When Honda (IW 1000/29) announced last month that it was investing $857 million at its Alliston operations, it was a welcome sign to Ontario’s automotive industry.
“Ontario’s auto sector has shown tremendous resilience,” says Julie Washburn, Team Lead - Automotive at the Ministry in Ontario. “We are very encouraged that vehicle production is rebounding, with shipment values and exports from Ontario growing strongly.”
Ontario is among the top vehicle producers in North America, making 2.4 million vehicles per year, about 15% of North American production. It is unique in hosting five major global automotive assemblers: Chrysler, Ford, GM, Honda, and Toyota. Together the companies operate 12 plants in Ontario.
However, the industry, which had seen an average investment of $3 billion in the early 2000s, is now down to about $1.5 billion according to a recent study from the Canadian Automotive Partnership Council.
Honda’s investment is a show of faith in the area. “Honda is pleased to extend our commitment and deep manufacturing roots in Ontario,” said Jerry Chenkin, CEO, Honda Canada Inc. “In 1986, we became the first Japanese auto company to manufacture in Ontario. Today, we employ more than 4,000 highly-skilled Ontarians in our three plants, have built over 6 million vehicles in this province and our total manufacturing investments in Ontario will now reach nearly $3.9 billion.”
Honda builds two models in Ontario: the Civic and the CRV. In 2013, it produced about 409,000 vehicles in Ontario, or about 17% of total vehicle output in Canada. And of all the Honda and Acura vehicles sold in Canada, about 70% are produced at the Honda plants in Alliston.
The new investment will provide leading-edge technologies for vehicle assembly and engine manufacturing, as well as worker training and research and development partnerships with Ontario universities and colleges. This project will make Honda’s Alliston operations a teaching plant for all other Honda facilities worldwide.
Honda is currently partnered with researchers at the University of Waterloo to test a new manufacturing process called tailored hot stamping that maintains high safety standards while reducing fuel consumption and vehicle emissions.
“This project focuses on innovation, productivity and lowering manufacturing costs per vehicle,” says Washburn. And what is good for the company is good for the province which provided a conditional grant of up to $85.7 million. The grant was to keep 4,000 jobs at the plants as well as other jobs in the supply chain across Ontario. In 2006, Ontario invested $15 million toward public infrastructure upgrades in Alliston near the Honda plant.
The province is willing to invest in the industry as the area is home to more than 350 auto parts manufacturers and 500 tool, die and mold companies.
These industries employ 95,000 autoworkers, 43% of which have a post-secondary education. And the province points out that per capital they have more qualified engineers than any other G7 country.
In addition to an educated workforce, the province has deep R& D resources with more than 24 auto-focused public research facilities. Facilities include the McMaster Automotive Research Centre, the automotive research center at the University of Waterloo, the University of Ontario Institute of Technology's General Motors of Canada Automotive Centre of Excellence, and the Fraunhofer Project Centre at Western.
All of these attributes are part of a strategy to ensure that the automotive industry continues to thrive.
“Our government is proud to partner with companies that are making the investments in innovation and skills that help us compete globally,” said Kathleen Wynne, Premier of Ontario of Honda’s announcement.
“The fact that Ontario successfully competed for this project reinforces our position as a global leader in auto manufacturing, and it is a vote of confidence in our province as a great place to do business – now and in the future.”