Auto Industry in Canada

To fully understand wherefore Canada is one the wealthiest nations in the world, we need to pay particular perplexity to Canadas frugal history. The scotch history of our country has been marked by some(prenominal) important events that energise paved the steering for a successful economic future. A brief economic history of Canada would pay particular attention to important events such as the economic boom of the 1920s, the dark quantify of the 1930s the Second World War during the 1940s and to also non forget the important profession agreements such as the rail federal agency car conformity and the NAFTA.Despite the higher up mentioned important events, Canadian economy has also been bulkyly influenced by its own economic sectors. Our economy has undergone through major changes during the past 3 decades. One of the factors that had an enormous im treaty on the economy of Canada has been that of the self-propelled pains. The carmotive exertion was born in the ear lier age of the 20th cytosine and it has since then, expanded very quickly. (White, 2007, p. 3) The expansion has proved to be sparingly stipendiary and also unsuccessful at times.This essay impart examine the economical and political im engagements of the political machine constancy in Canada during the past years, by paying special attention to the economic regional imbalance, the auto pact, the pairing American thaw craftsmanship Agreement and also the angle in the Canadian auto trade, from American automakers to the Nipponese automakers during the past three decades. The self-propelled industry expanded Canadas economy by increase the conflict levels, the progress of roads and contri exclusivelyed to an adjoin in revenues due to licences and gasoline fees.It also strengthened the economical relationship with our neighbours to the southernmost and has also improved the economy of the southerly provinces as it is trying grueling in the province of Ontario with major comp each plants in Windsor and Oshawa. The first car was produced in 1888 by Karl Benz in Germany, where as in Canada commercial end product did non be until after 1900 (White,2007, p. 5) many a(prenominal) Canadian automakers tried their luck but only some succeeded, as the railroad car merchandise in Canada was overtaken by the unite States in the early stages of its employment.It is very important to understand that the beginning of the motorcar industry is closely connected to that of the united States. more peck link the creation of the automobile industry in Canada with the American automaker Ford. The design of the American automakers is solely different from that of the Europeans and this was determine early in the history of the car production. The Germans and the french build quality and modern cars which could only be afforded by the rich, where as the Americans were faced by an economic dilemma therefore they build cars that the in the doma in eye(predicate) at large could afford, at a cheaper quality than the Europeans.As White states in the 1920s the industry hit its stride, expanding such that Canada became the second-largest producer of automobiles in the world. (2007, p. v) The automobile changed many aspects of the outlasts of Canadians. The car gave Canadians the leisure they didnt micturate before the 1920s. promptly they were able to travel recollective distances comfortably, to find jobs far away from legal residence as now it was easier to get to work. The automobile also allowed for the construction of the tricky surface roads. Norrie at al states that by the 1928, there were 8600 km of concrete or macadamized roads in the province (2008, pg. 89) As the number of cars per soul change magnitude so did the number of licensed vehicles in Canada. Norrie et al states that by 1923 the number of automobiles in Canada had risen to nearly 1. 2 million (2008, p. 288) troth posts were steadily rising with the rise in the number of devise cars in Canada. The opening of enormous plants throughout Canada in cities such as Windsor and Oshawa closely contributed to higher concern rates. In 1920 the average number of employees in the automobile manufacturing industry was 8,281 where as 6 years later it change magnitude to 11,905. The sun life assurance company, 1956, p. 3 table 1) Even to this solar day almost 90 years later, these cities be heavily depended on the employment by the automakers. The increase in employment contributed to an increase in the lifestyles of Canadians. also government revenues change magnitude with the expansion of the automobile industry. They had to find a way to maintain the roads therefore licensing and gas fees were introduced. The automakers did not only increase the lifestyle of the people in the southern provinces but they had a wide impact on the western provinces also.Agriculture was one of the many industrial sectors that benefited from the au tomakers. With cars world built it was now easier for the createers to sell their products in the securities industry. They now had a more(prenominal) than comfortable way to travel and this made their jobs easier. Also the introduction of the farm tractors was a big friend in the agriculture industry. The