 2006 Legacy National Highway Traffic Safety Administration • Five Stars for front impact protection (driver 2006 B9 Tribeca and passenger) and side impact protection (front and rear) Best Pick for frontal and side impact testing • Good for rear impact testing, Midsize 2006 Legacy Moderately Priced Cars Money Magazine • Best Car Value (Wagon category) Legacy/Outback Le Monde de l’auto • Choix des chroniquers, categorie familiale Legacy/Outback Motoring 2005 • Best New Crossover/Wagon Legacy/Outback World of Wheels • Editor’s Choice Impreza WRX/STI and Legacy/Outback 2006 2006 International Engine of the Year SUBARU BOXER Turbo • 2- to 2.5-litre class Insurance Institute for Highway Safety • Top Safety Pick “Gold” 2006 Impreza • Top Safety Pick 2006 Legacy Car and Driver • Best Small Sport-Utility Vehicle 2006 Forester Motoring 2006 • Best Sports Sedan Under $40K 2006 Impreza WRX

51 SUZUKI CANADA INC. - Timeline 1979 Suzuki Canada begins automotive sales with the introduction of the first compact import 4X4, Suzuki Canada Inc. the LJ 80. It is followed by the very popular Samurai. 100 East Beaver 1984 Suzuki introduces it first passenger car to North America, the Forsa. Creek Road, Richmond Hill, Ontario 1986 Suzuki and General Motors announce a joint $ 600 million dollar partnership in a production facility located in Ingersoll. CAMI has the capacity to produce 200,000 units annually. L4B 1J6 1988 Suzuki launches the 1989 Sidekick convertible which is the first Canadian-built 4X4 for the company. It is targeted at a youth audience and is widely received. CAMI production is increased immediately to support strong sales demands. 1991 Suzuki launches the 4 door Sidekick, built at CAMI, to the market. 1992 The Suzuki 4 door Sidekick wins Best New 4X4/SUV of the year from the Automotive Journalists Association of Canada. 1995 The Suzuki Swift sub compact, produced at CAMI is brought to market designed specifically for North America. 1997 Suzuki imports the Esteem compact sedan. A wagon version is added the following year. 1999 Suzuki launches the Japan designed and built Grand Vitara, the first V6 compact SUV in North America. A 4 cylinder version called the Vitara is produced at CAMI. 2001 As demand grows in Compact SUVs’ Suzuki imports the larger XL 7 SUV to Canada. 2002 Suzuki replaces the Esteem with the totally new compact Aerio passenger car in sedan and fastback models. 2004 Suzuki partners with GM Daewoo Auto Technology and launches the sub compact Swift+ and mid-size sedan Verona in Canada. 2006 Suzuki Introduces the totally new Grand Vitara V6 Compact SUV.

Suzuki XL-7 Suzuki Grand Vitara

52 CAMI AUTOMOTIVE INC. – Timeline CAMI is an independently incorporated joint venture between Suzuki Motor Corporation and General Motors of Canada with production facilities in Ingersoll, Ontario. CAMI Automotive Inc. Production began in April of 1989 as an opportunity for GM to offer economy cars and Suzuki to access the 300 Ingersoll Street North American market. Over the years, CAMI has produced various entry-level vehicles such as the Chevy P.O. Box 1005 Metro, Pontiac Firefly, Suzuki Swift, Chevy Tracker, Suzuki Sidekick, and the Suzuki Vitara. Currently, CAMI Ingersoll, Ontario produces the mainstream 2005 Chevrolet Equinox. N5C 4A6 With a floor space of 158,000 square meters (1.7 million square feet) and a production capacity of 250,000 vehicles per year, CAMI has produced to date, over 1.6 million vehicles. CAMI uses the CAMI Production System (CPS) which is a set of operating philosophies that guide team members in manufacturing our vehicles. The basis of this system is working in teams performing standardized work. CAMI currently employs approximately 2,400 Team Members represented by CAW Local 88 and approximately 350 Salary Team Members. Significant Dates & Facts 2002 Suzuki Vitara - • Start of Production: April 1989 2 Door • CAMI was built at a cost of $500 million • CAMI has built over 1.6 million economy cars and small SUVs • CAMI owns 570 acres of property (230 hectares) • Approximately 160,000 m2 (1.7 million square feet) • The plant stretches a little over one kilometer in length • November 1993 - CAMI celebrated production of its 500,000th vehicle 2003 Suzuki Vitara - • March 1996 - CAMI’s milestone production of its 1,000,000th vehicle 4 Door • February 23, 2004 - Re-tooled Equinox line commences production • August 2, 2005 - Production of Pontiac Torrent begins • January 2006 - CAMI produced the 2,000,000th vehicle - a Chevrolet Equinox • September 25, 2006 - Production of Suzuki XL7 begins ISO Registrations • CAMI received ISO 9002 registration for its Quality Management System in May of 1998. 2007 Suzuki XL7 • In June 2000, CAMI registered to ISO 14001 for its Environmental Management System.

