Auto parts industry profits fall to lowest level since 1999
Ottawa, ON -- An 18% drop in production will translate into a 38% decline in profits in Canada’s automotive p...
Ottawa, ON — An 18% drop in production will translate into a 38% decline in profits in Canada’s automotive parts industry in 2008, according the Conference Board’s Canadian Industrial Outlook: Canada’s Motor Vehicle Parts Manufacturing Industry – Autumn 2008.
“Canadian auto parts manufacturers continue to see their production contracts slashed because of weaker demand for new vehicles in the United States,” said Sabrina Browarski, economist. “However, massive cost-cutting of more than $4 billion will enable the auto parts industry as a whole to stay in the black this year.”
Profits in Canada’s motor vehicle parts industry are expected to decline to about $1 billion this year, their lowest level since 1999. Further declines in profit levels are expected in 2009. After shedding 12,800 jobs in 2007, the industry is expected to cut another 10,800 jobs in 2008 and 2009 combined.
A fourth consecutive year of decreased output is expected in 2009. An anticipated recovery in U.S. demand beginning in 2010 would allow for an eventual rebound in auto parts production. The Conference Board’s medium-term outlook assumes sustained production by the Detroit Three automakers.