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Canada The Global Loser In Auto Industry Game: Report

Auto Industry Booming Everywhere .. Except Canada
The General Motors Co. (GM) assembly plant stands in this photo taken with a tilt-shift lens in Oshawa, Ontario, Canada, on Monday, Aug. 8, 2011. General Motors of Canada Ltd. will pump $2.535-billion into a trust fund that will finance health-care costs for its retirees, eliminating a key legacy cost that the auto maker said hobbled it in the fiercely competitive North American auto market, according to The Globe and Mail. Photographer: Brent Lewin/Bloomberg via Getty Images
Bloomberg via Getty Images
The General Motors Co. (GM) assembly plant stands in this photo taken with a tilt-shift lens in Oshawa, Ontario, Canada, on Monday, Aug. 8, 2011. General Motors of Canada Ltd. will pump $2.535-billion into a trust fund that will finance health-care costs for its retirees, eliminating a key legacy cost that the auto maker said hobbled it in the fiercely competitive North American auto market, according to The Globe and Mail. Photographer: Brent Lewin/Bloomberg via Getty Images

The world experienced a significant boom in auto industry investment in 2014, but Canada saw virtually none of it, according to a new report from the University of Windsor’s Odette School of Business.

Auto firms announced $24.1 billion worth of new investments in 2014, a 36.9-per-cent jump over the year before, said the report prepared by the business school’s Office of Automotive and Vehicle Research (OAVR). But Canada saw only $118 million, or 0.2 per cent, of that investment.

The U.S., by comparison, saw investments of $4.2 billion, or 17.3 per cent of the total. Mexico more than doubled the U.S. number, at $9.3 billion, the Globe and Mail reports.

The hands-down winner is China, with $12.7 billion in auto investment. CBC reports China has seen 60 per cent of the world’s auto investment in the past four years.

“Clearly Canada is getting beat by far more aggressive competitors south of the border,” Pete Mateja, co-director of the OAVR, said in an interview last month with Yahoo! News.

“We’ve got a highly-educated work force and good work ethic but the cost of doing business, it’s expensive here, and when you throw in some of the other related costs that go with running a facility it really does add up.”

Economists say the loonie’s decline over the past year will help exporters, including automakers, but so far there is little evidence this has begun to happen.

A closely-watched measure of Canadian manufacturing, RBC’s Purchasing Managers’ Index (PMI), contracted for the second month in a row in March, the bank said Wednesday. The weakening loonie is increasing manufacturers' costs at a "robust" pace, RBC said, thanks to higher prices for imported raw materials.

"Canada's manufacturing sector continues to face headwinds," RBC chief economist Craig Wright said in a statement.

He said he still expects to see the uptick in exports from a strengthening U.S. economy and weakening loonie, but “we need some time to see this materialize.”

There may not be enough time for some parts of Canada’s auto industry. One of two General Motors plants in Oshawa, Ont., is slated for closure next year, and a recent study prepared by labour union Unifor estimated that shutting down both plants would lead to the loss of 33,000 jobs in Ontario within two years. It would also reduce government revenues by $1 billion and reduce Canada's GDP by $5 billion. the report estimated.

Meanwhile, North American auto production is expected to reach a record high in 2016, the OAVR report predicts, with the southern U.S. and Mexico taking most of the new vehicle assembly work.

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