CAMI Plant, Ingersoll, Ontario

53 TOYOTA CANADA INC. - Timeline 1965 First Toyota vehicle imported into Canada. 1970 Toyota opens its new Head Office in Scarborough, Ontario. Toyota forklift vehicles introduced in Canada. Toyota Canada Inc. 1980 Canadian Distributors of Toyota vehicles amalgamated to become Toyota Canada Inc. (TCI). One Toyota Place, Scarborough, Ontario 1985 Toyota Canada Foundation established. Awards 25 annual scholarships to students at the Canadian M1H 1H9 Automotive Institute and Centennial College. 1986 TCI has the highest annual sales of International companies for vehicles imported to Canada. 1990 Lexus vehicles introduced to Canada. Toyota Credit Canada Inc. (TCCI) established. 1992 TCI opens its Technical and Training Centre in Scarborough, Ontario. TCI launches Technical and Education Program (T-TEP) for Canadian automotive students at three colleges. 1993 10,000th Lexus sold in Canada. 1994 Official Sponsor – Canadian Special Olympics. Captin aluminum wheel 1,500,000th Toyota sold in Canada. plant, Delta, B.C. 1997 Official Sponsor – Special Olympics World Winter Games. TCI annual vehicle sales exceed the 100,000 milestone. 1998 Opening of the Toyota Cold Weather Research Centre in Timmins, Ontario. 1999 A new expanded Parts Distribution Centre opens in Vancouver. 2000 Official sponsor: Toyota Evergreen Learning Grounds program. TCI Head Office achieves ISO 14001 certification. 2003 TCI sells its 2,500,000th vehicle in Canada. Lexus celebrates 50,000th vehicle sold in Canada. TCI achieves 10% annual market share for the first time. 2005 Toyota in Canada receives the National Corporate Social Responsibility Award from the Globe Foundation for the Automotive Sector. 2006 TCI celebrates the sale of its 3,000,000th vehicle in Canada. TCI achieves 12% annual market share for the first time. 2007 1,000,000th Corolla’s sold in Canada.

Toyota Canada Head Office

54 TOYOTA MOTOR MANUFACTURING CANADA INC. - Timeline 1985 Announcement that Toyota will build a plant in Cambridge, Ontario. 1986 Ground-breaking ceremony for Cambridge plant. Toyota Motor 1988 First car rolls off the line - 4 door Blue Mica Corolla Sedan. Manufacturing 1989 Grand opening of TMMC. Canada Inc. 1989 Second shift added. 1055 Fountain Street 1992 Test track opens. North, First major model change. Cambridge, Ontario 1993 Corolla Park Fitness & Recreation Centre opens. N3H 5K2 1993 Sod turned for new engine plant. 1994 Major expansion announced to double capacity, employment. 1995 Engine production begins. 1997 Corolla production shifts to new expansion and retooling of original Corolla line begins for future Solara production. Second major model change. 1998 Visitors’ Centre opens, school tours begin. Ceremony for the first First Camry Solara rolls off the line. vehicle built at TMMC 1999 TMMC manufactures its 1,000,000th vehicle. in November 1988, a Toyota Corolla 2000 First Camry Solara convertible is manufactured. Announcement that TMMC will manufacture Lexus RX 330 starting in 2003. 2001 Announcement that all-new Matrix crossover utility vehicle to be built at TMMC. 2002 Matrix production begins in January; third major model change. Solara production ends at TMMC; retooling of line begins for Lexus RX 330. 2003 Lexus RX 330 production begins officially on September 26. 2004 TMMC manufactures its 2,000,000th vehicle. The 1,000,000th 2005 Announcement that TMMC will build a plant in Woodstock, Ontario. vehicle built at TMMC Ground-breaking ceremony for Woodstock plant. in 1999 2006 TMMC celebrates 20 years since 1986 ground-breaking in Cambridge.

J.D. Power Plant Quality Awards for TMMC Gold – 1991, 1995, 1996, 2001 Silver – 1992 Bronze – 1993, 2000 Other Awards RX330 - the first Lexus Top 100 Employers in Canada: to be built outside of 2005, 2006, 2007 Japan.

