Educating Donald: The Integrated North American Automotive Industry John Holmes Queen s University holmesj@queensu.ca Brendan Sweeney McMaster University bsween@mcmaster.ca APRC Research Workshop, Kingbridge Centre, Toronto March 16, 2017
Work-in-Progress 1. Origins Trump s intention to renegotiate or withdraw from NAFTA Trump s woeful lack of understanding of the integrated nature of the North American auto industry 2. Aim data-rich analysis to benchmark current patterns of auto production and trade within NAFTA assess potential impacts on Canada of possible changes to NAFTA 3. Data Trade data Industry Canada s Strategis Online Trade Database Detailed Vehicle Production and Sales Data
Levels of Analysis Canada s Auto Trade with All Countries Canada s Auto Trade within NAFTA Ontario and Québec Auto Trade with Regions within North America Ontario and Québec Auto Trade within the Great Lakes Region
Main Points NAFTA Auto Trade reflects high levels of specialization and intra-industry trade Still essentially a hub and spoke arrangement: Canada US Mexico Within NAFTA, Canada runs positive but small auto trade balance (5% of total trade) ON/QC highly integrated within Great Lakes Region 70% of parts exports; 56% of parts imports 3 core red states: MI, OH, IN!
Canada s Overall Automotive Trade
millions current $CAN Canada Automotive Trade Balances with All Countries: 1992-2016 50,000 40,000 30,000 20,000 10,000 0-10,000-20,000-30,000 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Vehicle Trade Balance Parts Trade Balance Overall Balance Source: Industry Canada: Strategis Online Trade Data
Percentage Shares (by value), Total Vehicle Trade, Canada: 2016 VEHICLE EXPORTS: $62.87 billion Mexico 1% Rest of World 2% Rest of World 17% VEHICLE IMPORTS: $47.64 billion United States 97% Mexico 12% United States 71% Source: Industry Canada, Strategis Online Trade Database
Percentage Shares (by value), Total Automotive Parts Trade, Canada: 2016 PARTS EXPORTS: $21.1 billion Mexico 6% Rest of World 4% PARTS IMPORTS: $47.8 billion Rest of World 22% United States 90% Mexico 13% United States 65% Source: Industry Canada, Strategis Online Trade Database
Automotive Trade within NAFTA
Millions C$ (current) Canada Automotive Trade Balances Within NAFTA: 1992-2016 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00-5,000.00-10,000.00-15,000.00 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 United States Mexico NAFTA Source: Industry Canada, Strategis Online Trade Data
Canada Automotive Trade Balances with U.S. 1992-2016 millions current $CAN 50,000 40,000 30,000 20,000 10,000 0-10,000-20,000-30,000 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Trade Balance Vehicles Trade Balance Parts Overall Trade Balance with US Source: Industry Canada, Strategis Online Trade Data
millions current $CAN Canada Automotive Trade Balances With Mexico: 1992-2016 0 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016-2,000-4,000-6,000-8,000-10,000-12,000 Trade Balance Vehicles Trade Balance Parts Overall Balance Source: Industry Canada, Strategis Online Trade Data
NAFTA Vehicle Production and Trade Flows: 2016 (Units) CANADA 2,357,846 UNITED STATES MEXICO 3,457,204 11,930,041 Source: AMIA; USITC; Industry Canada a estimate
NAFTA Vehicle Production and Sales: FCA 2016 FCA NAFTA Production 2016 NAFTA Sales 2016 Model Volume Canada U.S. Mexico Canada U.S. Mexico Chrysler 300 64,152 100% 6% 93% 0% Dodge Challenger 59,922 100% 5% 94% 1% Dodge Charger 109,262 100% 4% 95% 1% Chrysler Pacifica 90,592 100% 4% 96% 0% Dodge Grand Caravan 202,703 100% 29% 79% 0% Dodge Dart 51,306 100% 3% 97% 0% Jeep Patriot 129,999 100% 4% 94% 1% Jeep Compass 109,786 100% 7% 91% 2% Dodge Durango 79,961 100% 4% 95% 1% Jeep Grand Cherokee 269,455 100% 8% 91% 1% Jeep Cherokee 244,968 100% 14% 86% 1% Chrysler 200 77,828 100% 11% 89% 0% Jeep Wrangler 244,947 100% 9% 90% 1% Ram Pickup 613,801 54% 46% 15% 83% 2% Dodge Journey 109,544 100% 13% 81% 6% Models with volumes > 50,000 Source: Automotive News Database