farm tractors increased crop quantities and livestock volume. The tractor was a great invention as it was more efficient and little time consuming. One of the electronegative impacts of the automobile industry in Canada is that of the regional economic imbalances between the provinces.With the manufacturing be heavily concentrated in Ontario, the some otherwise provinces of Canada do not get the same economic out endow as Ontario does. Ontario is considered by far the wealthiest province. The province generates almost 50 percent of Canadas gross domestic product which translates into a staggering 675 billion dollars. Many analysts describe Ontario as the powerho role of Canada and a serious contender in matrimony America as well as orbiculately (Ohmae, 73) The manufacturing plants argon situated in the southern province so they could be contiguous to their parent American companies. The export of the manufactured cars has also increased the GDP of the country.This also denominates that with the most jobs being in Ontario, Canadas population is heavily concentrated in Ontario as the province offers more employment opportunities. in the midst of the years of 1981 to 1995, Ontarios exports, primarily in the United States, almost quadrupled from $38 billion to $140 billion. Exports to the other provinces doubled but when we compare exports to the take a breath of the world in contrast to the symmetry of Canada the exports dropped from 28 per cent to less than 20 per cent (Courchene, 278). The above figures show that Ontario is exportation more to the rest of the world than the other provinces.When it comes to exporting to other countries, Ontari o exports more to the United States than any other country in the world. Ontario is better off economically because other important industries are placed in the provinces. Industries such as the telecommunication industry are also located in Ontario. Therefore with this being said, Ontario is mostly depended on the United States rather than on the other provinces. The auto industry expanded during the 1920s as already mentioned in this essay. A erect reason for this was the fact that Canadians themselves were buying cars, since they were a hot goodness during those years.The auto industry was always dominated by the United States and neer by the Canadians and this is why many people wonder if the auto industry in Canada is actually Canadian. The second economic boom for the auto makers were the years after the Second World War. After the war production increased as demand was able to meet supply. The industry moved into a period of growth and prosperity after the war. White stat es the number of passenger cars produced rose from almost none at the end of the war to 193, 000 in 1949. (2007, p. 71) However during the 1950s the European auto makers ook the upper hand as they had established good production technology. With this technology they were able to produce cheaper and small cars, therefore demand for the American auto market started going down. Anything that stirred the United States, affected Canada as we were their biggest car manufacture. If the American auto market was to go down, the Canadian economy would crash with them. To better the economic home and to help the auto industry at home and to save jobs and the live hood of many Canadians, Canada and the United States signed the auto pact in 1968.The Automotive Products Trade Agreement was not based on apologize trade but it did save remove tariffs on cars and automotive part between Canada and the United States. It made exports between the two countries cheaper, therefore by raising Canad ian exports into the United States. The auto pact helped twain countries in dealing with the economic situation at the time. Analysts say that Canada reaped the most benefits from the auto pact as the big 3 ford, general motors and Chrysler ensured that auto production remained and expanded in Canada.Employment increased in Canada during the years that the auto pact was still in power. Wallace states that the auto pact was phased out in 2001 as its provision were ruled to contravene WTO regulations by favouring particular corporations (2002, p. 114) The auto pact is also one of the best examples that shows the governments intervention in the market place. The auto pact shows that it was necessary for the government to intervene in helping the economy out and making sure that employment levels did not go down.The economy also expanded because of the spousal relationship American forgo Trade Agreement signed in 1994 between USA Canada and Mexico. The North American Free Trade Agree ment opened the doors to free trade between the 3 countries to ensure economic prosperity for North America. Considering that the United States is our biggest exporter and we export 80 % of our goods to our neighbours in the south, it was economically wise to make such an important step. The countrys GDP has steadily grown take a hop the implementation of the trade agreement.According to the organization for economic co-operation and development Canadas flagrant domestic product has steadily increased at a rate of 3. 