Good morning.
Mr. Chair and honourable members, thank you for the invitation to appear here today as part of the committee's important study about the state of Canada's supply chain.
The Canadian Vehicle Manufacturers' Association is the industry association representing Canada's leading manufacturers of light- and heavy-duty motor vehicles. Our membership includes Ford Motor Company of Canada, General Motors of Canada Company and Stellantis FCA Canada.
Canada's automotive industry was responsible for over $13 billion in annual economic activity, 117,000 direct jobs and an additional 371,000 jobs in aftermarket services and dealership networks in 2020. The industry is Canada's second-largest export sector, with $36.5 billion in exports in 2021.
CVMA members are leading a new wave of automotive investment in Canada. Over the past two years, Ford, General Motors and Stellantis have announced $11.5 billion in investment, which will create over 6,000 direct jobs and tens of thousands throughout the auto supply chain. Most of this new investment is dedicated to electric vehicle assembly and the battery supply chain.
Canada's domestic auto industry is competitive as part of the highly integrated North American market. Every day, vehicles, parts and components are shipped across the continent as part of the assembly process. To make this happen, companies invest millions in complex logistical plans that rely on scheduled, uninterrupted delivery to and from the plants. Any delay can impact production and potentially shut down a line, which costs millions of dollars and puts jobs at risk.
Supply chain challenges continue to be a major headwind facing the industry, slowing the return to pre-COVID North American production and sales levels. First-quarter vehicle sales are down 12.7% from last year. North American auto production is expected to reach 15.2 million units in 2022, which is one million units short of pre-COVID production.
These supply chain challenges are driven by semiconductor shortages, COVID outbreaks, the Russian invasion of Ukraine and the recent blockade of the Ambassador Bridge, to name a few. While some of these challenges are outside of Canada's control, the blockade at the Ambassador Bridge exposed weaknesses in our trade infrastructure that should be addressed to make the supply chain more resilient.
The Ambassador Bridge blockade closed a critical commercial border crossing that is responsible for approximately one-third of all Canada-U.S. trade. Almost 7,000 trucks cross each day, and a significant portion of these are tied to the auto industry.
Due to the blockades, automotive companies on both sides of the border undertook extraordinary measures and cost burdens to deal with the sudden trade diversion. Some plants were forced to cease production. Company contingency planning efforts were impacted by a lack of communication and coordination among local, provincial and federal levels of government. Companies were challenged to find an appropriate point of contact that could provide oversight and direction to support decision-making. In the absence of a clear response plan, CVMA had to take the extraordinary step of supporting an injunction against the protesters. The injunction was successful and ultimately led to enforcement action to clear the blockade.
Canada needs to do more to support a safe and reliable trade infrastructure to make the supply chain more resilient as part of the integrated North American auto market. Failing to act now could impact our competitiveness for existing and future investment.
With that, we recommend five things for your consideration today.
First, identify a clear federal lead to provide guidance and direction when there is any threat to cross-border movement of commercial goods. This person or entity should have the authority to coordinate with other levels of government and counterparts in the U.S. to ensure decisions are made quickly and disruptions are dealt with swiftly.
Second, reinforce efforts to complete the Gordie Howe International Bridge and access to it via the construction of direct access from Ontario's Highway 401 to prevent future disturbances.
Third, increase border service agent staffing to ensure all lanes are consistently open at high-volume ports of entry. This should be accompanied by investments in training opportunities for border staff to support improved consistency and interpretation of bulletins or regulatory changes.
Fourth, enhance marine port infrastructure to facilitate vehicle loading and unloading, support the supply chain and ensure our domestic industry can reap the benefits from Canada's trade agreements.
Fifth, ensure that any new customs administrative processes that are introduced take into consideration the lead times necessary to make complex customs system updates and mitigate any undue cost increases or administrative burden that would impact the competitiveness of businesses.
Thank you so much for your time today. I would be pleased to answer any questions.