Thanks. You don't know me very well, but I'm going to try to stick to that five-minute limit.
I'm going to be candid, because I think the two presenters got very specific about the business they're in.
Let me break the North American auto sector into four buckets.
In the first bucket, there are the materials that go into vehicles and the materials that also go into the tools that make the parts that go into the vehicles. That's one issue, and it's one set of issues that we have to deal with.
In the second bucket, there's tooling. This includes, specifically, moulds and auto-specific tools. The main competition has been China. It has been for the last 15 years, for lots of reasons. That's the real competition. It has been the canary in the mine for the automotive sector in North America. What the Chinese have been able to do in terms of winning the market share and hollowing out the base in North America is something for the rest of us.
In the third bucket, there are the parts. We use the tools to make the parts, and 75% of a vehicle is made by the parts suppliers.
Finally, you have the final bucket, which is the automotive bucket. This is the only one facing the regular consumer.
The gentlemen on here, and other witnesses you had here before, talked about how the time between quoting a job and delivering a tool has put them on either side of new tariff updates. Tariffs hit after the job is priced, and customers, whether they're parts suppliers or automotive assembly plants, are expecting the mould-makers and toolmakers to absorb that cost. If we lose that capacity, that's the first domino to fall.
In the industry, we had a crisis in 2021 and 2022, when the auto sector let go of the supply of chips that it needed for complex systems. When the industry tried to get those chips back, it figured out that the rest of the world wanted them for all the new electronic consumer goods everybody was buying because they were stuck at home. That affected volumes, the cost of vehicles and the cost of parts, but it also affected leverage for Canadian entities and those centred around Detroit, of which the Canadian auto sector is a part.
The American mould sector is benefiting from this in the short term. In the long term, as this cluster reduces.... The cluster that Aalbers Tool and Mold is part of is one of the world's top five clusters of mould-making expertise and capacity. As that erodes and as customers in the Detroit cluster—of which Ontario and Quebec are a part—lose Canadian options, the Chinese option looks more and more real.
What do we need to do? We don't have the defence opportunities and aerospace opportunities that the Americans have, nor do we have the volume of automotive opportunities that the Americans have. One thing we've been doing with the CTMA, which is the tool and machine makers association in this country, and the mould-makers association is finding a way with new defence spending and new programs to support the automotive and parts sector to require those companies to buy tools locally or reward them for doing so.
If I worked at a tool shop in Windsor, I'd probably be the youngest guy there. These are usually independent businesses that are looking for a succession plan. They usually want to say “the next generation”. All of this makes the valuation of that business lower, or maybe it's unsellable, so they have to stay in longer as they fight forces they have no control over. They're the canary in the coal mine, and I'm very happy to represent, even just in this moment, some of their interests. If they go, it erodes part of the shaky pillars we have under the automotive parts sector in Canada as well.
Thank you.