Canadian Auto Production Hit Hard By High Loonie
It's becoming harder for car companies to justify their current Canadian production strategies. The increasing strength of the dollar over the past 10 years has put companies like General Motors and Chrysler in a difficult position when it comes to evaluating the future of plants located in Southern Ontario, which is one of the largest vehicle building regions in North America.
With an increase of close to 40 percent in the value of the Canadian dollar versus the U.S. dollar in the past decade, the exchange rate advantage that was once enjoyed by American companies investing in Canadian infrastructure has completely evaporated. While GM will be pouring $850 million into its Canadian operations in the next three years, it has also begun to withdraw from the market. Chevrolet Camaro production has been pegged to shift from Ontario to Michigan, following the Buick and pick-up production that have already made the cross-border journey.
The loss of production capacity hasn't just been felt in the automotive sector. Overall, Canadian exports (apart from commodities) has dropped by 35 percent during the same period that the dollar has strengthened, according to an article published by the Automotive News.
