OTTAWA, June 18 /CNW Telbec/ - Canada's auto parts makers will implement
major structural changes in 2009, which includes trimming its workforce by
one-third as part of a 34 per cent reduction in industry costs this year,
according to the Conference Board's Canadian Industrial Outlook: Canada's
Motor Vehicle Parts Manufacturing Industry - Spring 2009.
"Conditions will be undeniably difficult in 2009, and many small and
medium-sized firms could potentially go out of business," said Sabrina
Browarski, Economist, and author of the outlook. "The larger manufacturers,
however, stand to increase their global market share when U.S. demand for
automobiles starts to recover in 2010."
Canada's auto parts makers will lose money for the second consecutive
year in 2009, but the industry is expected to return to profitability
beginning next year. The industry posted a $109 million loss in 2008. With
production expected to fall by 39 per cent in 2009, a further loss of $173
million is forecast this year.
Extensive cost-cutting, combined with the start of an anticipated rebound
in U.S. auto sales next year, will allow the industry to return to
profitability quickly. A profit of $222 million is forecast in 2010. By 2013,
profit margins are expected to return to historical norms.
Three factors give auto parts manufacturers greater cause for optimism
than automakers. First, many of Canada's largest parts manufacturers are
multinational corporations with diversified sales in other markets. Second,
parts firms are in better financial shape than the auto makers. Third, the
industry is not saddled with the "legacy costs" that the Detroit Three
automakers must bear.
The medium-term outlook for the industry is based on the assumption that
General Motors will successfully exit Chapter 11 restructuring, and that
Chrysler will be restructured under a stable partnership with Fiat.
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