From l-r: TEMA President Seiichi Sudo, Minister of Economic Development and Trade Joe Cordiano, Minister of Labour and Housing Joe Fontana, TMC President Katsuaki Watanabe, Prime Minister Paul Martin, Premier Dalton McGuinty, Vice-Chairman of TMC Norm Okuchi, Senior VP, TMMC; Ken Katsuhiro Nakagawa, TMMC Tomikawa, President, Toyota Canada; President Ray Tanguay and and Ray Tanguay, President, TMMC Woodstock Mayor Michael Harding celebrate the launch of the Lexus RX 330 TMMC Plant in Cambridge, Ontario break ground in Woodstock. in September, 2003. 55

CHAPTER 5 THE CANADIAN ASSOCIATION OF JAPANESE AUTOMOBILE DEALERS

CAJAD in Perspective The Launch In 1981 the Government of Canada imposed serious restrictions on the importation of Japanese cars. Intended to protect the market share of the Big Three American automakers, this skewed the marketplace and penalized Canadian consumers. It also undermined the Canadian entrepreneurs who had taken the personal and financial risk to retail Japan’s innovative automotive technology. They turned to the national Federation of Automobile Associations for help but it was unwilling to take up the free trade argument. Big Three dealers formed a group called The Domestic Auto Dealers Brian Caldwell Association to lobby Ottawa for even more punitive restrictions on Japanese products.

The Japanese vehicle dealers decided to organize. They felt they had to create awareness of the punitive impacts of what they considered to be misguided and discriminatory trade policies. In June of 1982 they formed the Canadian Association of Japanese Automobile Dealers (CAJAD). It was established to represent the unique interests of all Japanese dealers across the country. For the next twenty years CAJAD dedicated itself to this end and in particular, to achieving a fair and efficient market for CAJAD dealers, their customers and their vehicle manufacturers. As the Canadian dealers of Japanese automobiles became recognized as leaders in providing service to consumers, their association became a respected purveyor of sound thought on the industry and its regulation.

The Operation CAJAD was a unique experiment in governance and funding. It was established by dealers and was directed by a board of twenty-four dealers elected every two years by their dealer colleagues. But it was funded jointly by dealers and - until the last year of its operation - by the manufacturers/distributors on a fifty-fifty basis based on vehicle sales. In addition, the manufacturers supported several specific public information projects directly. JAMA Canada was also of significant assistance and helped for example to organize bi-annual missions to Japan. There CAJAD met with JAMA officials, factory representatives, government officers and executives of other associations, all to ensure a thorough understanding of how Canadian policy and market characteristics impacted the auto retailers and consumers. While many have talked about the elusive notion of a “dealer-manufacturer partnership” the CAJAD experiment was a living example of one that worked. By late 1999 and early 2000, the mandate of a level playing field had largely been achieved and further unilateral Canadian action on trade policy seemed unlikely.

POSITIONS AND INITIATIVES

Trade CAJAD consistently championed the view that trade in auto products should be free and that all tariff and non-tariff barriers should be eliminated. It argued that trade liberalization was not only fair and equitable; it would allow Canadian consumers the product choices they were entitled to. Throughout its existence the association worked closely with industry analysts and economists and produced a steady flow of well researched position papers.

57 At the start, it fought against restraint agreements which limited the number of vehicles imported. CAJAD directors “took to the streets” and the radio stations across Canada in a major public relations effort to inform Canadians how hurtful the restrictions were to them. When the time came, CAJAD strongly supported Canada’s participation in the Canada-U.S. FTA and subsequently in NAFTA.

From the late eighties on, CAJAD’s emphasis focused on the exclusion of Japanese auto makers from the benefits of the Canada-US Auto Pact on the one hand and the very existence of import tariffs on the other. Several studies were done during this period to measure the negative impacts of Canada’s tariffs on imported automobiles. These works included thorough macro and micro economic analysis and showed that the auto tariffs were not only a manufacturing investment issue; they distorted the retail marketplace, dampened overall car demand and had a net negative effect on economic activity. They also directly penalized consumers to the tune of hundreds of millions of dollars.

Through regular events in Ottawa, annual information seminars across Canada, effective media relations and public information programs, these arguments became well known to decision makers and were well reported and endorsed by influential media. They became part of the political environment that led to various reductions in tariffs and were considered by the WTO in its decision that the Canada-US Auto Pact violated international trade rules.

Dealer Legitimacy Fundamental to getting its public policy positions considered, the association made continuous efforts to strengthen the position dealers with policy makers, the media and the public. For many years, consumer and dealer matters were not considered part of the policy making process. Auto industry meant manufacturing. Yet dealers created thousands of direct and indirect jobs and added lasting value to their communities by their support of charities and cultural programs. The benefits they created stuck to the local area...they were not exported. CAJAD argued that its members deserved to “be at the table” when industry policy was being made. Over time, CAJAD and other dealers came to be included in all major policy forums.

