PROFIT PERFORMANCE STABILITY PROFIT PERFORMANCE INNOVATION DIVERSITY DIVERSITYINV STABILITYEST IN PROFIT PERFORMANCE INNOVATION PROFIT DIVERSITY STABILITY STABILITY DIVERSITYCANADA’S COMPETITIVE INNOVATION ADVANTAGES PROFIT DIVERSITY STABILITY PROFIT PERFORMANCE INNOVATION PROFITAUTOMOTIVE DIVERSITY STABILITY PERFORMANCE INNOVATIONSECTOR DIVERSITY PROFIT PERFORMANCE STABILITY PROFIT PERFORMANCE STABITLITY PROFIT DIVERSITY STABILITY DIVERSITY INNOVATION PROFIT PERFORMANCE STABITLITY PROFIT DIVERSITY ’S IN 2016, CANADA’S AUTOMOTIVE INDUSTRY AUTOMOTIVE SECTOR CONSISTED OF:

Automotive manufacturing is one of Canada’s » With more than 100 years as an auto- 1,085 companies with largest industrial sectors, accounting for producing nation, Canada has an 1,275 facilities 10% of manufacturing GDP and 23% of outstanding track record of performance manufacturing trade. Canada produces and a well-established automotive passenger vehicles, trucks and buses, auto infrastructure that includes manufacturers 20 passenger and commercial parts and systems, truck bodies and trailers, and R&D expertise in materials, vehicle plants with 2.4 million as well as tires and machines-tools-dies- machinery, parts and finished vehicles. moulds (MTDM). The auto industry directly units of installed capacity employs more than 125,000 people in vehicle » Canadian auto manufacturers are assembly and auto parts manufacturing, recognized for their strong capacity in and another 380,000 in distribution and launching complex and advanced 800+ parts plants aftermarket sales and service. automotive manufacturing projects due to their world-class plant and labour quality. Automotive manufacturing is highly annual production of concentrated in which accounts for » Canada is a global leader in emerging 2.37 million vehicles of 100% of Canada’s light vehicle production, automotive technologies such as 400 parts manufacturers and 94% of lightweight materials, advanced safety which 85% were exported industry shipments; however, there are systems, software and cybersecurity, also important manufacturing clusters in connected/autonomous vehicles, Quebec, Manitoba and British Columbia. artificial intelligence (AI), alternative $107.3 billion powertrains (electric vehicles and fuel in factory revenues cells), vehicle safety and testing. CANADA’S KEY STRENGTHS IN THE » Companies such as Apple, ABB, Ford and General Motors have made AUTOMOTIVE SECTOR significant recent investments in Canada » Canada has the lowest cost structures and to establish their R&D centers in self- the lowest business tax burden among driving vehicles, and are working advanced economies, with an overall cost closely with world-class universities advantage of 8.2% over the engaged in cutting-edge research. and 4.5% over in the automotive manufacturing sector. According to » Canada offers foreign investors excellent KPMG Competitive Alternatives, auto parts plant and labour quality, evidenced by operations based in Canada typically enjoy the fact that Canadian assembly plants a 31% labour cost advantage compared have won one-third of all J.D. Power to their U.S.-based counterparts. plant quality awards for North America, which is nearly three times Canada’s » Canada’s auto sector is strategically share of regional production. located in the heart of the Great Lakes “supercluster,” which has the largest “GM selected Canada for its clear concentration of automotive manufacturing capacity for innovation, proven and engineering/R&D centres in North talent and strong ecosystem America (45% of total vehicle production). There are 36 high-volume assembly of great universities, start-ups plants within a 500-kilometre radius and innovative suppliers.” of the Windsor-Detroit border; these — Mark Reuss, Executive Vice facilities built 7.4 million vehicles in 2016. President, Global Product Development, Purchasing and Supply Chain, General Motors Company. ONTARIO: Vehicle assembly, AUTOMOTIVE original equipment parts, auto- related MTDM, AI and CV/AV tech » Leading companies include: CAPABILITY CLUSTERS Fiat Chrysler Autos, Ford, General Motors, Hino Motors, Honda, Toyota, ABC Group, AGS Automotive, GREENLAND Aisin Seiki, Anchor Danly, Autoliv, BlackBerry/QNX, Brose, Continental, ALASKA (USA) Dana, Denso, D&V Electronics, Dynaplas, ETAS/ESCRYPT, Faurecia, YUKON Flex-N-Gate, Goodyear, HBPO, NORTHWEST NUNAVUT TERRITORIES Husky Injection Molding, Hydrogenics, NEWFOUNDLAND & LABRADOR Intelligent Mechatronic Systems, Johnson Electric, KSR International, BRITISH COLUMBIA Laval Tool, Lear, Linamar, ALBERTA MANITOBA , Martinrea, QUEBEC Edmonton SASKATCHEWAN Matcor Automotive, Mitchell Plastics, Saskatoon Vancouver PRINCE EDWARD Multimatic, NARMCO Group, Nemak, ONTARIO ISLAND Calgary Québec City NOVA Next AI, Nucap Industries, Papp SCOTIA Winnipeg Ottawa Halifax Plastics, Schaeffler, Toyota Boshoku,

