SUPPORTINGAdvisory Council Conseil consultatif DOCUMENTon Science and des sciences et de Technologyla technologie3Profile of theAutomotive SectorPrepared for the Expert Panel on Skillsby Dan O’Hagan 1999
PROFILE OFTHE AUTOMOTIVE SECTORAdvisory Council on Science and TechnologyExpert Panel on Skills
This publication is also available electronically on the World Wide Web at the following address: publication can be made available in alternative formats upon request. Contact the Information DistributionCentre at the numbers listed document is part of a series of research documents that constitute background material for The Report of theExpert Panel on Skills. For additional copies of this publication, available on CD-ROM, please contact:Information Distribution CentreCommunications BranchIndustry CanadaRoom 205D, West Tower235 Queen StreetOttawa ON K1A 0H5Tel.: (613) 947-7466Fax: (613) 954-6436E-mail: publications@' Her Majesty the Queen in the Right of Canada (Industry Canada) 2000Cat. No. C2-467/2000-28E-IN ii
AbstractThe automotive industry, including vehicle assembly and parts production, is a key component ofthe Canadian economy, contributing about 12 percent of manufacturing gross domestic product(GDP), providing roughly 160 000 jobs (1997 figures) and generating a large surplus oninternational trade. The industry is the largest single destination of capital investment in plant andequipment in the total Canadian manufacturing industry faces a number of challenges in coming years, including economic and marketpressures resulting from the globalization of production, and technological issues from the needto reduce fuel consumption, vehicle weight and environmental industry is coping well with these economic and technological issues, and continues to grow,though it will need to address two challenges. The first is to retain its productivity and costadvantage in the assembly sector over . production facilities that lead large auto makers tomaintain high levels of investment in Canada. The second is to ensure that levels of design,research and development capability in the parts sector, especially the Tier 2 parts sector, arehigh enough to ensure a continuing flow of supply contracts from the Tier 1 companies and themajor vehicle of these challenges require that the industry meet its critical skills needs. In the assemblysector and the larger parts companies the key issues are in design and research and developmentactivities, and in dealing with impending shortages in a range of production-related specialties. This means replacing the large numbers of skilled workers and production specialists such asengineers who are likely to retire over the next two to seven years. For the smaller partscompanies, the challenge is to maintain or raise the level of technological sophistication anddesign capability to ensure sustained sourcing opportunities with the assembly and larger partscompanies, and position them to grow into complete system (Tier 1) industry and educational institutions have begun to fill these skills needs, with a range ofco-op and full-time programs devoted to skilled trades and technologies as well as to managerialand related skills. Whether or not these initiatives will be sufficient to deal with the industry shuman resource needs over the next decade remains to be
ContentsAbstract..............................................................................iiiINDUSTRY SECTOR CHARACTERISTICS.................................................1The Challenge Of the Future..............................................................1Economic and Market Pressures...........................................................1Regulatory and Environmental Issues.......................................................2Technological Issuues...................................................................3 Social and Demographic Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4Current Situation.......................................................................5MANAGEMENT PRACTICES.................................................................8Employment..........................................................................8Skilled Work Force.....................................................................8Engineering and Technical Personnel.......................................................9Demographics.........................................................................9Pay and Benefits.......................................................................9Quality Initiatives.....................................................................10Training Capacity.....................................................................10CRITICAL SKILL NEEDS AND GAPS..........................................................11Skill Needs..........................................................................11Skill Gaps...........................................................................11RECRUITMENT, TRAINING AND DEVELOPMENT PATTERNS........................................12Recruitment..........................................................................12Training and Development..............................................................13OVERVIEW: KEYS AND OBSTACLES TO SUCCESS................................................13BEST PRACTICES AND CASE STUDY PROFILES..................................................14APPENDIX I: SOURCE DATA................................................................16Web Sites...........................................................................18Interviews...........................................................................18iv
