Canadian Automotive Industry Outlook by A Bukey, October 2004

Canadian Turkish Business CouncilKanada-Türkiye İş Konseyi

www.ctbc.caABCANABCAN Consulting Inc. www.abcanconsulting.com

Presented at DUTIV.org

September 2004

Canadian Automotive Industry

Canadian Automotive Industry

September 2004DUTIV

Canadian Auto Industry - ABCAN Consulting©

2* Solely Ontario-Sourced ** New Vehicle Launch

Vehicles Key to the North American MarketVehicles Key to the North American Market

Matrix, Lexus RX 330

Coming- A Pick-up Truck

Odyssey, Pilot*

Buick Century, Regal *

2004 Grand Prix*

F-Series Pickup

2004 Pacifica*

CorollaTOYOTA

Acura MDX

Acura EL* / Civic Hatchback *HONDA

Chevrolet Silverado / GMC Sierra Trucks

Chevrolet Impala, Monte Carlo *GM

Crown Victoria / Grand Marquis / Marauder*

Freestar * (formerly Windstar)FORD

Dodge Caravan / Chrysler Town & Country

Magnum / 300M * **DAIMLER/

CHRYSLER

Suzuki Equinox * **CAMI

PRODUCTSASSEMBLER

Canadian Assembly Plants

Source: APMA

September 2004DUTIV


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Oshawa (566)

Oakville (294)

Brampton (250)

Alliston (368)Cambridge (211)

Windsor (273) St. Thomas (237)

Ingersoll (107)

Total 550,000 people employed in the industry.

20 assembly plants

550 parts manufacturing plants

Capacities (000):

Source: APMA

Canadian Assembly PlantsCanadian Assembly Plants

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Parts ManufacturersParts Manufacturers

Canadian

Magna

Woodbridge

Linamar

Wescast

ABC Group

Dominion

AG Simpson

Trillium Metal

Canadian

Magna

Woodbridge

Linamar

Wescast

ABC Group

Dominion

AG Simpson

Trillium Metal

International

Dana

Delphi

Ube

Nemak

Eaton

Textron, Oetiker

TRW, Lear Seating

Johnson Controls

International

Dana

Delphi

Ube

Nemak

Eaton

Textron, Oetiker

TRW, Lear Seating

Johnson Controls

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Vehicle Production 1992-2003Vehicle Production 1992-2003

Source: APMA

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Est

.

Source: APMA

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OEM Supplier Shipments 1991-2003 OEM Supplier Shipments 1991-2003

NAFTA

Source: APMA

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Canada – US Automotive TradeCanada – US Automotive Trade

• $67 b cars and trucks

• $24 b parts, engines

•$26 b cars and trucks

•$38 b parts, enginesSource: Statistics Canada 2002

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Automotive Statistics, CanadaAutomotive Statistics, Canada

Shipments of all vehicles and parts: $100 billion+

23.2 hours of labor per vehicle (19.9 per light) car assembly

Total 550,000 employed by the industry

20 plants, 554 parts manufacturers, 3,600 dealerships

2.6 million units production, 1.7 million units domestic sales

Production: 55% cars, 45% light trucks, vans, utility

19 million vehicles in operations, 2.3% of world’s share

$82.7 billion vehicles sold at 3,600 dealers in 2002

$17.4 billion parts sold at after market

Shipments of all vehicles and parts: $100 billion+

23.2 hours of labor per vehicle (19.9 per light) car assembly

Total 550,000 employed by the industry

20 plants, 554 parts manufacturers, 3,600 dealerships

2.6 million units production, 1.7 million units domestic sales

Production: 55% cars, 45% light trucks, vans, utility

19 million vehicles in operations, 2.3% of world’s share

$82.7 billion vehicles sold at 3,600 dealers in 2002

$17.4 billion parts sold at after market

September 2004DUTIV


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Automotive Statistics, CanadaAutomotive Statistics, Canada

12% of GDP comes from the automotive sector

85-90% of production is exported

8th largest vehicle manufacturer in the world

$22 billion direct investment over the last decade

$7.2 billion trade surplus per year

Cost of manufacturing: USA = 100, Canada = 94

12% of GDP comes from the automotive sector

85-90% of production is exported

8th largest vehicle manufacturer in the world

$22 billion direct investment over the last decade

$7.2 billion trade surplus per year

Cost of manufacturing: USA = 100, Canada = 94

September 2004DUTIV


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Automotive Statistics North AmericaAutomotive Statistics North America

2002 Canada US Mexico

Population 32 m 290 m 102 m

Vehicle Sales 1.7 m 17.1 m 1 m

Production units 2.6 m 12.3 m 1.8 m

Assembly Employees 51,000 331,100 57,500

Parts Mfg. Employees 98,100 489,400 390,000

Vehicles per Assembler 52 37 31

Light Auto labour hrs. 20-24 21-29 …

Production per 1000 84 43 18

Sales per 1000 people 55 59 10

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Competitive Applications Competitive Applications

Continuous productivity improvement and cost reductions

JIT and TQM applications, especially on shop floor

Focus on certification of suppliers

More modular systems manufactured by Tier 1 suppliers

Integrated R&D with OEM using concurrent engineering

Integration of supply chain, shop floor control, ERP systems

Sequenced delivery, eliminating inventory for expensive items

QS9000 and TS16949 standards with process orientations

Continuous productivity improvement and cost reductions

JIT and TQM applications, especially on shop floor

Focus on certification of suppliers

More modular systems manufactured by Tier 1 suppliers

Integrated R&D with OEM using concurrent engineering

Integration of supply chain, shop floor control, ERP systems

Sequenced delivery, eliminating inventory for expensive items

QS9000 and TS16949 standards with process orientations

September 2004DUTIV


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Trends to watchTrends to watch

