Presentation to:Society of Automotive Engineers

World CongressInternational Business Spotlight on Canada

March 5, 2003Cobo Hall

Detroit, Michigan

Automotive Parts Manufacturers’ Association

The Voice of the Automotive Original Equipment Suppliers

in Canada since 1952

Who are we?• Since 1952 APMA has been Canada’s national

association representing OEM producers of parts, equipment, tools, supplies and services for the worldwide automotive industry.

• APMA members and their subsidiaries collectively account for over 90% of the US $22 billion automotive parts industry production in Canada. (2001)

Mission StatementTo engage in activities that promote the interests of automotive original equipment suppliers in Canada

that enhance the economic welfare of our members and

be the Voice of the Canadian automotive original equipment suppliers

Objective• Create and execute global marketing

initiatives to develop international trade and business opportunities for APMA’s members by developing working relationships with industry counterparts to promote the exchange of market information and strategic alliances

Canadian Vehicle Production 1992 - 2002

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Total 14Total 14

Type of No. of Manufacturer Location Product Assembly Lines

Type of No. of Manufacturer Location Product Assembly Lines

List of Canadian Vehicle Assembly Plants from East to West

GM Oshawa, Ont. Truck & Auto 3Ford Oakville, Ont. Truck & Mini Van 2Honda Alliston, Ont. Auto, Mini Van & SUV 2DaimlerChrysler Brampton, Ont. Auto 1Toyota Cambridge, Ont. Auto & SUV 2CAMI (Suzuki/GM) Ingersoll, Ont. Auto & SUV 1Ford St. Thomas, Ont. Auto 1DaimlerChrysler Windsor, Ont. Van & Mini Van 2

Canadian Assembly Plants Locations

Oshawa

OakvilleBrampton

AllistonCambridge

Windsor St. Thomas

Ingersoll

Takanori (Tak) Sakaue, past PresidentToyota Motor Manufacturing Canada Inc.

“Our records for safety and productivity place the TMMCteam among the industry’s best. And when it comes to quality, vehicles built at our Cambridge facility are amongthe highest rated vehicles in North America.”

Hours per Vehicle

U.S.

Canada

19.8

29.8

21.0

23.1

31.9

22.4

24.4

33.2

Toyota Corolla

DaimlerChrysler minivans

GM full-sizepickups

Windsor

St. Louis

Oshawa

Fort Wayne

Pontiac East

Flint

NUMMI

Cambridge

HarbourHarbour ReportReport

20022002

Canada = Overall Superior Manufacturing Efficiency

…in an environment of exceptional quality performance.

With 16% of total North American assembly, Canada’s plants have won 33% (12 out of 36) of the awards given by the independent J.D. Power & Associates.

Toyota Cambridge

• Gold - 1991, 1995, 1996, 2001

• Silver - 1992

• Bronze - 1993, 2000

General Motors (Car) Oshawa• Gold - 2002General Motors (Truck) Oshawa• Bronze - 1999

Honda Canada Alliston• Silver - 1996

Ford plant St.Thomas• Gold - 1998• Silver - 1994

Canada’s quality of output is also top rated.

2001 J.D. Power Quality Survey

Canadian Automotive Parts Shipments1991 – 2001

(in US $)

8

10

12

14

16

18

20

22

24

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

$ billion

“ Canadian Auto Parts Share of North American Production has grown from 11% in 1991 to 17 % in 2001”

Carlos GomasBank of Nova Scotia

Sales by APMA Members(as of 2003; $US)

Annual Sale of Automotive Products

$0-7 million

$7-14 million

$14-34 million

$34-67 million

$67-167 million

$167-334 million

$334-670 million

$670 million +

Number of Members

67

16

20

16

14

12

1

3

Automotive Tier One OE Supplier Qualities

1) full service engineering support

2) product development

3) global capabilities

4) modular and systems sourcing

5) warranty assumption

6) tough target costing

7) continuous improvements everywhere

8) lean manufacturing capability

• Increased globalization and competition are forcing new realities:- Cost reductions- Tiering- Downloading/outsourcing responsibility for design, sub-assembly- Consolidation- Globalization of vehicle platforms- Modularization of parts systems- Standardization of components- Strategic alliances

But the assemblers continue to restructure, and this brings new opportunities for global players…

In addition to the business opportunities, one mightstill ask, “Why Consider Canada?”

• Canada’s cost advantages of doing business:

- 15% lower overall costs compared to USA (KPMG Study)

- lower corporate taxes

- higher productivity, quality

- full access to North American markets

- business climate: tax regime, innovation policy, programs

Very important is government support for development of Canada’s intellectual capability…

• Canada’s approach to technology:

- becoming global “Intellectual Centre for automotive Research, Design, Development and Testing”

- US $700 million in auto-related R&D investment over last few years

Canada offers real advantages for automotive R&D..

Quebec

Ontario

Source: Conference Board of Canada, 1999

After-tax cost of $1 R&D expenditure

Illinois

Ohio

Michigan

0.40 0.45 0.50 0.55 0.60

N. Carolina

Relative Competitiveness ofR&D Tax System

Additional government support through programs and research organizations.

Automotive education and training infrastructure that includes technical colleges, trade schools and universities.

Canada offers the most favorable tax treatment for R&D among the G-7:

- Combined federal/provincial tax credits reduce the after-tax cost of $100 of R&D expenditures to as low as $44.

-co-operative links to national labs, universities, colleges

-New last week- Ontario government will allocate US $ 330 million to automotive R & D

Government support for development of Canada’s intellectual capability cont’d...

Gerry Fedchun

gfedchun@apma.ca

(416) 620-4220 ext. 228

www.apma.ca

The Voice of the Automotive Original Equipment Suppliers

in Canada