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Docu m e n t s Automotive Sector ProfileINDUSTRY SECTOR CHARACTERISTICSThe Challenge of the FutureThe single most important factor affecting investment and jobs in this sector in recent years hasbeen the industry s competitive advantage in terms of productivity, labour costs and quality. Theindustry has invested heavily in new equipment and processes in recent years, with the result thatproduction facilities involved in vehicle assembly and the larger parts plants are regarded assignificantly more productive than equivalent plants in the United States. Recent estimates undertaken for the Automotive Competitiveness Review suggest that Canadianvehicle assembly plants enjoy a 25 to 30 percent advantage in terms of labour costs. Thisadvantage is attributed to higher productivity, lower wage costs, and factors such as medicare and1other social programs that allow companies to socialize employee benefit -related issues such as these will continue to affect investment decisions in coming years. Measures to ensure that the industry retains its overall cost advantage will be key to its ability tothrive. This is particularly true in a knowledge-based economy, where human capital, innovation,and the continuous development and diffusion of technology are critical to and Market PressuresGlobalization means that an increasing proportion of automobile, truck and bus production,including parts, is undertaken through international trade channels. Most large auto, truck andbus companies now produce several lines of world vehicle that involve common platformswith internationally sourced components. This further contributes to the rationalization of bothassemblers and suppliers, and transforms the relationships among them. As a result, in allsegments of the industry, there is significant pressure to lower costs while ensuring quality. Thispressure is particularly acute for parts suppliers who must compete with offshore suppliers notonly in the Canadian market, but also in markets abroad, as assemblers increasingly look toTier 1 suppliers to follow them as they build facilities in developing Of the 10 most efficient car assembly plants in North America, in terms of the hours of labour needed to assemblea car, four are in Canada (ranked second, fifth, seventh and tenth). Of the 10 most efficient truck assembly plants(which includes pickups, sport utility vehicles and minivans), one is in Canada, ranked 10th. It should be noted thatlabour productivity is a result of a combination of factors, including efficiency of the capital used in the process. Onaverage, labour costs in North America are 15 to 20 percent of the overall cost of producing a vehicle. (Source: Harbour Report, 1998.)1
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileGlobal over-capacity in auto assembly may result in further plant closures in the next few years,particularly in North America. Major mergers among auto makers are already influencing howthe industry responds to over-capacity and the ongoing battle for market pressures are also driving the changing relationships among vehicle makers and theirsuppliers. These changes include more outsourcing, a move to modular assembly plants thatintegrate system suppliers into the assembly line, and more research and design work beingshifted to major (Tier 1) parts suppliers, resulting in mergers and consolidation. This may havean impact on skills needs in the parts sector as more technological demands are being placed onboth Tier 1 and Tier 2 a result of consolidation, Canadian-owned parts companies, especially Tier 2 (smaller)suppliers, will feel more intense competitive pressures, for example, when merged Tier 1companies must rationalize their combined supplier bases to retain only the best s bus-making sector is affected by declining ridership, production over-capacity, anageing population, new government regulations and decreasing government funding; allcontribute to a reduced demand for urban transit and standard school buses. The urban bus market is in a more rapid transition to new (low floor) bus designs than originallyanticipated. New bus designs will feature the extensive use of advanced materials, asmanufacturers try to increase the durability of their products, reduce weight to meet stricteremissions standards and reduce total expenses over the life cycle of the and Environmental Issues The Kyoto Protocol to the UN Framework Convention on Climate Change, which obligatesCanada and other nations to reduce greenhouse gas emissions significantly by 2010, presentsfurther challenges and opportunities for the industry. Climate change commitments will continueto be significant drivers of government science and technology policy as well as industry researchand development (R&D) efforts, particularly with respect to the development of environmentallysustainable technologies. For example, Canada s leadership in hydrogen fuel- cell technology issetting the standard for clean propulsion systems of the future, and could position Canada tocapture a substantial portion of the world are continuing pressures to reduce fuel consumption for economic and environmentalreasons. The Clean Car initiative in the United States, in which most major vehicle and partscompanies participate, has a goal of achieving fuel economies that are three to four times as lowas current levels. This will mean new electronics, new powertrains, new materials, newproduction processes and equipment. Some Canadian parts companies are involved, but smallercompanies may lose out as a result of these kinds of
