International Trade Committee on June 1st, 2017

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I know that the Toyota numbers historically, perhaps from 2000 to 2015, and the company's footprint in Canada and North America in terms of the number of cars sold in Canada and those produced in North America have grown over that time frame. Does that continue to be the case, and is it also the case for Honda and some of the other members of your organization?

[Stephen Beatty]

Speaking on behalf of Toyota, it certainly is increasing, and investments continue to be made, as Scott has identified.

The same is true at Honda. I think Hanif may want to expand on that.

[Hanif Nori]

We made an investment earlier this year. We built 400,000 last year, and 75% of our vehicles go to the States. In terms of sales numbers, we're growing—

[The Chair, Liberal, Mark Eyking]

Excuse me, sir. You might want to get a little closer to the mike. Just repeat your comments, please.

[Hanif Nori]

I was just going to echo what Stephen said. At Honda we have been investing more in Canada. Our production numbers have gone up, and our sales numbers continue to grow.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

That's good.

Is it fair to make the assumption that most of that growth, most of that increased capacity in North America and in Canada, is as a result of NAFTA, the integrated supply chain, and the other things that flow from NAFTA?

[David Worts]

Absolutely.

[Scott MacKenzie]

It's 100% attributable to NAFTA. I mean, both of us started manufacturing in the late 1980s. In Toyota's case, it was an initial 50,000 units. We made just over 600,000 units last calendar year. I would say that 80% would go to the United States.

So yes, NAFTA is the singular reason for our growth.

[Stephen Beatty]

Scott is being a little modest. TMMC is the largest manufacturing operation in Toyota globally by volume. It's been a substantial increase.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Okay. That's good.

I'm almost out of time, but thank you, gentlemen.

Honda, we love having you in York region.

Stephen, if Toyota is ever looking for some space in York region, let me know. We'll see if we can help you out.

[The Chair, Liberal, Mark Eyking]

Mr. Peterson, your time is up, but that was a good promo at the end.

We'll move on now to the Conservatives.

Mr. Van Kesteren, you have the floor for five minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair.

Thanks to all of you for being here. It's good to see you again.

I've always been curious to know this. I think I know the answer, but I'd like you to tell me. Why, when so many other manufacturers chose Mexico or the United States, did Honda and Toyota choose to make a substantial investment in Canada? I know that the dollar was a factor in that, but what was the other reason for you to choose Canada as probably your leading manufacturing spot in North America?

[Scott MacKenzie]

Honestly, speaking on Toyota's behalf—I would expect Honda to have the same answer—we have great people to hire here as part of our talent pool. They could be technical people. They could be manufacturing people as well. We have a tremendous reputation for quality. Not just the Japanese OEMs but all of the OEMs in Ontario have a tremendous record in terms of manufacturing [Technical difficulty—Editor].

We are recognized within Toyota as being one of the best or highest-quality manufacturers globally. We have reliable production. They can bank on us for the units they order. We've never had any concerns with explaining that we're a valued entity within Toyota.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I'm going to address the elephant in the room. The way I see it, the United States, specifically Donald Trump, has a real problem with the Midwest—that is, that much of their manufacturing has moved, either to Canada...especially for the United States in the way of North American automakers. What happens if Donald Trump says tomorrow, “Geez, fellows, we'd love to have you sell your cars here, but you're going to have to start making them here”? At what point would you comply, or is that a consideration? Is that something you're considering at this point?

[Stephen Beatty]

I think it's fair to say that we already do manufacture substantially in the U.S. Toyota's operations have taken us into states such as Indiana, Kentucky, Texas, and beyond. We have design and engineering facilities in California and Detroit. We have a very strong on-the-ground level of investment, because a basic principle of Toyota is that we build where we sell. The U.S. is a top-10 market in the world, and so is Canada. It makes sense for us to be invested in both countries and to work back and forth. That level of integration between our operations and the dependence on each other's suppliers are part of the benefits, I think, that have come out of NAFTA and that relationship.

We're going to be talking, I think, not just from the corporate executive level but also from the level of our associates, about the importance of jobs, about that investment, and about what's happened in the economies for both. I'm convinced that those voices will be heard.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

You mentioned earlier that if we had harmonization with jurisdictions like the European Union, that would gain you entry into Europe or make it more affordable, I suppose, to move into Europe. Is that something our government should be considering and possibly encouraging the Americans to do? Let's face it: it's the Americans who make the rules.

[Scott MacKenzie]

From Toyota's point of view, I'll say that we manufacture two vehicles right now that are quite popular in Europe. Actually, all three of our vehicles are popular in Europe, but they manufacture one of them there.

Access to the European market would be good. It would be a good outlet for us, but right now we do not manufacture a vehicle that's saleable into the EU because they have different standards. They have different vehicle crash-testing standards and different lighting-related standards. That's not something that's impossible to overcome, but it is something that we would have to overcome. Any—

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Scott, I'm sorry, but I have only a minute and I do want to ask you this question.

Are there any plans for Toyota to build heavy-duty trucks for the North American market?

[Stephen Beatty]

We build medium-duty trucks through our sister company, Hino. We currently have a heavy-duty truck powered by fuel cells that we're using in a demonstration in the U.S., so there is some possibility that this will also develop.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Are the heavy-duty trucks being manufactured in Canada or the United States?

[Stephen Beatty]

The medium-duty trucks are being produced here. The heavy-duty truck is a pilot right now, coming out of Detroit.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Okay.

I think I'm out of time. Thank you very much.

[The Chair, Liberal, Mark Eyking]

That wraps up your time.

We're going to hear from one more MP on the docket here.

Mr. Fonseca, you have the floor. Go ahead for five minutes.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you, Mr. Chair.

Thank you to the witnesses.

I proudly drive a GM-built car. I won't say which car. It was manufactured here in Ontario, but I ask myself in regard to the car about how all of the pieces, components, etc., as we often hear, must have gone back and forth across the border six or seven times. So is it a Canadian car or an American car? Really, it's a North American car, and I don't even know if some of those pieces came up from Mexico. Can you take us through that and how much of a car is really...? I know that it may be finished and come off the line here in Canada, but a lot of it could be American.

[Scott MacKenzie]

Most of it's North American. In terms of content, as I said earlier, more than 50% of it is coming from the United States. A lower percentage is coming from Mexico; it's mainly electronics—wire harnesses—that we will get from Mexico.

You need to understand that it costs a lot of money for us to ship parts, and we tend to centralize our supply chain near to our manufacturing base. We do import parts from Mexico and Japan, but there are always economic factors that cause us to centralize our supply chain near our manufacturing facilities. Right now, we're a strongly North American car.