Operational and Retail Issues From time to time other economic and market issues were “top of mind” for the association’s members. CAJAD was looked to by dealers and governments for assistance and advice on many domestic and operational issues. Capital tax, leasing, GST, training, the use of new technologies, used-car imports and exports and how to tame the internet were some of the matters upon which CAJAD provided advice. Its dealer business publications and regional seminars for dealers were highly respected. It also spoke to the Canadian public of the significance of its dealers’ contributions through annual national promotions which were promoted in national media and auto shows.

SELECTED ACCOMPLISHMENTS

o Helped convince the Canadian government to withdraw quotas and discriminatory trade actions in the eighties. o Helped ensure that the federal government treated tariff reduction on vehicles and parts where a vital objective for Canada during the GATT and WTO negotiations.

58 o Helped achieve tariff reductions on vehicles and parts by supporting the Canada-US Free Trade Agreement and the NAFTA. o Discouraged use of “import” and “domestic” to describe auto companies and products. o Challenged exclusionary government vehicle procurement policies resulting in some changes to policy to qualify Japanese brands for purchase. o Presented constructive options on GST definition and administration regarding lease grandfathering and used car inventory which led to better law. o Helped protect the retail industry from oligopolistic vehicle lease legislation. o Protected its dealers’ and their customers’ interests in the International Warranty and Guardall warranty product collapses. o Raised the perception of car dealers and the quality of car dealer policy positions with many politicians and bureaucrats. o Helped convince the government to include dealers in various policy committees. o Represented its dealers on the Select Panel on Canada-US Automotive Trade and the federal government’s Automotive Advisory Committee. o Supported the National Task force on Cross Border shopping regarding the competitiveness of Canada’s retailers. o Helped encourage the federal government to include retailing data in its annual industry reviews. o Established innovative programs to give automotive marketing students hands-on product and idea development experience. o Awarded the first “Employer of the Year” by the Canadian Automotive Institute. o Established projects with universities across Canada to expose business students to the intricacies and sophistication of the automotive retail industry. o Supported the establishment of the Canadian Institute of Retailing and Services Studies at the University of Alberta. o Advised its dealers on used-car trade opportunities with the U.S. o Built increased awareness in the public sector of used-car markets and issues and managed government – industry study of this misunderstood marketplace. o Precipitated major government – industry study of human resource issues in auto retailing. o Ran campaigns to discourage curbsiding. o Developed and published a respected industry magazine, the Business Review, to help dealers be profitable and informed. o Hosted regular regional receptions for business and government officials to provide the opportunity for its dealers to meet, and express their opinions to legislative decision makers and encourage government/industry interaction. o Published the consumer-friendly Ben Wicks’ Handy Car Guide to help people with their shopping experiences. o Ran cooperative promotions with dealers to advance the image of Japanese auto dealers in their local communities.

59 o Staged the annual Test Drive Canada Contest to create awareness of dealers’ commitment to Canada and help more Canadians see the country. o Created one of the country’s most thorough web sites on the car industry. o Continued to expose the costs of tariffs to Canadian consumers and the damage they do to competitive markets. o Provided research considered by the WTO in its decision against the Canada-U.S. Auto Pact. o Designed and built a leading edge B2B web site to give members efficient access to information and services to help their operations.

CAJAD LEADERSHIP The dealers who served as President:

Bob Attrell Toyota Brampton, Ontario 1982/84 Donald Megaffin Honda Halifax, Nova Scotia 1984/87 Robert Salvian Honda Oakville, Ontario 1987/88 Shahin Alizadeh Mazda Toronto, Ontario 1988/89 Daryll Stothart Toyota Bathurst, New Brunswick 1989/90 Grant Ericksen Nissan Edmonton, Alberta 1990/91 Marcel Rainville Honda Ile Perrot, Quebec 1991/92 Glen Rumpel Toyota Calgary, Alberta 1992/93 Rick O’Neill Nissan Mount Pearl, Newfoundland 1993/94 Luc Duval Toyota Boucherville, Quebec 1994/95 Steve Scarff Mazda Halifax, Nova Scotia 1995/96 Bill Taylor Toyota Regina, Saskatchewan 1996/97 Claude Lavigne Subaru Ste-Anne-de-Bellevue, Quebec 1997/98 Al Pasnak Mazda Vancouver, British Columbia 1998/99 Jim Proskos Honda Coburg, Ontario 1999/00 Richard Buckley Honda St. John, New Brunswick 2000/02

60 CHAPTER 6 COMMENTARY

Four Decades of Automotive Progress If you look back over the almost forty years that Japan’s automakers have been selling vehicles in Canada you’ll see the evolution of a major paradigm shift. This shift has significantly benefited the automotive consumer while at the same time fundamentally altering the business model of the North American automotive industry. Compared with 40 years ago, the automotive consumer today has more choice, better technology, better quality, better value for money and a better shopping experience. I believe that much of this improvement was accelerated by Japan’s entry into the North

American auto sector. Dennis DesRosiers So, let’s look back over those four decades. Through most of the late 1960s and the early 1970s governments in North America were attacking the automotive sector’s environmental record. Fuel efficiency targets were being set and laws being proposed to force the vehicle companies to address this issue.

