Sharp Increase In Canadian Auto Parts Exports to U.S.

Canada's auto-parts exports to the United States jumped to a record high last year and helped the country's manufacturers keep pace with rival Mexico, according to a Bank of Nova Scotia. Carlos Gomes, an economist at Scotiabank, said Canadian parts makers boosted their exports to the United States by 11 percent in the first 11 months of the year to a record C$23.7 billion ($15.6 billion). Gomes based his study on data supplied by Statistics Canada.

December figures were not available. Canada's auto trade surplus, which includes assemblies and parts, was C$10.7 billion ($7.1 billion) from January through November 2002, helping to reduce the country's deficit on auto parts to C$19.7 billion ($13.0 billion) last year from a peak of C$22.9 billion ($15.1 billion) in 1999. "The auto parts sector is continuing to do quite well," Gomes told Reuters.

"We had record exports last year into the United States and that's primarily because the Canadian industry continues to gain market share in North America." Canadian auto parts makers' market share in the North America assembly plants is almost 17 percent of the overall Canada-U.S. auto-parts shipments, up from 11 percent 10 years ago. This increase is due to the cheaper Canadian dollar and lower wage and benefit costs, Gomes said.

However, Canadian auto parts companies have also invested more than C$10 billion ($6.6 billion) over the past decade to improve productivity and expand production. Canadian suppliers boosted exports to the United States by US$1.3 billion last year, matching the increase by Mexican parts makers.

Each vehicle assembled in North America now contains almost C$2,000 ($1,319) of Canadian-made parts, up 21 percent in the past four years and double the level of a decade ago. Industry officials predict a flat year in 2003 for auto production, before a downturn in 2004 as sales, spurred by aggressive market campaigns, dry up.