Good evening, and thank you.
First, I'll say a few words about Linamar.
Linamar is a diverse advanced manufacturing company. We are about 70% in auto parts, and about 30% in a variety of industrial equipment, such as access equipment and harvesting equipment, as well as commercial vehicle parts and energy components. We have $7.5 billion in sales. We have 27,000 employees globally. We manufacture in 61 facilities in 11 countries. About 40% of our plants and about 11,000 of our employees are in Canada.
Turning to trade, I believe that an area that is critically important to our prosperity and global competitiveness as a country is free trade agreements. I think it is absolutely critical for us not to lose momentum in this key area, because free trade agreements allow us to have bigger markets to buy from and sell to. They create more opportunities, and more opportunities mean more chances to grow or to cut costs. Free trade agreements have been a key factor in several decisions, as an example, for automotive OEMs to locate in Mexico because of their access to world markets.
In my mind, ratifying the new NAFTA deal here in Canada is absolutely critical to Canada's continued economic success. The U.S. has long been Canada's most important trading partner, and vice versa. As I'm sure you know, trade with the U.S. represents more than 75% of our exports, which is 64% of our GDP. We really can't afford to put that at risk and create the enormous costs that added duties would add to those transactions.
NAFTA was a deal that created enormous prosperity for all three countries since its inception in 1994. The United States' GDP increased by $12 trillion, reaching 2.8 times the 1994 level. Canadian GDP was up by $1 trillion, reaching, very similarly, 2.7 times its 1994 level. Mexican GDP increased half a trillion dollars to almost twice what it was before the agreement.
Importantly, NAFTA also created deep and intricate supply chain optimizations across all three countries. It would be quite disastrous financially to try to unravel those. You can't unscramble the eggs. In the auto sector alone, there are on average seven border crossings between Canada, the U.S. and Mexico for every vehicle that is built. Adding duty to each of these border crossings would add enormous costs to North American-built vehicles, and decrease our competitiveness.
We have a great case study right here at Linamar that illustrates that deep integration. We have a program for a cylinder block that we make that is cast in Mexico, comes to Canada for premachining, goes back to the U.S. for additional processing, and comes back to us again in Canada for final machining. Then we ship it to our customer down in the U.S. to be assembled into an engine. Some of those engines come back to Canada to be assembled into vehicles, and then those vehicles are sold in both Canada and the U.S.
Why is it so complicated? We are tapping into the great strengths and technologies that have been developed and honed in each of those countries. Instead of each country having to develop the technologies and make the investments to do all that processing in each country for its individual needs, we are pooling our needs and focusing on different parts of the supply chain, and in the end we have a great, highly competitive product that we can sell in many countries, not just North America.
The new NAFTA deal has modernized important elements of our trade deal to reflect technologies and realities that didn't exist 25 years ago, but at the same time, from our perspective, will keep consistent core elements of the deal. That means we will see minimal disruption of existing supply chains, which is really key. From an automotive perspective we see only upsides, no downsides for Canadian companies to the changes that were implemented. Higher regional value content means opportunity for work, potentially, as automakers who maybe are not meeting the new standard. Maybe some of the German manufacturers, for instance, will decide to onshore some product. High labour value content may also result in some opportunities for Canadian suppliers to help increase this measure of content in the vehicle.
It is important to remember that we don't win business by being protectionist. We win business based on innovation and efficiency. That's where we should all try to focus and try to eliminate barriers to growth.
At Linamar, our Canadian plants are our most productive globally of all of our 61 plants. We have the deepest bench here, we have the best increases in productivity here, which, by the way, has increased by 34% in the last six years, and we have the strongest commitment here to continuous improvement in our facilities every single day.
We can compete with any country with our product and our process innovation and efficiency, and we do so. We've invested billions of dollars in our Canadian plants in recent years to launch billions of dollars of new business, almost all of which, by the way, ships to the U.S. We critically need the new NAFTA agreement to be ratified to bring certainty to our ability to continue to compete in this manner.
Last, I wanted to comment on timing. The U.S. and Mexico have already moved to ratify the agreement in their respective legislatures. While of course it's important to fully understand and to vet the deal—I appreciate that this has happened, and I encourage that to happen—I do caution against excessive or unnecessary delays or attempts to rewrite something that frankly I think has gone as far as we could get it to go.
Business leaders across North America are supporting swift ratification of the agreement—many I speak to—to keep North America tariff free, make the economy even more vibrant and competitive, drive investment and, of course, support the creation of jobs.
Thank you very much for the opportunity to address your committee. I look forward to your questions.