UNITED STATES OF AMERICA Montréal NEW TE Connectivity, Valiant TMS, Valeo, BRUNSWICK Waterloo rTo onto Vari-Form, Wescast Industries, London Niagara Woodbridge Group, ZF/TRW MANITOBA: Buses, specialty vehicles, cold-weather testing » Leading companies include: Motor Coach Industries, QUEBEC: Trucks, buses, light metals, electric vehicle (EV) New Flyer, Artik/OEM, Carlson Composites, Champ Industries, components, AI and CV/AV tech Thompson Unlimited » Leading companies include: PACCAR (Kenworth, Peterbilt), BRITISH COLUMBIA: Fuel cell EV cluster Volvo Bus (Nova Bus, Prévost), Blue Bird/Girardin, » Leading companies include: Automotive Fuel Cell Cooperation, Lion Bus, ABB, AddÉnergie, Bolloré Group, Bridgestone, Ballard Power, Canadian Autoparts Toyota, D-Wave, Loop Energy, Cooper-Standard, Element AI, Exo-S, Fluent AI, ImmerVision, Mercedes-Benz Fuel Cell Plant, Mojio, Powertech Labs, LeddarTech, Phantom Intelligence, Raufoss Automotive, Westport Innovations Spectra Premium, TM4, Toyoda Gosei, Verbom

RECENT INVESTMENTS

January 2018, Linamar announced In March 2017, Ford Motor Company In January 2017, Honda announced a $500 million to: support the production unveiled a $1.2 billion investment $492 million investment to upgrade its of advanced engine and drivetrain plan to transform its Windsor engine assembly plant in Alliston, Ontario to build components, develop and produce plant into a world class facility, and the next generation of Civic and CR-V. electrified and connected vehicle as well as creating hundreds of new technology and create a dedicated R&D positions in Ontario to focus on innovation centre focussed on AI, connected/autonomous vehicle. machine learning and robotics. In June 2016, General Motors In May 2016, Fiat Chrysler Autos (FCA) announced a major expansion of its announced a $1.2 billion investment to R&D team by 750 new engineers In October 2016, FCA announced its Windsor assembly plant to produce and software developers in Ontario, $325 million to rebuild the the company’s sixth generation to focus on autonomous and paint shop in their Brampton, of minivan, including a plug-in connected vehicle software, controls Ontario assembly plant. hybrid version of the Pacifica. development, safety, and infotainment. CANADA’S ADVANTAGES

ACCESS TO MAJOR MARKETS HIGHLY SKILLED AND RELIABLE WORKFORCE Under NAFTA, Canada enjoys preferential access to one of the largest and most Canada has a highly skilled workforce important automotive markets in the world. capable of providing a quality and productivity With the Comprehensive Economic and advantage vis-à-vis lower cost jurisdictions. Trade Agreement (CETA) with the European Canadian workers in the auto industry are Union now in force, Canada has guaranteed recognized for lower turnover and ability preferential access to the European markets. to problem solve “on the shop floor.” Also, In addition, Canada has a free trade agreement Canadian workers are highly educated with South , its first in Asia, providing a strategic gateway to this dynamic and fast- and reliable due to top quality education growing region. These trade agreements institutions that produce qualified graduates in allow automotive investors in Canada to engineering, machining, metalwork, welding, benefit from integrated global supply chains robotics, manufacturing systems, repairs and seize new export market opportunities. and maintenance, and tool and die making.

WORLD-CLASS CONVERGENCE SUPPLY BASE OF AUTOMOTIVE AND

Canada’s automotive supply base is second ICT EXPERTISE to none, with capabilities in virtually every Canada’s well-established strengths in product category. Canadian suppliers automotive manufacturing and information are recognized for their best-in-class and communications technology (ICT) manufacturing expertise and innovation. combine to make it an excellent to location Many of the largest global suppliers to develop and build the connected, have operations in Canada and some of the biggest and most capable suppliers autonomous and safe vehicle of tomorrow. are based in Canada, including Magna The automotive and ICT clusters in Ontario International, Linamar, Bosch, Faurecia and Quebec overlap perfectly, and provide and Martinrea. Assemblers and Tier 1 a unique combination of manufacturing suppliers in Canada also have access to experience and software engineering value chains in the U.S. and . expertise not even found in Silicon Valley.