Supply chain visibility from OEMs into Tier 2 companies

Synchronized planning and execution (OEM Tier 1 Tier 2 )

More ERP, CRM and SRM integration

Collaborative Planning Forecasting and Replenishment (CPFR)

Six sigma and lean manufacturing applications

Tier 0.5 concept is in the works

Outsourcing of IT, logistics, HR, and similar services

Global optimization of after market supplies

Environmentally friendly and fuel-efficient vehicles

Hybrid vehicles, fuel cells, solar power

Supply chain visibility from OEMs into Tier 2 companies

Synchronized planning and execution (OEM Tier 1 Tier 2 )

More ERP, CRM and SRM integration

Collaborative Planning Forecasting and Replenishment (CPFR)

Six sigma and lean manufacturing applications

Tier 0.5 concept is in the works

Outsourcing of IT, logistics, HR, and similar services

Global optimization of after market supplies

Environmentally friendly and fuel-efficient vehicles

Hybrid vehicles, fuel cells, solar power

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Inventory in Supply ChainInventory in Supply Chain

Tier 2Tier 2 OEMOEM

InventoryInventoryInventory

TRADITIONAL MANUFACTURING COMPANIES

Lead times are long, weeks or months

Tier 1Tier 1 OEMOEMTier 2Tier 2

SRM

Delivery

SRM

Delivery

Inventory

Inventory

ADVANCED COMPANIES REPLACE INVENTORY WITH INFORMATION

CAPACITY IS REPLACED WITH CAPABILITY TO DELIVER

Lead times are very short; hours or minutes

planning

Manufacturing

Inventory

RM WIP FG

AssemblyManufacturing

planning planning

Tier 1

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OEMBulk delivery

Demand Pull

JIT WarehouseSupplier

• Supplier delivers bulk shipments to JIT Warehouse based on use and set limits

• Warehouse breaks the inventory into smaller delivery containers

• OEM sends Kanban pull request to the warehouse based on consumption

• Warehouse delivers specific replenishment quantity to OEM

JIT

Just in Time Delivery - ExampleJust in Time Delivery - Example

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OE PaintedBody Storage

OE Assembly Line

Sequencing Assembly Line1st TierFacility

JIT Sequenced

Returnable containers

Point of Assembly

Point of

Pay

Other 1st Tier Suppliers

JIT Broadcast

JIT Synchronization - ExampleJIT Synchronization - Example

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OEM Satellite ModelOEM Satellite Model

OEM

1st

Tier

2nd

Tier

2nd

Tier

2nd

Tier

2nd

Tier

2nd

Tier

2nd

Tier

1st

Tier

2nd

Tier

2nd

Tier

2nd

Tier

2nd

Tier

1st

Tier

2nd

Tier

2nd

Tier

2nd

Tier

2nd

Tier

Tier 0.5

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Canadian Investments in Automotive Industry - Turkey

Canadian Investments in Automotive Industry - Turkey

Dominion Spring and Stamping (Dominyay

ve Makina Sanayii) serving Mekaplast,

Bosch, Teba, Arcelik, etc.

Intier (via Italy)

Technology transfers possibilities

License agreements possibilities

Dominion Spring and Stamping (Dominyay

ve Makina Sanayii) serving Mekaplast,

Bosch, Teba, Arcelik, etc.

Intier (via Italy)

Technology transfers possibilities

License agreements possibilities

September 2004DUTIV


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Canadian Turkish Business Councilwww.ctbc.ca

Canadian Turkish Business Councilwww.ctbc.ca

Promotes bilateral trade/investment between Canada and Turkey Volunteer and not-for-profit, run by corporate representatives Establishes a forum for business and investment Provides networking and experience sharing Facilitates access to each market Regular trade missions by senior level business and government,

one scheduled Spring 2005 to Turkey Advocacy for Canadian-Turkish business interests Sponsored by Canadian Manufacturers and Exporters, Ontario

Investment, International Trade Canada, … Counterpart: DEIK and Turkish Canadian Business Council

Promotes bilateral trade/investment between Canada and Turkey Volunteer and not-for-profit, run by corporate representatives Establishes a forum for business and investment Provides networking and experience sharing Facilitates access to each market Regular trade missions by senior level business and government,

one scheduled Spring 2005 to Turkey Advocacy for Canadian-Turkish business interests Sponsored by Canadian Manufacturers and Exporters, Ontario

Investment, International Trade Canada, … Counterpart: DEIK and Turkish Canadian Business Council

September 2004DUTIV


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ABCAN Consulting Inc.www.abcanconsulting.com

ABCAN Consulting Inc.www.abcanconsulting.com

Consulting in supply chain, operations management,

industrial engineering, enterprise resource planning

Solutions for manufacturing companies in supplier

relationship management (SRM), ERP, JIT, CI

Education and training in operations management

25 years of expertise in manufacturing, ERP, JIT,

SCM, SRM and integration of business systems

Offices in Canada, US and Turkey

Consulting in supply chain, operations management,

industrial engineering, enterprise resource planning

Solutions for manufacturing companies in supplier

relationship management (SRM), ERP, JIT, CI

Education and training in operations management

25 years of expertise in manufacturing, ERP, JIT,

SCM, SRM and integration of business systems

Offices in Canada, US and Turkey

ABCAN

Documents

Canadian Automotive Industry Outlook by A Bukey, October 2004