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileSafety and emission standards are harmonized between Canada and the United States, but stillpresent a problem for exports to non-NAFTA (North American Free Trade Agreement)countries. The Automotive Dialogue has been established under the Asia-Pacific EconomicCooperation (APEC) s voluntary sectoral liberalization initiative. One of the objectives of theAutomotive Dialogue is the harmonization of standards and regulations among APECeconomies. Canada is also actively pursuing agreement on global technical regulations throughthe United Nations Economic Commission for Europe, Working Party plastics industry is expected to benefit from the move to lighter vehicles that is resultingfrom environmental pressures, but will need to maintain high levels of R&D in order to compete. It will also have to deal with environmental issues such as solid waste management, challenges tothe use of PVC, and possible links between plastics and endocrine management of post-consumer rubber waste continues to be an important issue for therubber industry. While most of the attention has focussed on scrap tires, all large-volume rubberproducts will ultimately face the problem of dealing with waste and discarded material. Since 1965, qualified bus vehicle assemblers have operated under the Auto Pact. However,factors such as the Buy America Act, which requires final assembly in the United States and atleast 60 percent total . content, biases bus-purchasing decisions. As a result, Canada s busindustry operates on a partially rationalized basis only, and is faced with having to compete in . market under these terms in order to maintain its manufacturing base in every major market, government policy has an important impact on bus production and salesthrough technical standards regulation, environmental requirements, urban transit authorityfunding, school bus purchases, local product preference, intercity carrier regulations and specialneeds such as handicap access. Technological IssuesThe relatively low level of R&D investment is mentioned in most discussions of this industry. That is, the Canadian industry uses advanced technology but obtains much of it throughtechnology transfer. This is especially true in the assembly technologies such as rapid prototyping reduce the design time for parts and vehicles, puttingmore pressure on smaller parts producers to modernize, and invest in new machinery andprocesses. The design time for a complete new vehicle has decreased from five to seven years, tothree to four years and continues to decrease. The design time of Japanese manufacturers is lessthan that of North American manufacturers, which puts pressure on both North Americanassemblers and North American parts producers to change technologies and processes. Also, asresponsibilities for design, engineering and innovation are being increasingly passed down fromthe assemblers to the supplier sector, parts companies must invest even more in technology and3
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector Profileskills warehousing and communications technologies such as electronic data interchange (EDI)and electronic commerce are having a significant impact along the entire automotive supplychain, and may affect the entry level skills required of those working in the Canadian bus manufacturing industry is currently the technological leader in North Americain terms of low floor design, alternative fuels, and hybrid and fuel-cell technology. However, . government has provided extensive support to the development of a new generation busdesign with R&D funding assistance through its Department of the rubber industry, thermoplastic elastomer technology is producing significant improvementsin productivity and product quality. The alternative substances produced by this technologybehave like rubber, but under appropriate conditions can be processed like plastics, and mayreplace rubber for components such as seals, gaskets, hoses, flexible tubing, coated fabrics, bootson steering columns, sheeting, weather stripping, conveyor belting and air ducts in development may require major new investments by rubber companies in order to sustainand develop new the plastics industry, rapid technological change is significantly increasing the minimumneeded to stay in the market. Although the industry leaders conduct significant amounts of R&D,many companies do not, and as a result may suffer in terms of and Demographic SituationThe major demographic issue is the approaching retirement of a large portion of the automotivework force, including skilled tradespeople and technologists. Shortages are forecast in key tradessuch as general machinists, tool and die makers, mould makers, millwrights, and industrialelectricians. These skilled trades are identified as critical for a range of metal fabricating andmanufacturing sectors, which means that the industry will have to compete for a limited supplyof skilled research conducted for the Automotive Competitiveness Review suggests that the skillsshortage will be felt most acutely in small and medium-sized enterprises (SMEs) that produceparts for the industry. This is where Canadian ownership is highest. SMEs typically offer lowerwages and fewer training opportunities, and often lose their skilled workers to industry s ability to recruit young people is somewhat limited by the lack of awareness inschools and among highly trained workers of the range of challenging jobs available in thisindustry, including the fact that many jobs employ advanced
