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Latest News from the CVMASPEECH Remarks to the Federal Auto Caucus by Alain Batty, President and CEO Ford Motor Company of Canada, Limited.
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We are all proud to work in our industry because as you know, the automotive industry today represents 11 percent of Canada's manufacturing Gross Domestic Product, and employs one in seven Canadians, directly or indirectly. Automotive products are Canada's Number One export, with over $89 billion-worth exported last year. Canada is the seventh-largest vehicle-producing nation in the world and collectively the companies in this room have invested more than $20 billion in capital investments in Canada since 1990. And that doesn't include the network of more than 500 parts suppliers in this country.
The automotive industry is responsible for providing generations of Canadians with one of the highest standards of living in the world. That's an incredible legacy that we are a part of, and one of which I am very, very proud. After all, not many companies or industries make it this far, and that gives us an excellent opportunity to look back on what we've learned in the last 100 years, and to look ahead to how we'll continue to build on our past successes, because we want more success for our companies and for Canada. We certainly want to celebrate our history and our rich heritage, and we want to acknowledge our milestones and take pride in our accomplishments. But rather than dwell on them, we intend to use them as a solid foundation to move forward into our future. To do so, we need to ensure that the Canadian automotive industry has the tools needed to survive and compete in a new global reality framed with intense competition for future investment and a worldwide production over-capacity averaging about 22 million units a year – the equivalent output of more than 80 assembly plants. In North America alone, the overcapacity is about 3.5 million cars and trucks, or 14 excess production plants. So, the automotive industry faces some serious challenges.
From the consumer perspective, the benefits of the intense competition in our industry are enormous – Canadian consumers have access to the broadest range of vehicles in history, built to the most stringent emissions standards in the world, including the world's most comprehensive safety standards…and all at some of the developed world's lowest vehicle prices.
Our industry has grown and prospered because we are competitive on a global basis, and to maintain the benefits for Canadians, it is imperative that Canada adopt a pro-active and aggressive regulatory policy that allows for the sale of common products in both the Canadian and US markets. Through the Canadian Automotive Partnership Council, or CAPC, and with your help, we need to accelerate progress toward harmonizing product safety, emissions and fuel standards across the border. This is where we need your help.
For many years now, the companies in this room have been working actively with Transport Canada to ensure that Canadians have access to the latest advances in safety standards and equipment, and in many cases, Canada has raised the chinning bar on vehicle safety improvements.
But for the last few years, we have been unable to convince Transport Canada to continue this trend by adopting the new US occupant protection standards known as FMVSS 208. This new standard contains important advances in occupant protection, particularly for females, small children and small-stature adults.
The new US standard was developed by its National Highway Traffic and Safety Administration (NHTSA) – after an extensive review of medical, scientific and accident data. The new rule provides important improvements for occupant protection, but Transport Canada insists on a different standard, although it has not come forward with Canadian field data to support this.
Unnecessarily unique Canadian standards will result in many vehicles being delayed or withheld entirely from the Canadian market – particularly low-volume models such as alternative fuel vehicles. Your help is needed in our continuing efforts to encourage Transport Canada toward a reasonable resolution of this important issue.
In much the same way, we need to maintain a commonized approach to the emerging fuel economy standards across North America.
Fuel efficiency improvements have been made with respect to gasoline engines throughout the 100-year history of the automotive industry in Canada. The North American auto industry will continue to improve the fuel efficiency of vehicles going forward. But, improvements need to happen in a rational and coordinated manner, not forced by arbitrary timelines and targets. It is important for the continued health of the Canadian auto industry (and to Canadian consumers) that our fuel efficiency targets remain harmonized with those in the US, and in step with the wants and needs of consumers. The harmonized system has worked extremely well, and has benefited all Canadian consumers.
Recently, the US announced the single largest light-duty truck fuel efficiency improvement in 20 years, after balancing the important considerations of vehicle safety, technological feasibility, economic impact and fuel economy. The new light-truck fuel economy improvement set at – 1.5 miles per gallon for the 2005-2007 model years, represents about a 7% fuel economy gain. Attention will now turn to setting similar fuel economy improvements across other segments, particularly for cars.
While we are all racing to develop advanced technology for our vehicles, it is important to understand that the biggest near-term impact will come from the turnover of today's on-road vehicle fleet. It is important that we understand that hydrogen technologies that offer great promise with respect to greenhouse gas emissions will not be available until well beyond 2010. Instead of continually focusing on and arguing over artificial targets and timelines, we need to work together to understand the changes that are coming and ensure that Canadians will continue to have access to the broadest range of vehicles at the lowest possible prices. What can government do? You can help accelerate the development and acceptance of alternative fuel and advanced technology vehicles by joining industry in real-world demonstration programs. You can also help by implementing a short-term tax incentive to advance consumer reception for these technologies, and the required support infrastructure, that typically bring with them a price premium of at least $5000 over a more conventional vehicle.
And while we're on the topic of supporting infrastructure – even the advanced vehicle technologies that we have brought to market and have on the road today need clean fuels to function properly, and allow consumers to reap the benefits of the maximum emissions reductions possible. While we have done our part with significant advances in vehicle emissions control technologies, gasoline quality in Canada has not improved at the same pace. Worse, Canadian consumers today do not even have access to consistent quality of fuel across Canada.
Fuel quality is an industry-wide concern, not limited to just one or two manufacturers. Manganese-based fuel additives are a serious and growing concern for the Canadian auto industry, particularly as we introduce new, advanced emissions control technology like close-coupled catalytic converters to meet the more stringent Tier 2 standards.
A recently completed auto industry study showed that vehicles that run on gasoline with manganese-based additives have higher emissions. Field experience is beginning to show clogging of the catalytic converters, a serious customer concern, and one that should concern government as well. It’s time Canada developed a national clean fuel standard, compatible with the Worldwide Fuel Charter, to ensure that Canadian consumers across the country have access to a consistent quality of fuel that will allow their vehicles to operate efficiently and effectively.
We must together do everything we can to keep our industry vibrant in Canada.
The auto industry has helped shape our way of life, and despite pessimistic predictions, it is still healthier today than at its inception. The automobile represents Freedom, and freedom is a universal value, one of the most treasured values of human kind.
If we want to leave a legacy to future generations, we need to address the challenges facing our industry today in our country, because the world has changed. Businesses, government and labour must work together on a comprehensive national industrial strategy to attract as well as retain investment, innovation, production and jobs in Canada. And this is why CAPC was created.
And, logically, in my view, we should take great care of future generations, and begin by preserving what we have, because it took the last 100 years to build it. We now have an automotive industry that creates real jobs and this allows us to bring in new investments, foster innovation, and attract new production to Canada.
All of us in this room must compete on a daily basis, so we must put plans in place that emphasize long-term strength and stability in our business, and help smooth out the peaks and valleys of a cyclical marketplace… and your ongoing support has been invaluable in building this industry.
That’s why I feel confident about the Canadian auto industry based on its past, and its strong prospects for the future. The industry has been through both good and bad times, it has weathered storms that would, and have destroyed many other businesses. It has proven time and again that it has the "right stuff" to be successful now and as we move farther into the 21st century.
I started off quoting our founder, Henry Ford, and I can't think of a better way to close my remarks. Henry Ford also said: "Coming together is a beginning; Keeping together is progress; Working together is success."
It is working together that will ensure Canada and its auto industry is as strong and healthy in our second hundred years as we have been in our first century. Please enjoy the evening and feel free to discuss these issues with the industry representatives at your table.
Thank you for your time and your support.
Contacts:
Mark Nantais
President
Canadian Vehicle Manufacturers' Association
416.364.9333
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