The automotive sector was spending significant dollars to fight these initiatives in Ottawa and Washington. The basic message to government was that it was impossible to meet the standards on the timetables being suggested and any forcing of the issue would cost the consumers millions if not billions of dollars.

In 1975, in the midst of this debate, Honda introduced their CVCC engine that not only met the proposed requirements but also exceeded them without loss of performance and at no increased cost to the consumer. This turned the entire automotive environment debate upside down. The industry moved very quickly from “we can’t do it without time and increased cost” to “we will find a way to do it quickly and with little increased cost.”

Thirty years later, ninety nine percent of the tailpipe emissions harmful to the consumer have been eliminated. Without the catalyst of the Honda CVCC engine I question whether this would have occurred. Looking ahead on the environmental issue, it may be that the success of the 2004 Toyota Prius and the Honda Civic Hybrid might provide the impetus for eliminating most of the tailpipe emissions that are harmful to our environment, including “greenhouse gases”. Based on the strong showing of these vehicles, there have been more than a dozen other hybrid vehicles announced for market entry.

The industry may not be able to precisely meet government timing for reduction of greenhouse gases but with the example of these successful hybrid vehicles I think that within the next ten to fifteen years this issue, along with other automotive/social matters will be solved by the automotive sector. The quality built into Japan’s vehicles has had a significant impact on the automotive sector in ways not always fully understood by automotive stakeholders.

Here are some results, which I believe stem from the quality revolution. First and foremost, “quality” became a “must-have” automotive manufacturing core value. The mantra at every automaker and original equipment parts manufacturer for the last two decades has been quality, quality, quality. The sector has invested billions of dollars over the last 20 years in this quest. In 1965 the average vehicle

61 in Canada lasted about 150,000 kilometres. Today, on average, a vehicle bought in 2005 will last over 300,000 kilometres. That is a statement on quality.

In the past, consumers who purchased a used vehicle were often buying “someone else’s problems”. Today, because of the quality movement, we can generally buy an older vehicle with confidence. Indeed we don’t see much deterioration in the consumer’s ownership experience until a vehicle reaches its tenth birthday. New vehicle quality revolutionized the used vehicle market. Thousands of Canadians now buy two- to five-year-old vehicles instead of brand new vehicles because used vehicle quality is so high. This has resulted in the creation of a dynamic used vehicle market.

Another far-reaching effect of high manufacturing quality is the effect it had on creating the leasing industry, which represents about 40 percent of financing in the new vehicle market. With leasing, consumers pay only the difference between the new vehicle retail price and what the vehicle is worth at the end of the lease -- what is usually called the residual value. When vehicles were of low quality their residual values were also low and there was little advantage to leasing versus financing a new vehicle.

Now with high quality vehicles, residual values are typically 40 to 60 percent of the original MSRP after four years of ownership. With high residuals the consumer gets a significant reduction in their monthly car payment. Therefore, the growth of leasing can be tied directly to quality. In turn, making it easier to purchase a vehicle and providing a higher quality ownership experience are two of the key reasons that vehicle ownership in Canada has doubled. In 1965 only about a third of the driving age population owned a vehicle. Today about two thirds of the driving age population own a vehicle in Canada. And in the US the vehicles-to-driving-age-population ratio is above 100 percent.

Without high quality vehicles I doubt these levels of ownership would ever have been reached. High ownership levels enabled a huge increase in the market for new vehicles. This decade Canadians will purchase more than 14 million new vehicles; in the 1960’s they purchased only seven million vehicles.

The total dollar amount spent on vehicle repair during the lifetime of a vehicle was relatively low when vehicles lasted only 100,000 kilometres. Now that they last three times as long, the parts and service industry has boomed. There are significantly more dollars spent on repairs and maintenance today as a result of the quality movement. Previously a consumer might have had about 15 oil changes through the life of their vehicle -- today they have closer to 40 oil changes. Other aftermarket categories have also boomed because middle-aged vehicles are now worth fixing instead of scrapping.

In the 1960s new car dealers accounted for less than 20 percent of the aftermarket dollars spent in Canada, whereas today new car dealers represent almost 40 percent of aftermarket dollars. One of the big influences in the development of this trend was that Japan’s OEMs and their dealers taught consumers to return to where they bought their vehicle for their repairs. Longer warranties, enabled by quality, were another factor.