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileCorporate governance is an issue in the sense that most investment and marketing decisions aremade by the large foreign-owned companies that dominate the industry. This is likely to persistas the move continues to standardize vehicles around a few platforms that can be SituationDefinition and SizeThe automotive industry, as defined for the purposes of this report, includes the assembly of lightvehicles (autos, small trucks, minivans and sport utility vehicles); parts and accessories (originalequipment makers, or OEM, and aftermarket and replacement parts firms); and truck, bus andheavy vehicle assembly, including some conversion of heavy vehicles for specialized use. Table 1: Auto Sector by SegmentIndustry SectorShipmentsPlantsLight duty vehicles $56 billion15 assembly plants* million vehiclesHeavy duty vehicles $2 billion annually14 assembly plants producingbuses and trucks30 000 vehicles annuallyVehicle systems,$ billionMore than 550 OEM, and roughlycomponents, parts 1000 including aftermarketproduction*Excluding Volvo plant in Nova Scotia, which is now : Industry Canada, Statistical Review of the Canadian Automotive Industry, 1998. All figuresare for 1997. Figures do not include shipments of roughly $ billion in tires and tubes in , this industry produced some 51 million vehicles annually in the mid-1990s, andCanada is the sixth largest producing nation. While Canada accounts for 16 percent of NorthAmerican production of light duty vehicles, it accounts for only 8 percent of North Americanmotor vehicle For instance: In 1998, GM announced that it would divide up its engine and transmission development among fourengineering centres. A European powertrain centre in Ruesselsheim, Germany, is responsible for small gasolineengines and transmissions. A North American powertrain centre in Pontiac, Michigan, is in charge of large car andtruck gasoline engines and automatic transmissions. Saab Automobile, Alberta, leads GM work on turbochargers forgasoline engines. Finally, all diesel development is assigned to Isuzu Motors Ltd. in Japan. The idea is to takeadvantage of expertise in regional pockets of a vast corporation and transfer the resulting technologies and design throughout the organization. (Source: Greg Gardner, Global growing pains: GM Powertrain reshufflesresponsibilities, Ward s Auto World, Vol. 34, March 1998, p. 42.) 5
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileTradeThe Canadian automotive industry has grown significantly in the past 30 years since the AutoPact, and is fully integrated into the North American market following implementation of theCanada United States Free Trade Agreement (FTA) and NAFTA. Some 87 percent of Canada slight vehicle production is exported, primarily to the United industry overall generates a significant surplus on international trade, made up of a largedeficit on parts (roughly $17 billion in 1996 and $20 billion in 1997) and a larger surplus on3vehicles (roughly $31 billion in 1996 and $31 billion in 1997). The overall balance on automotive trade with the United States was roughly $12 billion in 1997. Canada s deficit on automotive trade with Japan was roughly $4 billion in 1997. Canada also hadan overall deficit on automotive trade with Mexico in 1997 of $ billion, a figure that has beenincreasing with the implementation of NAFTA. The deficit on automotive trade with Mexico was4$674 million in accounts for about 16 percent of North American light vehicle and parts production,more than 70 percent of North American bus production, and about 30 percent of the NorthAmerican heavy duty truck automotive industry is the largest single generator of capital investment in plant andequipment, accounting for about 20 percent of manufacturing investment, and about 12 percentof overall manufacturing gross domestic product (GDP).The automotive sector has the highest level of foreign direct investment in the Canadianeconomy, of which roughly 86 percent is from the United States, 7 percent from Europe, and6 percent from Japan. Virtually 100 percent of the assets of the vehicle assembly sector isforeign-owned. Light vehicle assembly is heavily concentrated in Ontario, with 14 assemblyplants, and there is one plant in production is similarly concentrated in Ontario, with some production in Quebec, and asmaller amount in British Columbia and Manitoba. Some 43 percent of parts firms have fewerthan 50 employees; more than three quarters have fewer than 200 employees; less than onequarter of the firms account for just under 80 percent of shipments and 70 percent of Source: Industry Canada, Statistical Review of the Canadian Automotive Industry, Source: Industry Canada, Statistical Review of the Canadian Automotive Industry,
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileThe Bus IndustryThe Canadian bus assembly and components industry is made up of 10 major companies, most ofwhich have plants in both Canada and the United States. There are two intercity, one mini-bus,three urban transit and four major school bus manufacturers. Two companies are located inManitoba, four in Quebec and four in Ontario. The intercity and urban transit bus manufacturing sub-sectors are estimated to have about70 percent of the North American bus market, and Canadian school bus manufacturers haveabout 11 percent of the North American market. In contrast to the high-volume car assembly lines, bus plants are low-volume assemblyoperations and are not highly automated. All three bus manufacturing sub-sectors in Canada areprofitable, and the bus market is mature and stable. The economies of bus manufacturing make every assembler dependent on major independentsystems suppliers who gain their economies of scale primarily from supplying the heavy truckmanufacturing industry in North America and thus exert a high degree of influence over busmanufacturers. Bus production in Canada exceeds domestic needs, and exports are sold only in the UnitedStates. As a result, most of the Canadian bus manufacturing industry is strongly influenced . government policies, regulations and subsidies. PlasticsThe plastic products industry includes some parts makers that produce plastic components for theauto industry, and the value of plastic products is reflected in the sales of finished vehicles. Theplastics industry is composed of a large number of small establishments that are fully rationalizedon a North American basis, but the degree of foreign ownership is less than in other sub-sectorsthat supply the automotive MattersThe vehicle assembly sector is about 75 percent unionized, because of virtually 100 percentunionization rates in the big three vehicle assemblers and their captive parts plants. TheJapanese assembly plants are not unionized, except for the CAMI plant, which is a joint ventureinvolving Suzuki and General independent parts sub-sector (. other than the assemblers captive parts plants) is about 45 percent unionized, while the specialty vehicles sub-sector (which includes heavy trucks,7
