Title: The commoditisation of automotive assembly: Canada as a cautionary tale

Authors: Greigory Mordue; Brendan Sweeney

Addresses: Department of Economics, and W Booth School of Engineering Practice and Technology, McMaster University, Hamilton, Canada ' Automotive Policy Research Centre, McMaster University, 1280 Main Street West, Hamilton, Ontario L8S 4L8, Canada

Abstract: For generations, automotive manufacturing has made an outsized contribution to the Canadian economy. The industry's growth was supported by active industrial policy, including an evolving combination of incentives: low-cost, high-quality labour, access to the largest market in the world, and investment inducements; and deterrents: market access and trade-related levers and threats. In recent years, many of the advantages Canada made for itself have eroded. The rise of new competitors, shifting philosophies surrounding trade, cost pressures, and a new paradigm with respect to investment incentives have challenged policy-makers. Several attributes previously considered the preserve of advanced countries like Canada are now evident in lesser developed jurisdictions, a phenomenon that this paper terms the commoditisation of automotive assembly. It is the result of standardised production processes and the automotive industry's ability to recruit top tier talent, particularly in less developed countries. This phenomenon is evident in the convergence of quality results and capital intensity across geographic boundaries and economic strata, expanding production in lesser developed countries, the emergence of luxury vehicle production in those countries, and stagnation of final assembly production in developed countries.

Keywords: industrial policy; automotive; manufacturing; Canada; incentives; competitiveness; commoditisation.

DOI: 10.1504/IJATM.2017.084804

International Journal of Automotive Technology and Management, 2017 Vol.17 No.2, pp.169 - 189

Received: 22 Sep 2016
Accepted: 20 Dec 2016
Published online: 29 Jun 2017 *

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