Can Ford Stay Steady in Canada?
Will the high Canadian dollar keep Ford Motor Co. (NYSE:F) from preserving its Canadian factory footprint? The answer: not if Ford has anything to say about it. Despite rising factory costs that are reflective of the high Canadian dollar, Dianne Craig, chief executive officer of Ford Canada, declared at the Bloomberg Canada Economic Summit that the automaker is expecting to maintain its manufacturing profile in the nation.
Automotive News reports that Ford’s workers in Canada receive the highest wages and benefits. However, despite Ford being Canada’s top-selling automaker, it now only has one assembly plant there that currently makes the currently makes the Ford Edge and Flex and Lincoln MKX and MKT. It used to have a plant in St. Thomas, Ontario that made the Ford Crown Ontario and Lincoln Town Car sedans, but it was closed in 2011.
Canada’s currency trades at parity with the U.S. dollar, driving General Motors Co. (NYSE:GM) to reconsider its production in the country. It is putting a stop to output at its plant in Oshawa, Ontario and instead refocusing its efforts on Lansing, Mich., where it will make the next-generation Camaro sports car.
Despite GM’s desire to get out, Ford promises it is going to stay in, and at least maintain the footprint it has today.While the automaker may be working on an investment plan for its Oakville plant, no announcement has yet been released.
Inspection of investment trends also shows that automotive companies are leery of investing in Canada. Of the $43 billion invested in North America from 2010 to 2012, only 5 percent of it was devoted to Canada. Is this warranted? Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc., doesn’t seem to think so. According to Automotive News, he expressed concern over the disconnect between considerable Canadian auto sales and its pitiful share of global auto investment.
He complains that a significant portion of the investment is only going to Mexico and the U.S. South, despite Canadian sales being on the climb for a third consecutive year.