62 Although G.M., Ford and DaimlerChrysler lost market share and profits in the quality battle, the upside is their vehicles are now of much higher quality, and by some measurements, equal in quality to Japanese products. GM, Ford and DaimlerChrysler are producing vehicles much more efficiently and with better technology. GM, Ford and DaimlerChrysler are also benefiting from their alliances with Japan’s automakers.

The Japanese brought flexible and lean manufacturing methods to the North American automotive sector. Dozens of plants can now produce two or three vehicles on the same assembly line on a cost- effective basis. Through much of the last forty years the vehicle companies introduced about 30 to 35 new models each year into the Canadian market. During the last few years they have introduced over forty new models each year. This year there will be 51 new models and in 2006 there will be 65 new models. Flexible manufacturing methods allow the OEMs to produce many more models at lower volumes and still make a profit. This has created unprecedented choice for consumers.

One can also argue that the Japanese successfully proved that an automaker can make money selling small cars. The result is an entry-level market, such as we have in Canada, which is much better served with product than otherwise would have happened. These vehicles have also been positive for the environment. The entry of Japan’s OEMs into North America has not only had a significant impact on the automotive consumer market in Canada but also on the structure of the industry itself. Following are a few of the key issues.

First, was the introduction of the Voluntary Export Restraints in the U.S. and shortly thereafter, a similar Voluntary Restraint Agreement in Canada. Under intense pressure from the automotive sector, Governments in both countries put in place very restrictive import quotas on Japanese vehicles in the early 1980’s. These contributed to an unprecedented investment in assembly and original equipment parts plants in North America by the traditional importers.

In 2004, these “new domestics” produced close to four million vehicles in North America. The entire vehicle assembly and automotive parts sector has undergone a restructuring as a result of Japanese investment. However, the resulting additional capacity is also at the root of the current automotive manufacturing overcapacity in North America.

Second, the current pricing environment in North America is very lean as a result of price deflation for seven consecutive years. This is primarily due to overcapacity of vehicle production. In any economic system when supply far exceeds demand, prices fall. A case can then be made that the original restraint agreements, which helped create this overcapacity situation, are the root cause of the high levels of incentives currently plaguing the market.

Third, these new assembly plant investments have also led to several hundred Japanese original equipment parts companies investing in North America or forming joint venture or technology transfer agreements with suppliers. About fifty of these have been in Canada. This contributed to the strength and global competitiveness of the Canadian parts sector.

Looking back at the overall automotive landscape from today’s vantage point, the impact of Japan’s automakers on the Canadian market and industry has been highly positive in virtually every aspect.

63 Appendix: Snapshot of the Industry – 2008 - Cumulative investment in vehicle/engine manufacturing $8.6 billion - Employment: 61,600 1. Manufacturing: Motor Vehicles 12,250 Auto Parts & Materials Plants 16,240 2. National Sales/Distribution 2,150 3. Dealerships (est.) 39,000 - Production, 2007 (HCM, TMMC, CAMI, HINO) 873,100 - Exports, 2007 (HCM, TMMC, CAMI) 691,156 - Imports, 2007 464,297 From Japan 239,647 From US/Mexico 224,650 - Light Vehicle Sales, 2007 580,339 - Medium/Heavy Duty Truck Sales, 2007 1,985 - Total Vehicle Sales in Canada, 2007 582,324 - Light vehicle market share, 2007 35.1%

Vehicle Manufacturing Operations HONDA of CANADA MFG (HCM) Cumulative Investment: $2.15 billion Location: Alliston, Ontario Start-up: November, 1986 Vehicles Built: Plant 1: Civic Coupe/Sedan, Acura CSX, Plant 2: Acura MDX, Ridgeline, Civic Sedan Production: 390,580 – 2007 Export: 300,960 – 2007 Employment: 4,600 Total 2-shift capacity:390,000 units per year New Investment: $154 million for 4 cylinder engine plant 200,000 units / year starting in 2008 TOYOTA MOTOR MANUFACTURING CANADA (TMMC) Cumulative Investment: $3.2 billion Location: Cambridge, Ontario Start-up: November, 1988 Vehicles Built: North Plant: Corolla, Matrix South Plant: Lexus RX350 Production: 302,749 – 2007 Export: 240,889 – 2007 Employment: 5,000 Total 2-shift capacity:300,000 units per year Engine Assembly: 1.8L 4cyl (Corolla & Matrix) Future Plant: Woodstock, Ontario Vehicle: RAV 4 - 150,000 / year New Investment: $1.1 billion for Woodstock assembly plant – RAV 4 CAMI AUTOMOTIVE (SUZUKI & GM CANADA) Cumulative Investment: $2 billion Location: Ingersoll, Ontario Start-up: April, 1989 Vehicle: Suzuki XL 7, Chevrolet Equinox, Pontiac Torrent Production: 178,141 – 2007 Export: 149,307 – 2007 Employment: 2,600 Total 2-shift capacity: 260,000 units per year HINO MOTORS CANADA Cumulative Investment: $3 million (equipment only) Location: Woodstock, Ontario Start-up: April, 2006 Vehicle: Class 4 – 7 medium duty trucks Export: Only for Canada Employment: 50 Total 2-shift capacity: 2,000 per year