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector Profilebuses, railway equipment, agricultural implements) is about 50 percent unionized. The rubberindustry is highly unionized, and the plastics products industry is only about 10 to15 percentunionized. Canadian Auto Workers (CAW) is the largest union in the sector, and is found in all parts of theindustry. Other unions representing significant numbers of workers include the InternationalAssociation of Machinists (IAM) and the United Steelworkers of America Canada. Industry AssociationsMajor business associations in the sector include Canadian Vehicle Manufacturers Association(CVMA), representing the big three vehicle assemblers; Japan Automobile ManufacturersAssociation of Canada (JAMA), which represents Honda, Toyota and Suzuki; Automotive PartsManufacturers Association (APMA), which represents the independent OEM parts makers;Automotive Industries Association of Canada (AIA), which represents makers of aftermarketparts and accessories; the Canadian Urban Transit Association (CUTA), which represents busassemblers; and the Canadian Tooling and Machining Association, which represents the toolingindustry (tools, dies, moulds, jigs, fixtures, gauges, machinery, machining systems, robotics,automation equipment, models, patterns, general jobbing machine shop products and cuttingtools).8
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileMANAGEMENT PRACTICESEmploymentEmployment in the manufacturing sector of the Canadian automotive industry has remainedrelatively constant since 1985, while output has increased significantly, as a result of productivityincreases. The majority of employment in both parts and assembly is in Ontario, where the bulk ofmanufacturing facilities exist. However, Manitoba and Quebec have some employment in busand truck production, and there is one auto assembly plant in Quebec. In parts, almost all of thelarge Tier 1 production and employment are concentrated in Ontario, with a smallerconcentration in the MontrØal area. Tier 2 suppliers are important in the Manitoba economy 2: Auto Sector Employment by SegmentBusiness Segment1965198519961997Vehicle assembly43 00057 000 50 000 51 000Parts and components, 3 00084 000102 000 92 000including aftermarketTruck body and trailer 000 15 000 16 000Total80 000 152 000167 000 159 000Source: Industry Canada, Statistical Review of the Canadian Automotive Industry, 1998. Figuresfor 1997 are derived from the Survey of Employment, Payrolls and Hours (SEPH); previousfigures are from the Census of in the relative size of the vehicle assembly and parts sectors are partly due to the fact that manufacturers have outsourced parts and components, and have sold off some parts production to independent Work ForceThe 1985 Report of the Automotive Industries Task Force found that roughly 12 percent ofhourly workers in the vehicle sector and 13 percent of hourly workers in the parts sector could bedefined as skilled workers those requiring two or more years of training. No data exists on thecurrent work force in the auto industry based on the same member surveys by the APMA suggest that about 8 percent of the hourly paid work forcein the parts manufacturing sector are skilled tradespersons such as mould makers, pattern makers,tool and die makers, industrial electricians and are current and projected over the next two to seven years in most of these skilledtrades. Apprenticeship programs in these trades are well developed and widely used, although the9
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector Profilenumber of certifications appear to fall short of the number of positions available. The autoindustry competes with other industrial sectors, especially the metal fabricating and relatedindustries, for many types of apprenticed and Technical PersonnelThere is no data available on the employment of highly skilled scientific and engineeringpersonnel in assembly and parts, but the numbers are assumed to be considerably below those inother industries, where higher levels of domestic R&D is Report on the Automotive Industries Task Force noted that roughly 22 percent of the workforce in the manufacturing sector was composed of salaried workers, including managers, clericalworkers, and scientific and engineering personnel; and another 17 percent were technicalpersonnel, including computer, electronic, robotic, laboratory and other technicians andtechnologists. Since these surveys reflect the work force and work practices of the mid-1980s, itis not clear whether or not these proportions can be taken as currently applicable. Policy workrelating to highly skilled personnel in this industry would benefit from more recent , women make up about 11 percent of GM s work force, and this is probably typical of5the other auto makers, at least within the big three. Estimates of other demographiccharacteristics in assembly and parts are not available, and there is no particular indication thatthe age distribution of the automotive manufacturing work force is different from manufacturingas a downsizings, especially those involving semi-skilled production workers, have largelybeen accomplished through early retirement programs, which are virtually universal in theunionized sector. At the same time, some expansion has taken place (for instance, the Chryslerexpansion in Bramalea, Ontario). As a result, the proportion of the semi-skilled production workforce aged 55 and over is probably less than in manufacturing as a Source: Tanya Gadzik, A firm believer in teamwork: Maureen Kempston Darkes, Ward s Auto World, Vol. 32 ,April, 1996, pp.
