Presentation to: Society of Automotive Engineers World Congress

1. The Voice of the Automotive Original Equipment Suppliers in Canada since 1952 Automotive Parts Manufacturers’ Association Presentation to: Society of Automotive Engineers World Congress International Business Spotlight on Canada March 5, 2003 Cobo Hall Detroit, Michigan

2. Who are we? • Since 1952 APMA has been Canada’s national association representing OEM producers of parts, equipment, tools, supplies and services for the worldwide automotive industry. • APMA members and their subsidiaries collectively account for over 90% of the US $22 billion automotive parts industry production in Canada. (2001)

3. Mission Statement To engage in activities that promote the interests of automotive original equipment suppliers in Canada that enhance the economic welfare of our members and be the Voice of the Canadian automotive original equipment suppliers

4. Objective • Create and execute global marketing initiatives to develop international trade and business opportunities for APMA’s members by developing working relationships with industry counterparts to promote the exchange of market information and strategic alliances

5. CanadianVehicle Production 1992 - 2002

6. List of Canadian Vehicle Assembly Plants from East to West Type of No. of ManufacturerLocationProductAssembly Lines GM Oshawa, Ont. Truck & Auto 3 Ford Oakville, Ont. Truck & Mini Van 2 Honda Alliston, Ont. Auto, Mini Van & SUV 2 DaimlerChrysler Brampton, Ont. Auto 1 Toyota Cambridge, Ont. Auto & SUV 2 CAMI (Suzuki/GM) Ingersoll, Ont. Auto & SUV 1 Ford St. Thomas, Ont. Auto 1 DaimlerChrysler Windsor, Ont. Van & Mini Van 2 Total 14

7. Canadian Assembly Plants Locations Oshawa Brampton Alliston Oakville Cambridge Ingersoll Windsor St. Thomas

8. Hours per Vehicle Flint 33.2 Pontiac East 24.4 GM full-size pickups Fort Wayne 22.4 Oshawa 21.0 St. Louis 31.9 DaimlerChrysler minivans Windsor 29.8 NUMMI 23.1 Toyota Corolla Cambridge 19.8 Harbour Report 2002 “Our records for safety and productivity place the TMMC team among the industry’s best. And when it comes to quality, vehicles built at our Cambridge facility are among the highest rated vehicles in North America.” Takanori (Tak) Sakaue, past President Toyota Motor Manufacturing Canada Inc. U.S. Canada Canada = Overall Superior Manufacturing Efficiency

9. Toyota Cambridge • Gold - 1991, 1995, 1996, 2001 • Silver - 1992 • Bronze - 1993, 2000 • Honda Canada Alliston • Silver - 1996 • General Motors (Car) Oshawa • Gold - 2002 • General Motors (Truck) Oshawa • Bronze - 1999 • Ford plant St.Thomas • Gold - 1998 • Silver - 1994 …in an environment of exceptional quality performance. Canada’s quality of output is also top rated. With 16% of total North American assembly, Canada’s plants have won 33% (12 out of 36) of the awards given by the independent J.D. Power & Associates.

10. 2001 J.D. Power Quality Survey

11. Canadian Automotive Parts Shipments1991 – 2001(in US $)

12. “ Canadian Auto Parts Share of North American Production has grown from 11% in 1991 to 17 % in 2001” Carlos Gomas Bank of Nova Scotia

13. Sales by APMA Members(as of 2003; $US) Annual Sale of Automotive Products $0-7 million $7-14 million $14-34 million $34-67 million $67-167 million $167-334 million $334-670 million $670 million + Number of Members 67 16 20 16 14 12 1 3

14. Automotive Tier One OE Supplier Qualities 1) full service engineering support 2) product development 3) global capabilities 4) modular and systems sourcing 5) warranty assumption 6) tough target costing 7) continuous improvements everywhere 8) lean manufacturing capability

15. But the assemblers continue to restructure, and this brings new opportunities for global players… • Increased globalization and competition are forcing new realities: • Cost reductions • Tiering • Downloading/outsourcing responsibility for design, sub-assembly • Consolidation • Globalization of vehicle platforms • Modularization of parts systems • Standardization of components • Strategic alliances

16. In addition to the business opportunities, one might still ask, “Why Consider Canada?” • Canada’s cost advantages of doing business: • 15% lower overall costs compared to USA (KPMG Study) • lower corporate taxes • higher productivity, quality • full access to North American markets • business climate: tax regime, innovation policy, programs

17. Very important is government support for development of Canada’s intellectual capability… • Canada’s approach to technology: • becoming global “Intellectual Centre for automotive Research, Design, Development and Testing” • US $700 million in auto-related R&D investment over last few years

18. Relative Competitiveness of R&D Tax System After-tax cost of $1 R&D expenditure Quebec Ontario N. Carolina Illinois Ohio Michigan 0.40 0.45 0.50 0.55 0.60 Automotive education and training infrastructure that includes technical colleges, trade schools and universities. Source: Conference Board of Canada, 1999 Additional government support through programs and research organizations. Canada offers real advantages for automotive R&D.. Canada offers the most favorable tax treatment for R&D among the G-7: - Combined federal/provincial tax credits reduce the after-tax cost of $100 of R&D expenditures to as low as $44.

19. Government support for development of Canada’s intellectual capability cont’d... • co-operative links to national labs, universities, colleges • New last week- Ontario government will allocate US $ 330 million to automotive R & D

20. The Voice of the Automotive Original Equipment Suppliers in Canada Gerry Fedchun gfedchun@apma.ca (416) 620-4220 ext. 228 www.apma.ca