With recent investments by concentration of AI start-ups in the Quebec is the leading market for EVs BlackBerry/QNX, Apple, Ford, world. Automotive companies are with 46% of Canadian sales, and Linamar and GM in autonomous tapping into a mature ICT sector of is investing to expand its charging driving research, Ontario is 77,000 ICT workforce spread within station network. Montréal is a leading becoming an undeniable automotive 1,750 knowledge-based businesses center of global AI and has the R&D hub. Ontario’s ICT cluster including multinationals like Microsoft, highest concentration of researchers comprises over 19,000 firms and Oracle, SAP, IBM and EMC-Dell. and students of deep learning in the is second only to Silicon Valley in world with almost 9,000 students in North America, with companies The Greater Montreal Area is a vibrant AI and related programs. Montréal focusing on emerging automotive heavy truck and bus manufacturing based researchers have used technologies. The Greater cluster, and is a global leader in the this expertise to develop cutting Toronto area has the highest electrification of transportation, edge applications in the area of both for R&D and manufacturing. autonomous and connected vehicles. INNOVATIONINNOVATION SUPPORTSUPPORT PROGRAMSPROGRAMS

» UOIT: University of Ontario Institute of Technology, Automotive Centre Foreign investors in Canada’s of Excellence (climatic wind automotive sector are supported tunnel and other facilities) by a vibrant network of universities and research centres specializing » NRC: National Research in automotive-related R&D. In » Advanced Manufacturing Fund (AMF) Council Canada, Automotive addition, companies that develop is a $200-million program over five and Surface Transportation and test electronic systems and years administered by the Federal (light materials, composites, devices in Canada typically enjoy a Economic Development Agency for alternative propulsion, safety) cost advantage when compared to Southern Ontario, which supports their U.S.-based counterparts. investments by manufacturing firms in » Fraunhofer Project Centre activities that create new and innovative for Composites Research products or production methods. CANADA (composite technologies) Canada has a strong track record » Export Development Canada (EDC) » CanmetMATERIALS Laboratory of automotive success with an and Business Development Bank (metals, materials, processing research) experienced and collaborative federal of Canada (BDC) provide flexible and provincial government team that financing programs and solutions supports the automotive sector. tailored to support foreign direct QUEBEC investment in Canada. » IVI: Innovative Vehicle Institute Canada offers generous investment (Electric/Hybrid traction, energy tax credits and funding for automotive » The Accelerated Capital Cost Allowance efficiency, vehicle intelligence) companies investing in Canada: (ACCA) offers a two-year straight line fiscal depreciation rate for machinery » PMG Technologies (complete motor » Scientific Research & Experimental equipment, providing a rapid return on vehicle test centre, compliance, Development (SR&ED) provides investment and important cash flow. validation, development) income tax credits and refunds for expenditures on eligible R&D activity » InnovÉÉ (electrification of in Canada on wages, materials, some ONTARIO transportation, distribution, overhead and SR&ED contracts. » MacAUTO: McMaster University, storage and utilization) Institute for Automotive Research » Strategic Innovation Fund (SIF) is and Technology (automotive R&D » MILA: Montreal Institute for a five-year $1.26 billion program across several faculties and facilities, Learning Algorithms (AI, designed to support innovation electric and hybrid powertrains, computer vision applications) activities across all industrial sectors, mechatronics and materials) including automotive. It provides loans or grants to support innovative » University of Windsor (automotive MANITOBA R&D, technology transfer and engineering, research partnerships) » Manitoba Vehicle Technology commercialization projects, to attract Centre (product and process large-scale investments, to facilitate » WatCAR: University of Waterloo’s innovation, engineer training) company growth and expansion, and Centre for Automotive Research to encourage research collaborations (automotive innovation enhancement » Composites Innovation Centre and tech demonstration projects. and competitiveness) (design, testing, prototyping) AN ENABLING CANADA HAS A STRONG AND STABLE business climate that is open for BUSINESS business, investment, and trade. Canada benefits from ENVIRONMENT a sound, efficient financial system supported by low taxes and business costs and a government investing in the innovative, clean, inclusive economy of tomorrow.

WORLD-CLASS CLUSTERS OF INNOVATION, A WELCOMING BUSINESS WITH GOVERNMENT ENVIRONMENT AS PARTNER Canada has strong geographic and sectoral Canada is among the best places clusters, as well as R&D-intensive sectors with for business in the G20. one of the lowest business costs in the G7. Sources: Forbes, EIU Source: KPMG

A HIGHLY EDUCATED AND FINANCIAL STABILITY TALENTED WORKFORCE Canada’s banking system remains Canada has the most educated talent pool in one of the soundest in the world. the OECD with more than half of its population aged 25-64 having a tertiary level education. Source: World Economic Forum INVEST IN Source: OECD A GREAT PLACE TO LOW BUSINESS INVEST, WORK AND LIVE Global Affairs Canada TAX RATES Canada ranked first among 60 countries for 111 Sussex Drive, Ottawa, quality of life. Canada is ranked first in the G7 Ontario, K1N 1J1, CANADA Canada is one of the most tax and G20 for overall prosperity of citizens. competitive countries in the G7. Catalogue number: Sources: U.S. News and the FR5-38/2-2016-PDF Sources: KPMG, Finance Canada Legatum Prosperity Index ISBN 978-0-660-05213-7

Winter 2018

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