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfilePay and BenefitsThe unionized sector of this industry has been characterized by numerous initiatives in workenvironment innovations, including innovations in pensions and benefits, shorter work timeexperiments, and phased and salaries are generally higher than for manufacturing as a whole, and are heavilyaffected by collective bargaining. In the unionized vehicle assembly sector, average hourly wagesexceed $25 per hour, some 65 percent higher than the economy-wide average, and about 25percent higher than in manufacturing as a whole. These wages and benefits are set exclusivelythrough collective bargaining, and generally have an impact on non-unionized segments of theindustry as average hourly wage in the parts sector is roughly $17 to $18, with wages in the unionizedsector being higher than in the non-unionized sector, although the differential among smallerparts companies is not average hourly wage in the specialty vehicle segment (heavy trucks, buses, railwayequipment, agricultural implements, and other specialty vehicle producers) was slightly morethan $16 per hour in 1996 somewhat lower than in other transportation equipmentmanufacturing sectors. However, for this sub-sector, wages vary widely across industries. Theyare higher in heavy truck and bus, and lower in the truck body and agricultural implements areas,especially in the relatively large number of non-union facilities in these wages in the plastic products industry tend to be lower than in other manufacturingindustries, and considerably below the average hourly wage in auto manufacturing as InitiativesThe industry put forward numerous initiatives in new work practices and processes, includingTotal Quality Management (TQM), just-in-time production and cellular manufacturing. In fact,most of the early initiatives of these types originated in this industry, and literature on thesepractices is major North American vehicle companies have cooperated on an industry-specific version ofISO 9000, known as QS 9000. This system has been widely introduced in the industry and hashad a major impact on work organization and quality major (Tier 1) parts producers now adhere to the QS 9000 standard as a condition of supplycontracts with the major vehicle assemblers, and QS 9000 standards are gradually spreadingamong Tier 2 suppliers. The adoption of this standard is likely to have an impact on work11
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector Profilepractices and minimum skill levels. Moreover, whether or not they are able to adhere to thestandard will affect the smaller parts producers ability to stay in the CapacityEvidence from interviews with industry officials and from industry literature indicates that boththe assembly and parts sectors place a high priority on a steady supply of trained workers. Firmsregard the impending shortage of skilled tradespersons as the single most important impedimentto the industry s ability to grow over the next two to seven an effort to address anticipated shortages, the industry has engaged in a number of cooperativeefforts with universities, colleges and high schools to develop training of the larger companies have in-house training programs devoted to employee training andupgrading. Interviews with industry officials suggest that a large percentage of companies in thissector are active in accepting apprentices in a range of skilled companies such as the big three, Japanese manufacturers and Tier 1 companies such asMagna have also developed their own in-house management development systems. Theseinitiatives are described in the section entitled Best Practices and Case Study Profiles. 12
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileCRITICAL SKILL NEEDS AND GAPSSkill NeedsBoth assembly and parts companies require a relatively highly skilled production work force, andtraining and skill upgrading are closely related to the ability to maintain competitive facilities. Much of this training, especially of production staff, is done in-house and often to proprietarystandards. For a broad range of production jobs, an industry-wide occupational standard does notexist; however, this issue is under discussion within provincial a result of the adoption of more sophisticated equipment and processes, minimum literacy andnumeracy standards for some of these jobs are increasing, even for assembly line with industry officials on behalf of the Panel in the late spring of 1999 suggest that theneed for design and engineering employees is growing, particularly among Tier 1 and 2companies. The supply of persons with the required technical skills is adequate, but firms seekthose who combine technical excellence with good management and interpersonal skills. Thesupply of those who possess the full package of desired skills is more limited. In the plastic products industry, there are current shortages of process engineers, set-up people,mould and die makers, and maintenance personnel. A recent study projects that, withoutcorrective action, this imbalance will become greater. Throughout the industry, a large number ofthe lower-skilled machine operators lack basic skills in polymer science, computers,communications and mathematics all of which are becoming increasingly important. IndustryCanada reports suggest that some segments of the industry appear to have minimal commitmentto training. Although the