Automotive Industry

The Automotive Industry in 1986 comprised some 500 establishments, producing almost $37 billion in vehicles and parts; it ranked first among Canada's manufacturing industries. The first horseless carriage in Canada was built by Henry Seth Taylor in 1867 in Stanstead, Québec. Taylor's steam pleasure carriage was considered a novelty, but as other pioneers built steam, electric and gasoline engines in the late 19th century, the automobile began to find a place in personal and goods TRANSPORTATION.

The automotive industry began in Canada when a group of young businessmen in Windsor, Ontario, led by Gordon M. McGregor, formed the Ford Motor Co of Canada, Ltd (1904), only a year after Henry Ford, the promoter and inventor, had begun production in Detroit. Cars were assembled in the works of the Walkerville Wagon Co, Ltd, as parts were ferried by wagonload across the Detroit River. Canadian Fords were soon being shipped to most parts of the far-flung British Empire. Colonel R.S. MCLAUGHLIN, Canada's pioneer in the industry, converted the family's thriving carriage and sleigh production in Oshawa, Ontario, to the new horseless carriage with its noisy internal-combustion engine.

In 1908 McLaughlin arranged with William C. Durant, the financial wizard who formed General Motors, to use David Buick's engines. Buick engines with McLaughlin-designed bodies gained world renown. Later, Durant offered McLaughlin the Canadian rights to the Chevrolet "Classic Six," a 5-passenger touring car designed by racing-car driver Louis Chevrolet. General Motors of Canada Ltd was formed in 1918, under the presidency of McLaughlin, when McLaughlin Motor Co Ltd and Chevrolet Motor Co of Canada Ltd merged.

Detroit, just across the Detroit River from WINDSOR, became the world centre for automotive production at the beginning of the century. The reasons for Detroit's predominance seem to have been based on its well-established carriage, bicycle and boat-engine industries and the excellent road system in the surrounding region. Windsor became the Canadian extension of Detroit because of 2 inducements: a 35% tariff on carriages of all kinds entering Canada and a preferential tariff entry to British countries.

The development work in automotive technology was done in Europe; even the name "automobile" is French. A French army captain, Nicholas Cugnot, built a steam-artillery tractor, the first self-propelled land vehicle, and another Frenchman, Jean-Joseph-Étienne Lenoir, first used a gas engine in a vehicle to drive on a highway. Steam and electric vehicles offered many advantages, but the internal-combustion engine has dominated. Nicolaus A. Otto, a German engineer, developed the 4-stroke engine, the foundation of the industry which has produced the 400 million cars and trucks on the roads of the world today. Gottlieb Daimler and Wilhelm Maybach worked together at the end of the 19th century to produce a practical, Otto-cycle automobile engine. Emile Levassor, of Panhard and Levassor, conceived the central frame structure suited to carrying an engine. By adding pneumatic tires, most of the obstacles to the beginning of motoring had been removed.

It was the master mechanics of Detroit who turned the luxury plaything into a mass-produced, low-priced, reliable convenience for common use. Ransom E. Olds was the first successful mass producer in the US, with his rakish, curved-dash "merry" Oldsmobile. Important contributions were made by Ford, Charles and Frank Duryea, Henry Leland, Walter Chrysler, Charles Nash and Charles "Boss" Kettering, who invented the self-starter which made motoring less dangerous and more reliable.

In the early years, thousands of automobiles were introduced but few survived. In Canada these included the LeRoy, the popular Russell, the Tudhope, the Thomas, the Galt and many others. But no independent Canadian automobile company survived; Canada did not have enough people to support a native industry. The motor vehicle industry, however, burgeoned because of the demands of the first mechanized war. As a result, from 1918 to 1923 Canada was the second-largest vehicle producer in the world and a major exporter. Those Canadian manufacturers who succeeded were allied to successful American companies.

The form and size of today's automotive industry was shaped by the first "Canadian-content" legislation in 1926, the Tariff Board hearings of the mid-1930s, the Royal Commission on the Automotive Industry of 1960, the subsequent CANADA-US AUTOMOTIVE PRODUCTS TRADE AGREEMENT (APTA or Autopact) of 1965, and the Iranian oil crisis of 1979, which ushered in the automotive depression of the early 1980s. The recovery has seen the entrenchment of Asian companies in North America, both through direct exports and investment. These companies operate outside the Autopact. One result of the Autopact is continental, conditional free trade in motor vehicles and original equipment parts. The agreement contains safeguards requiring that APTA producers in Canada maintain levels of assembly related to the value of their sales here. At present, over 80% of the vehicles produced in Canada are exported.