64 Japanese Auto Parts Related Plants in Canada Company Location Province Type of Year Venture Operational AUTOMOTIVE PARTS MANUFACTURERS

NTN Bearing Mfg. Canada Mississauga ON D 1973 - Radial ball-bearings for pulley & tensioner applications, alternator, fan, clutch, electric motor & shaft support Canadian Autoparts Toyota Inc. (CAPTIN) Delta BC D 1984 - Aluminum wheels Waterville TG Coaticook Coaticook QUE D 1985 - Body sealing systems (window, door & trunk lid weatherstrips) Waterville TG Inc. Waterville QUE D 1986 - Door sealing systems (weatherstrips & weatherseals) F & P Mfg. Inc. Tottenham ON J 1986 - Engine & rear suspension parts, engine support, pedal/clutch assemblies, bumper beams; tube bending, hydroforming & laser cutting Quality Safety Systems Co. (QSS) Tecumseh ON D 1986 - Active seat belt systems; injection molding parts Meritor Suspension Systems Co. Chatham ON J 1986 - Suspension components & systems (coil springs, stabilizer bars & torsion bars) Milton ON Nichirin Inc. Brantford ON D 1987 - Hose & tube assemblies for brake/clutch/power steering systems; engine & transmission oil cooler hose & tube assemblies DDM Plastics Inc. Tillsonburg ON J 1988 - Plastic bumpers & parts, instrument panels TS Tech Canada Inc. Newmarket ON D 1988 - Seat assemblies Vuteq Canada Inc. Woodstock ON D 1989 - Auto glass assembly, door trim, softops & sunvisors Bridgestone/Firestone Canada Inc. Mississauga ON D 1990 - Radial tires; tire cord Woodstock ON Joliette QUE Yachiyo of Ontario Mfg. Inc. Barrie ON D 1990 - Gas tanks, body parts, sunroof parts, glass holders, front & rear frames & door hinges Freudenberg-NOK Tillsonburg ON J 1991 - Gaskets (rocker cover, electrical sealing & extrusion); cam cover seals, fuel system parts & silicone molded parts Omron Dualtec Automotive Electronics Inc. (Relay Div.) Oakville ON D 1991 - Electro-mechanical relays & controls; electronic modules (turn signal flashers & controls) Craft Originators Inc. Hamilton ON D 1995 - Dimensional badging, emblems & trim; backlit graphic overlays & inserts, production, service & under-hood labels Intertec Systems St. Marys ON J 1995 - Instrument panels, air bag door covers & small plastic parts Trimont Manufacturing Inc. Markham ON D 1996 - Auto trim & seat covers Listowel Technology Inc. Listowel ON D 1997 - Injection moulded plastic parts AGC Automotive Canada Inc. (formerly AP Cantech Inc.) Bradford ON J 1998 - Automotive glass Dyna-Mig Mfg. of Stratford Inc. Stratford ON D 1998 - Underbody/suspension parts (welding: frames, suspension arms, crossmembers); clutch/brake pedal/ball joint assembly; cold forging Sanoh Canada, Ltd. (formerly HiSAN of Canada, Ltd.) Orangeville ON D 1998 - Automotive tubular products, incl. brake tubes, fuel tubes (steel & plastic), engine parts & power steering parts Jefferson Elora Corp. (JEC) Elora ON J 1998 - Body components (dashboard panels, pillars) KTH Shelburne Mfg. Inc. Shelburne ON J 1998 - Automotive frame components Kumi Canada Corporation Bradford ON J 1998 - Fenders, column covers Musashi Auto Parts Canada Inc. Arthur ON D 1998 - Steering, suspension , transmission & clutch components Denso Manufacturing Canada, Inc. (DMCN) Guelph ON D 1999 - Air conditioners Omron Dualtec Automotive Electronics Inc. (Switch Div.) Oakville ON D 1999 - Switch assemblies (for power seats/windows/doors, instrument panels, moon roof limit switches, other micro-switch based assemblies) Showa Canada Inc. Schomberg ON D 1999 - Shock absorbers, brake & rear suspension components, drive shafts, power steering pumps Waterville TG Ontario Petrolia ON D 2000 - Door sealing systems (weatherstrips & weatherseals) & warehouse TG Minto Corporation Palmerston ON D 2001 - Plastic interior & exterior components: console box, instrument panels Ube Automotive North America Sarnia Plant, Inc Sarnia ON D 2002 - Aluminum wheels FIO Automotive Canada Corp. Stratford ON D 2003 - Automotive frame parts Aisin Canada Inc. Woodstock ON D 2003 - Auto body parts, belt moldings, windshield trim & manual operated seats Kasai Canada Inc. Sharon ON D 2004 - Automotive high precision switches 65 Japanese Auto Parts Related Plants in Canada Company Location Province Type of Year Venture Operational