plastic products industry has been making some progress in these areas,the consensus is that the momentum must be maintained and efforts expanded, as the industrycontinues to raise its level of technological sophistication. Skill GapsThe impending shortage of skilled tradespeople is the single most important issue in thisindustry. The APMA estimates that in Ontario the demand for skilled trades in the overallmanufacturing sector over the next two to seven years will be about 35 000, of which theeducational and apprenticeship system is capable of supplying only 20 000. The APMA estimatesthat, of the resulting shortfall of 15 000, roughly one quarter will occur in the automotive6industry, with the remaining shortfall absorbed by other industrial Source: APMA figures, used in the presentation by Ann Herten to the APMA
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileIt takes roughly four years of post-secondary training and experience to certify most skilledtrades. Industrial electricians, for instance, require four and a half years of apprenticeship inaddition to several formal courses, usually offered by community colleges. Industrial millwrights,mould makers, pattern makers, and tool and die makers, require similar periods of training andapprenticeship. Interviews with industry officials suggest that the skills most difficult to find among design andengineering employees are project management, problem-solving, and budget management/costcontrol. Most companies expect to train personnel in these issue not discussed in the literature is whether or not the lack of managerial skills and trainingimpedes the industry s ability to improve productivity. The literature on work organizationsuggests that the successful introduction of programs such as lean production, just- in-timeinventory, and TQM depends on buy-in and cooperation from management, especially with industry officials suggest that shortages of managerial skills constrainproductivity growth. Several companies in the industry, including General Motors, Ford andChrysler, have reacted to this problem by setting up in-house management developmentprograms. Magna, a Tier 1 parts supplier, has recently established an in-house managementdevelopment training
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileRECRUITMENT, TRAINING AND DEVELOPMENT PATTERNSRecruitmentIndustry representatives feel that attracting youth into the industry, and into the skilled tradesused in the industry, is an important issue. However, analysis has shown that there is littleawareness in schools and among highly trained technology workers of the career opportunities inthe automotive industry. This lack of awareness alone can limit the industry s ability to attractyoung people and encourage them to acquire the basic entry-level skills needed to work with theadvanced technology employed in the representatives suggest that current immigration policies make recruiting skilledworkers from abroad difficult, because of problems associated with the immigration of spousesand families. The recognition of skills and certification from non-Canadian sources is also aproblem for which no solution has yet been found. Further, there are no firm estimates of thenumbers and DevelopmentGiven the large numbers of unskilled or semi-skilled production workers in the manufacturingsector of this industry, much training is done on the job, but cooperative skills training programswith secondary and college-level institutions are becoming more common. Most large vehiclecompanies, and some larger parts companies, have in-house training facilities for both technicaland management skills. A major effort, much of it in cooperation with the union, is currently being undertaken to upgradeproduction workers foundation skills of literacy, numeracy, and English and French as secondlanguages. The largest union in the sector, the CAW, operates an active educational program,much of which is directed at foundation skills and health and safety. The unionized sector of theindustry in Ontario is a major user of programs such as Basic Education and Skills Training(BEST), offered by the Ontario Federation of the rising minimum standards for literacy and numeracy, the proportion of employeeswhose first language is neither English nor French is an important issue. No reliable estimates areavailable on the language profile of the work force, although recent census material may beuseful in this the United States, numerous specialized higher education facilities exist (for instance, theGeneral Motors Institute, GMI, which awards basic and advanced degrees in automotiveengineering); established institutes such as MIT, Caltech and Wayne State University havespecialized programs for training advanced automotive personnel. Although such an extensive15
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector Profiletraining infrastructure does not exist in Canada at this level, most parts of the Canadian industryhave access to these . facilities. Furthermore, some advanced research and training instituteshave been established in recent years, most notably the University of Windsor Automotive R&DCentre, which pursues niche research in new automotive technologies. Associated with this,Chrysler Canada has recently established new research chairs in alternative fuels and in design atthe University of Windsor. Ford Canada, with the Natural Sciences and Engineering ResearchCouncil (NSERC), has established the Ford/NSERC Industrial Chair in Light Metals CastingTechnology at the University of Windsor to promote advanced research and graduate training inthis
