Lower Loonie Helps the Canadian Auto Industry

Canadian Auto Industry Auto Careers

Most Canadians are upset that their dollar seems to be experiencing its worst quarter since the recession of 2008. Since the start of 2015, the loonie has fallen approximately 8 per cent against the US dollar. The Canadian automotive industry surprisingly may not be that upset about the declining dollar, and in fact, may even benefit. This is because a lower dollar may have the potential to help improve Canada’s competitive position in the automotive sector, and protect automotive manufacturing plants in places like Ontario.

If you plan to enroll in a mechanic college in Canada, continue reading for more information about how the state of Canada’s dollar might actually be an advantage for auto manufacturers.

Lower Labour Costs

Since the Canadian currency dropped, labour costs at the Detroit-based “Big Three” (Ford, General Motors and FCA Canada) auto plants in Canada have decreased substantially compared to their US locations. In Canada, the labour costs—which includes wages, benefits and pension plans—of these manufacturers typically adds up to an average cost of about $60 per hour. However, since the US dollar is worth more these days, this rate actually totals to about $48 USD—which translates to a $12 advantage for the Canadian plants.

Data provided by the Center for Automotive Research (CAR), shows that the low labour costs of their Canadian locations actually give the “Big Three” a large advantage over other foreign-based major manufacturers, including Honda Motor Co. Ltd. and Toyota Motor Corp.

Potential Opportunity on the Rise

As a result of the financial advantage that the “Big Three” auto retailers currently have over other companies, automotive school graduates might soon see a rise of job opportunities in Canada, specifically in Ontario. However, this comes in the wake of GM’s indefinite closure of at least one of its Oshawa manufacturing plants. In an attempt to influence GM’s decision, a recent Unifor report studied the impact that the closure of General Motors’ Oshawa locations might have on Ontario’s economy. GM Canada’s President, Stephen Carlisle has yet to make a public decision on the fate of the other plants, but one thing that is certain is that the lower dollar will help offset the cost of hiring new workers at these plants.

Another factor is that a large portion of the employees currently working at GM’s Oshawa locations are eligible for retirement. This means that if these workers retire, GM can potentially replace these older employees with newly graduated workers from auto mechanic courses. This can save the manufacturer money, and potentially save GM’s Oshawa locations from closure.

What are your thoughts on how the lower Canadian dollar affects the automotive industry? Do you think this will affect GM’s Oshawa plants?

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