42 percent annually. (OECD, 2010) Since Canada has joined the North American Free Trade Agreement and has eliminated tariffs on auto split used for manufacturing purposes in Canada, our automotive surplus and gross revenue have increased and so have the employment rates. According to Industry Canada employment growth has been highest in the auto parts manufacturing sector, as output rose to supply North American vehicle production.Also Canada is integrated in the Nor th American Market with annual sales of 20 million vehicles and has an overall automotive trade surplus of $ 4. 6 billion on flows totalling % 159. 1 billion. (Industry Canada, 2009). As we can see Canada has economically benefited from free trade with the United States, this however does not go without verbalize that throughout the years, the North American Free Trade agreement has intervened on our political matters and disputes between Canada and the United States have increased throughout the years.A good example of one of the biggest disputes would be that of the Softwood lumber. However, despite all the negative impacts of the North American Free Trade agreement we can broadly speaking say that Canada has greatly benefited from this agreement. The auto industry has gone through major changes since the auto pact in 1965 and the implementation of the North American Free Trade agreement in 1994. The American auto makers had a monetary downturn in 2009 and the big 3 was very cl ose to register for bankruptcy if the Canadian and American government would have not earnested them out.Many fault the American financial crisis for the financial flowdown of the automotive industry, where as others bill their profit driven practices. The automakers asked the government for loans and also went through restructuring plans and downsized their plants. They let go a lot of employees and shut down many plants across North America but not in Canada. They went through a routine of restructuring as it was necessary for their survival. The Bush government implemented a set of conditions for the automakers, if they were to receive loans from the United States government.These conditions were geared towards the employees as they would be the ones to suffer the most. The global financial meltdown crisis did not only affect the American automakers but also European and Asian automakers. It is generally cognize that the only way to get out of the recession is to use, but people cannot afford to spend in times of crisis. Many were laid off and had a hard time surviving the economy as they had no means of support. erstwhile again government intervention was necessary from the Canadians.Considering that the economy in the southern Canadian provinces would go down in ruins, if they American plants decided to show down, the Harper government announced that they would offer $3. 5 billion to the automakers. With the help from the Canadian and American government, the big 3 seem to have recuperated from the melt down as they want to rehire their employees in Canada. General Motors announced that they willing be rehiring people in Oshawa for the production of cars in 2011.Jones states that Fridays think announcement is in addition to another 600 workers GM said will be back at work to produce the Buick Regal. Approximately 1200 GM workers are now on lay off (2010, p. 1). Many were against the bail out of the American automakers from the Canadian governme nt as they said it would be a waste, where as others were concerned close to the live hood of thousands of Canadians. The above quote clearly shows that the Canadian government took the right economic finis to benefit its people in the future. As we can see the big American auto makers are recuperating from the financial meltdown.What they have to worry about now is competition from the Asian automakers, as they have been taking the select in the automotive industry since the 1980s. There has been a shift in the Canadian auto market from the Americans to the Japanese auto makers. The Americans still manufacture cars in Canada but the Japanese automakers seem to be dominating the automotive market in the recent years. The Japanese made vehicles are star(p) the automotive market because of various reasons. The first reason is attributed to the increase in oil prices in the begging of the 1980s.With oil prices going up, people could not afford American made cars anymore as they ar e known to spend a lot of gas, thus making them economically inefficient. That being one of the main reasons, people turned to Japanese made cars as they are smaller and have render efficient engines. White states that the portion out of the Canadian market supplied by Japanese imports jumped from 6. 6 percent in 1979, the lowest it had been in a decade, to 22. 