NAFTA Vehicle Production and Sales: Ford 2016 Ford NAFTA Production 2016 NAFTA Sales 2016 Model Volume Canada U.S. Mexico Canada U.S. Mexico Ford Edge 191,998 100% 13% 86% 1% Ford Taurus 59,125 100% 5% 86% 9% Ford Explorer 323,300 100% 6% 93% 1% Ford F-Series 990,510 100% 15% 84% 1% Ford Mustang 142,382 100% 7% 91% 3% Ford Transit 152,886 100% 7% 91% 2% Ford Expedition 75,814 100% 6% 93% 1% Ford Escape 346,657 100% 13% 85% 2% Ford Focus 162,426 100% 9% 89% 2% Ford E-Series 55,275 100% 0% 100% 0% Ford Fusion 287,023 3% 97% 5% 94% 1% Ford Fiesta 69,082 100% 5% 72% 23% Models with volumes > 50,000 Source: Automotive News Database
NAFTA Vehicle Production and Sales: General Motors 2016 GM NAFTA Production 2016 NAFTA Sales 2016 Model Volume Canada U.S. Mexico Canada U.S. Mexico Chevrolet Equinox 278,393 100% 7% 88% 5% GMC Terrain 116,556 100% 11% 87% 2% Chevrolet Impala 82,521 47% 53% 3% 97% 0% Chevrolet Suburban 67,999 100% 3% 91% 5% Chevrolet Tahoe 124,979 100% 3% 96% 2% GMC Yukon 61,242 100% 5% 93% 2% Chevrolet Malibu 207,331 100% 5% 94% 1% Buick Enclave 64,175 100% 6% 92% 1% Chevrolet Traverse 133,560 100% 4% 95% 1% GMC Acadia 156,227 100% 4% 94% 2% Chevrolet Camaro 99,640 100% 3% 94% 3% Cadillac XT5 53071 100% 7% 92% 1% Chevrolet Colorado 120843 100% 6% 93% 1% Chevrolet Express 86801 100% 6% 94% 0% Chevrolet Silverado 656,688 60% 40% 7% 91% 2% GMC Sierra 277,368 52% 48% 19% 81% 0% Chevrolet Cruze 416,339 85% 15% 12% 86% 2% Chevrolet Sonic 98,344 52% 48% 4% 51% 45% Chevrolet Aveo 76,674 100% 0% 0% 100% Chevrolet Trax 109,793 100% 8% 69% 23% Models with volumes > 50,000 Source: Automotive News Database
NAFTA Vehicle Production and Sales: Honda and Toyota 2016 Honda NAFTA Production 2016 NAFTA Sales 2016 Model Volume Canada U.S. Mexico Canada U.S. Mexico Honda Civic 460,115 45% 55% 15% 83% 3% Honda CR-V 436,823 48% 38% 14% 11% 85% 5% Acura RDX 68,474 100% 13% 86% 1% Acura MDX 64,759 100% 9% 90% 1% Honda Odyssey 131,498 100% 9% 89% 2% Honda Pilot 140,898 100% 6% 92% 2% Honda Accord 383,334 100% 4% 95% 1% Honda HR-V 171,980 100% 11% 73% 16% Toyota Lexus RX350 105,892 100% 7% 93% 0% Toyota RAV4 250,347 100% 18% 78% 4% Toyota Corolla 419,578 57% 43% 11% 86% 3% Toyota Camry 402,247 100% 4% 95% 1% Toyota Highlander 222,561 100% 6% 92% 2% Toyota Sienna 151,905 100% 9% 87% 4% Toyota Tundra 133,769 100% 9% 91% 0% Toyota Tacoma 225,037 57% 43% 6% 92% 2% Models with volumes > 50,000 Source: Automotive News Database
NAFTA Automotive Parts Trade Flows: 2016 ($US Billions) CANADA UNITED STATES MEXICO Source: AMIA; USITC; Industry Canada
Ontario-Québec Integration within the Great Lakes Region
Automotive Production Regions QC WI MI ON NY IL IN OH PA MO KY TN NC SC MS AL GA MEXICO TX LA South U.S. U.S. Mid-South Great Lakes
Percentage Shares, NAFTA Automotive Parts Exports from ON/QC: 1992 and 2016 South U.S. 5% U.S. Mid- South 10% Other U.S. 12% Mexico 2% Great Lakes 71% Parts Exports 1992 South U.S. 8% U.S. Mid- South 10% Other U.S. 6% Mexico 6% Great Lakes 70% Parts Exports 2016 Source: Industry Canada: Strategis Online Trade Data
Percentage Shares, NAFTA Automotive Parts Imports to ON/QC: 1992 and 2016 South U.S. 5% Other U.S. 6% Mexico 6% Other U.S. 6% Mexico 17% US Mid- South 4% Great Lakes 79% Parts Imports 1992 South U.S. 9% US Mid- South 12% Great Lakes 56% Parts Imports 2016 Source: Industry Canada: Strategis Online Trade Data
Percentage Shares of Auto Parts Exports from ON/QC to Great Lakes Region: 2016 ILLINOIS 6% WISCONSIN 1% NEW YORK 2% PENNSYLVANIA 2% INDIANA 12% OHIO 16% MICHIGAN 61% Source: Industry Canada: Strategis Online Trade Data 70% of NAFTA Total
Percentage Shares of Auto Parts Imports to ON/QC from Great Lakes Region: 2016 ILLINOIS 8% WISCONSIN 2% NEW YORK 3% PENNSYLVANIA 4% INDIANA 17% OHIO 25% MICHIGAN 41% Source: Industry Canada: Strategis Online Trade Data 56% of NAFTA Total
Whither NAFTA under Trump?? NAFTA allowed OEMs and suppliers to optimize regional production networks by locating different operations in best cost locations current NAFTA Auto Trade reflects high levels of integration, specialization, and intra-industry trade keeps the North American auto industry globally competitive significant changes to the tariff structure would result in consequences for OEMs, suppliers and consumers more on this in tomorrow s session!