As Unifor fights to form a union at Toyota’s manufacturing plant in Kitchener, Ont., Canada’s position as a car-producing juggernaut is quickly slipping away. In 2013, Mexico was the third-largest foreign supplier of cars to the U.S.; in 2014, it will be No. 1. Automakers have been shifting production to Mexico for years to take advantage of the country’s lower wages and attractive free-trade agreements, explains George Magliano, a senior economist with IHS Automotive. The slow erosion of the Canadian auto sector is going to continue. Canada has some top-notch plants, Magliano says, but challenges like the high Canadian dollar and tough union contracts are outside the automakers’ control. “I don’t see this reversing itself any time soon.” Eventually, the shift could affect the auto parts industry as well, Magliano adds, because parts plants need to be in close proximity to the assembly plants.
INFOGRAPHIC: How Mexico is overtaking Canada’s auto sector
Lower wages and more favourable free trade deals have made Mexico a rising auto power