Auto parts profits expected to plummet in 2007



    OTTAWA, Nov. 7 /CNW Telbec/ - Profits in Canada's auto parts
manufacturing industry are expected to decline by nearly 41 per cent to
slightly more than $1 billion in 2007, due to a weak performance early in the
year, according to the Conference Board's Canadian Industrial Outlook:
Canada's Motor Vehicle Parts Manufacturing Industry - Autumn 2007.
    "The combination of increased competition from foreign producers, reduced
production and price cuts will lower profits this year," said Louis Thériault,
Director, Canadian Industrial Outlook Service.
    "Major risks remain, but the industry is still in a good position for a
slow pick-up. Canadian auto parts manufacturers are adapting to changes in
supply chains by diversifying their customer base and reducing their
dependence on the Big Three. Coupled with a turnaround in both prices and
production, profits are expected to gradually improve beginning next year."
    Profits are forecast to reach $1.2 billion by 2011, although this figure
is still well below the industry's peak reached in 2000.
    In line with lower sales forecasts for the Big Three, auto parts
production is expected to fall by 4.5 per cent in 2007. Total job losses among
parts manufacturers are forecast to exceed 11,000 in 2007, almost 10 per cent
of the industry's workforce. Furthermore, about 2,000 jobs are expected to
disappear in the last quarter of 2007 and the first quarter of 2008.
    However, the opening of Honda's engine plant in Alliston in 2008 and the
development of new international markets will raise production by an average
of 1.8 per cent for the next four years, and employment levels will stabilize
at around 108,000 workers during this period.

    This is the first release of the Conference Board's new Canadian
Industrial Outlook: Canada's Motor Vehicle Parts Manufacturing Industry,
published twice a year. This industry was previously covered in the Board's
broader Canada's Auto and Auto Parts Industry report.




For further information:

For further information: Yvonne Squires, Media Relations, (613)
526-3090, ext. 221, corpcomm@conferenceboard.ca


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