In the 1980s the automotive industry accounted for about 14% of total direct manufacturing employment in Canada and 10% of the value of total manufacturing shipments. The industry consumed 14% of iron foundry production, 11% of rubber products, 7% of machine-shop products, 9% of wire goods, 14% of processed aluminum, 6% of carpeting and fabrics and 9% of glass products. The Canadian automotive industry is the final destination of over 20% of all domestic steel shipments, representing over 10 000 jobs in the Canadian steel industry. There are soon to be more than 10 producers of cars and trucks in Canada, and Canada is the sixth-largest producer in the world. These vehicle assemblers also produce nearly half of the value of parts and components going into vehicle production. A further 40% of these original equipment parts is produced by some 450 Canadian-owned parts companies, and the balance is produced by the 12 largest independent multinational parts companies.

Ontario continues to be the centre for vehicle assembly with 83%; about 12% of assembly is in Québec; and smaller facilities are maintained in BC, Manitoba and NS. Original equipment-parts plants are also concentrated in Ontario (80%) and Québec (10%). After-market parts production, which is about one-quarter that of original equipment parts, is located in Ontario (68%), with 16% each in Québec and Western Canada. The automotive industry also includes a distribution system of about 3500 dealers employing almost 80 000 persons.

Canada's automotive industry is not independent but is a fully integrated North American industry bound by the Autopact. The effects have been generally positive for Canada, creating more jobs, higher wages and lower car prices for Canadians. The Canadian industry has also grown more efficient since the agreement and Canadian plants are competitive with those in the US. However, several developments of the 1970s put the North American industry in a crisis.

The most visible sign of change was the growing sales of Japanese, Korean and European cars, as Canadian consumers turned to smaller, more fuel-efficient cars. Nevertheless, while the Japanese have implemented self-imposed restrictions on cars exported to Canada, recent models from General Motors, Ford and Chrysler have begun to regain the confidence of consumers as well as car enthusiasts. The issue of import restraints has been controversial, with the 1983 Federal Task Force on the Canadian Automotive Industry claiming that they are necessary to protect jobs and consumer groups claiming that they restrict choice and cause an overall rise in car prices.

In Canada over $12 billion was committed to new plants and equipment between 1980 and 1986. Huge sums went into single projects; eg, about $3 billion to renovate and expand GM's transmission plant in Windsor, over $900 million on Ford's new engine plant, $500 million spent by Chrysler to renovate production in the continent's most robotized assembly plant, and $764 million by American Motors in Brampton. Management methods and organization, as well as relationships with labour and suppliers have been revamped in attempts to promote greater productivity and quality.

Governments are also involved in the automotive industry. The federal government is using its impressive $25-million test track and facilities at BLAINVILLE, Québec, and Ontario has established 6 technology centres, an Automotive Parts Technology Centre in St Catharines, and a Robotics Technology Centre in Peterborough. In future years there will be more innovations in this revitalized, restructured industry.

Author JAMES G. DYKES

Links to Other Sites
Ford Motor Company of Canada, Limited
The official website of Ford Motor Company of Canada, Limited.

Canadian Auto Workers
The official website of the Canadian Auto Workers Union.

The Archives of Ontario Remembers the Home Front
In honour of the 60th anniversary of D-Day, the Archives of Ontario presents this stirring retrospective of Ontario’s extraordinary Home Front contribution to the war effort. Check out the personal stories, photographs, posters, video clips and other multimedia.

TMX Group
The online home of TMX Group, which owns and operates the Toronto Stock Exchange and the TSX Venture Exchange. For real-time and historical market data, sector profiles, and financial information about listed companies, click on listed company directory on left side of page or enter stock symbol in the search box.

DaimlerChrysler Canada Inc.
The website for DaimlerChrysler Canada Inc., the third-largest manufacturer of passenger cars, trucks and automotive components in the Canadian auto industry. Also funds many charitable programs in Canada.

The History of the Canadian Automobile Workers
Dedicated to the history of Canadian automobile workers. Features illustrated essays, copies of labour agreements and autoworkers’ reminiscences about life on the job. A joint project of the Canadian Automobile Workers and the Labour Studies Program at McMaster University.

Canadian Standards Association
The website for the Canadian Standards Association, a not-for-profit membership-based association serving business, industry, government and consumers in Canada and the global marketplace.

My Eighty Years on Wheels
This autobiography by R. S. McLaughlin provides intriguing details about his personal life and his role as one of Canada's leading industrialists. From the website for General Motors.

Ford of Canada, 1951
A Yousuf Karsh photograh of workers in a Ford of Canada automobile plant.

Reuters
Search the Reuters website for the latest news and reports about specific Canadian companies and business sectors.