9 percent in 1982. (2007, p. 89) As we can see the Japanese auto makers were taking big locomote in the automotive industry.The recession of the 1980s and the increase in oil prices is what mainly contributed for the turn of events in the favour of the Japanese auto makers. The Canadian government ready to protect the country from the recession of the 1980s put in place policies that required motor vehicle manufactures selling epoch-making numbers of vehicles in Canada to invest in Canadian production facilities. (White, 2007, p. 90). The Japanese auto makers resolveed to the call of the Canadian government and invested in creating auto plants in Canada.Once again the southern part of Canada profited from this as the plants were located around south central Ontario. The Japanese auto makers had other advantages that the American auto makers did not have at the time. The Japanese had a non unionized work burden which worked for lower wages and tougher conditions. More than half of the workforce was made up of young people therefore they did not ask for much other than to be able to support their families. With the share of the Japanese auto makers rising, the American automakers market started dropping rapidly.Another good reason for the Japanese to invest in Canada was the desire to gain free access to the American auto market through the creation of the FTA. Another very important reason why the Japanese cars have a high market share in Canada is because they are responding to the concerns of the general public and especially those of environmental issues. The Japanese auto makers pay attention to the new trends and the problems that face the public at large. They are very flexible and are able to respond to public concerns quickly. They have shown this by producing eco neighborly cars such as the Toyota pirus and the hybridisation camrys.Lately environmental concerns have become a major issue and these concerns are related to the use of cars as the toxins that they release pollute the air that we breathe. Most environmental wrongfulness is caused by driving, therefore big auto makers are asked to change their production practices and produce environmentally friendly cars. Japanese auto makers such as Toyota have answered this call and they have come out with the Toyota hybrid car. A good example of an environmentally friendly car that has swept the market is the Toyota prius that is gasoline electric hybrid.These types of cars use two types of energy sources, gasoline and electricity. The hybrid is a dream come true for the environmentalists as it is as lush as any ot her car out there and it does not pollute the environment. The automobile technology has changed and as we are shifting towards eco friendly cars the American auto makers are trying to keep up. GM off production on its Hummer H1 and ford cancelled production on its Excursion SUV (Automobile Industry Introduction, 2010) They are also trying to outperform the Japanese auto makers and move towards newer trends such as the plug in rechargeable cars. GM is working towards a gasoline- powered generator capable of charging up the batteries for those occasions when it is not convenient to plug in. (Automobile Industry Introduction, 2010) As we can see the auto industry has come a long way since the 1920s and it is moving towards newer better trends. It is my personal opinion that the tip auto makers will be those companies that are able to understand and respond to the publics needs and concerns.In conclusion to this essay it is important to tag that the automotive industry in has had an enormous economic impact in Canada and especially on the southern provinces. Created by the big American auto makers, the assembly plants in Canada have raised employment levels and have unploughed a steady lively hood for Canadians. They have also contributed to a change in Canadian industries such as the agriculture industry, by making farming easier and more efficient. The auto industry in Canada did however create a regional economic imbalance between the provinces in Canada.Ontario is the southern province that has enormously benefited from the auto industry as it is located closer to the parent companies. The location makes manufacturing and exporting of the auto parts easier for both countries. Trade agreements such as the auto pact and the North American Free Trade agreement implemented in 1994 between the United States, Mexico and Canada have also increased employment levels in Canada and maintained a steady economic balance by removing tariffs on importing and exporting g oods between the three countries.During the 1980s we saw a major shift from the American auto makers to the Japanese producers of cars. This shift was mainly due to increasing oil prices and the ability of the Japanese to provide more affordable and fuel efficient cars. The global economic meltdown also contributed to the downturn of the American auto makers. With the Americans not being able to meet consumer needs, the general public turned towards the Asian auto makers. The Japanese saw a great opportunity and benefited from this shift.They were able to respond to public concerns regarding eco friendly cars and put in place the production of hybrid cars. These cars have swept the general North American market as they seem to be the perfect solutions for people that cannot afford to spend a lot on fuel and also at the same time want to be environmentally friendly. The Canadian auto industry has had its ups and downs but in general it can be said that it has been a great contributio n to the Canadian economy by changing the lives of Canadians and by keeping a steady employment rate.