20 | SHOP REPORT
Jonathon Azzopardi, chair of
the Canadian Association of Mold
Makers (CAMM) and president
of compression mould maker
Laval International, sees direct
competition from Mexico and the
low-cost “right-to-work” states in
the US south as a huge challenge
for the sector in Canada. Mexico
and the southern states have
recently seen an upsurge in new
auto sector investment, which
comes at the expense of high cost
jurisdictions like Ontario.
The province still boasts an
unprecedented concentration of
automotive sector work. Ontario
hosts five auto OEMs–Ford,
Fiat Chrysler, GM, Toyota and
Honda–more than any other
province or any US state. It
also hosts more than 700 parts
suppliers and more than 500
tool, die and mould makers in
what some have called “North
America’s Other Silicon Valley.”
It’s an infrastructure that is the
The North American auto industry has become a political football following
US President Donald Trump’s declaration that he would slap a 35 per
cent tariff on Mexican-produced cars entering the US as a way of forcing
automakers who have offshored their plants there to relocate in the US. And
his promise to renegotiate the “failed” NAFTA trade agreement between
Canada, the US and Mexico has created uncertainty in economic relations
between the three countries.
But the sheer efficiency of the auto industry, and its tight integration
between the three countries, may be one of the most effective guarantees
that no head of state can shake things up as much as they’d like. That,
at least, is the view of Dennis DesRosiers, president of DesRosiers
Trump’s promises shouldn’t worry people too much, DesRosiers says.
As he points out, the integration of the North American auto sector got
underway in 1965 when Canada and the United States signed the Auto
Pact. That integration became closer in 1989 with the signing of the Free
Trade Agreement, and even closer in 1994 when Mexico was admitted
“We have over 50 years of a 100 per cent integrated auto industry in
North America,” DesRosiers says. “The US president simply isn’t powerful
enough to undo that. He can’t de-bundle it. The genie is out of the bottle.
And he’d be foolish to do it. I think he knows it would be a job killer.”
Even if US President Trump does follow through on his promise to
renegotiate NAFTA, as far as DesRosiers is concerned the auto sector will
probably be left alone. “The auto terms have been fair to all three countries.
It’s unlikely that he could touch those. If he did he’d be doing himself more
harm than good, and I think he knows that.”
How likely is Trump to introduce his massive tariff on Mexico? “I don’t
think he can do it. Remember there are four million vehicles made in
Mexico now, and more than three million of those sell into the US. Trump
may not like that, but it’s why vehicles have been so affordable in the
US,” DesRosiers says.
“We have this integrated industry that operates very efficiently–possibly
the most efficient industry in the world. To put any sort of border restrictions
on that would kill that efficiency and drive vehicle prices up, who knows,
maybe 10, 20, 30 per cent. Which would kill the market–and kill US jobs.”
Jonathon Azzopardi agrees that a tariff of that scale would create
stagnation or worse in the tightly integrated North American auto sector.
Azzopardi is president of Laval International, an Ontario based compression
mould maker. He’s also chairman of the Canadian Association of Mold
Makers (CAMM) and serves on the board of the Automotive Parts
Manufacturers Association (APMA).
Azzopardi uses Laval as an illustration of North American integration.
“Half of our sales today are exported to Mexico,” he says. “As Mexico has
grown, we’ve doubled the size of our company, and the Mexican industry
was growing as it was exporting to the United States. So even a 20 per
cent tariff on Mexican companies exporting to the US will actually hurt
Canadian companies like ours, who are exporting into Mexico. And I don’t
Even if US President
Trump follows through
on his promise to
renegotiate NAFTA, the
auto sector will probably
be left alone.