Thank you, Joint Chairs and honourable members.
Thanks for the invitation to appear here today as part of your study.
The Canadian Vehicle Manufacturers' Association—CVMA—is the industry association that represents Canada's leading manufacturers of light- and heavy-duty motor vehicles. Our membership includes Ford, General Motors and Stellantis, also known as FCA Canada.
The auto industry is responsible for approximately $13 billion in annual economic activity, 117,000 direct jobs and an additional 371,000 jobs in the aftermarket services and dealership networks. The industry is our second-largest export sector, with $36.5 billion in exports in 2021.
The auto industry is highly integrated with the U.S. through both supply chain relationships and the shipment of final vehicles. Parts may cross the Canada-U.S. border seven to nine times in advance of installation in a vehicle. Over 90% of Canadian-built vehicles are exported, with the overwhelming majority going to the United States.
Auto production relies on efficient supply chain logistics for the shipment of parts, components and vehicles. Assembly facilities depend on regular and predictable deliveries of parts that operate at full capacity. Any delay or disruption to the supply chain—even very minor—can have an immediate effect on production and trade. Given the integration of the industry with the U.S., the efficient movement of goods across the border every single day is particularly important.
The Ambassador Bridge plays a key role in the industry as Canada's most important border crossing. It's responsible for approximately 25% of Canada's annual goods trade. With five OEMs assembling vehicles in Ontario, the bridge is a key conduit for motor vehicles and parts.
The February blockade at the Ambassador Bridge exposed weaknesses in Canada's border management practices and trade infrastructure that need to be addressed to make the supply chain more resilient.
There is additional complexity with this particular trade corridor, as the customs plaza is under federal jurisdiction, the 401 is under provincial jurisdiction and the road leading into the plaza is municipal. It took significant time to identify each respective government lead and to coordinate, share information and determine what capabilities were required to resolve the trade blockage.
In an effort to accelerate this process, the CVMA filed an affidavit in support of the auto parts manufacturer injunction against the protesters on February 10.
While our members greatly appreciated all of the efforts of every level of government that worked to find solutions to mitigate the impact, the blockade resulted in automotive companies on both sides of the border undertaking extraordinary measures at great cost to divert trade to other border crossings. These other crossings simply did not have the capacity to handle higher trade volumes without significant disruption to supply schedules, which, of course, we witnessed. This meant that auto plants were forced to cease production. This affected thousands of people employed in the industry, not just in Canada, but also in the United States.
The blockade on the bridge came at an already challenging time for the industry, due to fragile supply chains under pressure from pandemic-related shortages and backlogs. In fact, North American vehicle production has still not returned to prepandemic levels.
This incident, combined with other recent port and railway disruptions, has undermined Canada's reputation as a reliable jurisdiction for the production and movement of goods. We must learn from these events to ensure that Canada has plans in place to quickly respond to future disruptions. Failing to address these weaknesses could impact our competitiveness, not just for existing auto manufacturing but also for future auto investment.
We should establish processes for quick and efficient coordination and communication between industry, multiple levels of government and other appropriate stakeholders to mitigate future disruptions to the supply chain.
We recommend the following.
First, identify a clear federal lead to provide guidance and direction when there is any threat to the uninterrupted movement of commercial goods. This lead should have the ability to coordinate with other levels of government and counterparts in the United States to ensure that decisions are made quickly and that disruptions are dealt with swiftly, with updates communicated regularly to industry.
Second, enhance the legislative tools to address future blockades or disruptions, such as the Keeping Ontario Open for Business Act, which established prohibitions and enforcement mechanisms to prevent persons from impeding access to, egress from or the ordinary use of protected infrastructure. The federal government should consider broader powers to quickly deal with blockades, powers that would preclude the necessity of invoking the Emergencies Act.
With that, I thank you. I appreciate your time and look forward to any questions.