AUTOMOTIVE PARTS MANUFACTURERS (cont.):

SETEX Canada Shelburne ON J 2004 - Automotive seats & parts Amino North America Corporation St. Thomas ON D 2005 - Auto body panels for specialty & niche vehicles Omron Dualtec Automotive Electronics Inc. (ECU Div.) Oakville ON D 2005 - Electrical Control Units (climate control & closure system) Trimont Manufacturing Inc. Scarborough ON D 2007 - Car doors/roofs Metaldyne Vibration Control Products Thamesville ON D 2007 - Harmonic vibration dampers Toyotetsu Canada, Inc. Simcoe ON D 2008 - Stamped & assembled automotive products Hayashi Canada Inc. Stratford ON D 2008 - Automotive interior trim & acoustical products (floor carpeting) Aisin Canada Inc. Stratford ON D 2008 - Car body components (door frames) Takumi Stamping Canada Inc. (TSI-CN) St. Thomas ON D 2008 - Stamped parts Toyota Boshoku Canada Inc. Woodstock ON D 2008 - Seats (front & rear), interior door trim, carpets & head liners Toyota Boshoku Canada Inc. - Elmira Plant (formerly Trim Masters Inc.) Elmira ON D 2008 - Seating systems & door panels MATERIALS, MACHINE TOOLS, SUB ASSEMBLY & SERVICES Tsubaki of Canada Ltd. Mississauga ON D 1973 - Chain products & sprockets Sanyo Canadian Machine Works Inc. Elmira ON D 1982 - Automated assembly line systems Canada Mold Technology Inc. Woodstock ON J 1989 - Plastic injection molds Autrans Corporation Ingersoll Plant Ingersoll ON D 1989 - Engine & transmission assemblies Z-Line (U.S. Steel Canada) Hamilton ON J 1990 - Zinc alloy plating SMC Pneumatics (Canada) Ltd. Mississauga ON D 1992 - Pneumatic components (cyclinders, valves, air cleaning equipment, fittings & tubing, vacuum products) DJ Galvanizing (formerly DNN Galvanizing) Windsor ON J 1993 - Galvanized steel NGF Canada Limited Guelph ON D 1995 - Rubber impregnated glass cord (for reinforcement of high performance racing car tires, car door & window seals, friction facings for automotive clutches & brakes) Monzen Steel Inc. (c/o Metal One Canada Corp.) Ingersoll ON J 1996 - Automotive steel coil processing Durez Canada Fort Erie ON D 1997 - Phenolic resins & molding compounds (for brake pistons, brake linings & brake pads) YM Technology Inc. Elmira ON J 1999 - Dies & tools Toyota Tsusho Canada, Inc. (TTCI) Cambridge ON D 2002 - Sales & distribution of automotive & MRO products Maple Automotive Corp. Cambridge ON D 2003 - Tire & wheel assembly Aar-Kel Moulds Ltd. Wallaceburg ON J 2004 - Plastic injection moulds (med-large size) & light pressure aluminium/magnesium die casting dies Kintetsu World Express (Canada) Inc. Milton ON D 2004 - Automotive parts distribution (OEM) Horiba Automotive Test Systems Inc. Oakville ON D 2005 - Design & development of automated test systems (engine, powertrain, transmission & vehicle-based testing) Green Metals, Inc. Woodstock ON D 2008 - Metal recycling Toyota Tsusho Canada, Inc. (TTCI) Woodstock ON D 2008 - Warehousing & distribution Maple Automotive Corp. Woodstock ON D 2008 - Tire & wheel assembly JAPANESE AUTOMOTIVE-RELATED INVESTMENT AND JOINT VENTURES IN CANADA Summary of Investments Automotive Parts Materials, Machine Tools, Total Total (excludes Newly Announced) Sub Assembly & Services Employees J - Joint Venture 10 6 16 4,004 D - Direct Investment, wholly-owned 36 13 49 12,644 46 19 65 16,648

Summary of Employment Number of Employees Automotive Parts Materials, Tools, Sub-Assembly & Services Total Employment 15,274 1,374 16,648

JAMA Canada 66

Japan Automobile Manufacturers Association of Canada Suite 460 151 Bloor Street West Toronto, Ontario, Canada M5S 1S4 Tel: 416-968-0150 Fax: 416-968-7095 www.jama.ca