06/19/2015 04:25 EDT | Updated 06/19/2016 05:59 EDT

Magna CEO Don Walker urges steps to keep auto assembly in Canada

Magna CEO Don Walker says Canada should make it a priority to set policies that will keep auto assembly and the spinoff jobs connected with it in the country.

The autoparts maker operates in low-cost jurisdictions such as Mexico, but Walker says he believes Canada can remain competitive.

"I think it should be a high priority for Canada to keep the auto assemblers here and keep them growing and if we can attract new ones that's great as well," he said in interview with The Exchange with Amanda Lang.

"But I think there's a good chance we can keep the people that are here if we have the right policies and if we make sure we are competitive with energy prices and make sure that anything else we are going is not going to put an added burden to companies that make them say 'well I'd be better off somewhere else,' because it's a  global industry."

Labour costs, free trade

Free trade with Europe is an important priority to keep the auto sector healthy, he said, in part because the U.S. is behind Canada in negotiating a deal.

Walker said labour costs in Canada aren't the biggest hurdle.

"I don't think we have to give up the shop floor because the assembly plant, there's a lot of labour there but it's probably only 8 to 10 per cent of the total cost of the car. So a much bigger part of their cost comes from parts makers, companies like Magna... and they can shop that around the world," he said.

The auto sector continues to grow and auto assemblers are healthy five years after the financial crisis, he said.

But the real key is continuous innovation here to boost productivity, Walker said.

"My philosophy is if you can't improve your efficiency and productivity by a minimum of three per cent a year then you might as well get out of the business," he said.

Magna has an estimated 47 autoparts plants in Canada and plans to invest further, about $250 million a year, he said. That means more jobs here, but not more plants, he added.

Instead the bulk of Magna's investment will be in markets like Mexico, China and eastern Europe. Walker anticipates the world will be building 100 million cars a year by the end of the decade.

"We're going to be launching $5 billion US dollars of additional work between 2015 and 2017 and the only reason we get that work is because we are competitive," he said.