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileOVERVIEW: KEYS AND OBSTACLES TO SUCCESSThe Canadian automotive industry is competitive and in a strong position to grow and prosperover the next few years. Employment, production and investment are currently at record levels. However, a number of significant issues must be addressed to ensure that the industry is able tomaintain its productivity and cost advantage, both of which are essential to continued investmentand segments of the industry have ready access to modern equipment and process technologybecause of the high level of foreign control and the global nature of the large companies thatdominate this industry. To meet the challenge of rapidly evolving technology, however, theindustry will have to focus on ensuring that workers are able to upgrade their skills or developnew skill sets. Solutions will involve innovative approaches to on-the-job training, such asdistance learning, and making sure that these approaches are accessible to smaller companies. Although there are clearly some skill shortages at the managerial level, as well as in the highlyadvanced specialties in science and engineering, the most pressing issue is the supply of skilledtrades. In particular demand are skilled tradespersons who are able to integrate competency inindustrial skills and trades with the ability to use advanced computer technology. A newgeneration of skilled workers is urgently needed to continue to support the growth of thisindustry. Success in ensuring that Canada s automotive work force and skills pool continue to represent acompetitive advantage for the industry is also dependent on raising the level of awareness of thecareer opportunities available in the automotive industry. This can be achieved by engaging allstakeholders industry, unions, governments, educators, counsellors and parents in aconcerted effort to promote these opportunities and attract young people to the
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileBEST PRACTICES AND CASE STUDY PROFILESBecause most R&D and design work in this industry is not done in Canada, educationalprograms for advanced personnel are not yet as well developed in Canada as in other countriessuch as the United States and Germany; however, they do exist. Co-op and apprenticeshipprograms are well developed and widely Windsor Experiment refers to a number of activities carried out by Chrysler Canada withgovernment and educational institutions. Activities include benchmarking best practices intraining and education in Europe in order to apply them to skills development programs inCanada. An example of initiatives that have come out of the Windsor Experiment include theAutomobile Manufacturing Skills Initiative (AMSI), at St. Clair College, supported by Chrysler,the CAW and the federal government. It includes on-the-job and off-the-job learning programsand combines industry-specific knowledge with skills development and advanced computertechnologies. The program will give participants a community college diploma in electronicsengineering technology and an industrial electrician apprenticeship certificate. A wide variety of co-op programs are in use in the industry, for example at Georgian College,which houses the Centre of Expertise for Automotive Parts Design and ManufacturingTechnology. The centre is a collaborative partnership between business and industry,governments, the education and training sector, and the R&D community. The program, whenfully operational, will have the capacity to turn out 90 graduates per year in automotivemanufacturing, 90 in auto parts design, 120 in tool and die, and 300 in advanced engineeringdesign. The college will also provide customized training and upgrading workshops and seminarson a continuing basis. Auto parts design, auto parts manufacturing technology, and skilled tradesapprenticeship programs in tool and die, robotics and automation, millwright, electronics andsystem design are part of the technology programs are offered in Ontario at Sheridan College, which offersengineering technology courses with and without co-op placement options. Among the activitiesat Sheridan College are a partnership with IBM and Pratt and Whitney to do training inComputer-Assisted Three Dimensional Interactive Application (CATIA), a suite of softwareapplications that is becoming the standard for design College and McMaster University are currently offering a joint program leading to aBachelor of Manufacturing Technology. This program is geared to current engineering personnelwho require upgrading, and students may include engineering technology graduates, as well asgraduate engineers wanting to upgrade or change their specialty. This program is not specific tothe automotive industry but includes placements in the automotive industry. The program isoffered on both a part-time (two-year) and a full-time (one-year) basis. Key players in the autosector were involved in the development of this program, and the auto industry is expected to bea major destination for program
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileA number of training and upgrading initiatives have been developed by specific companies tomeet their own needs, when these are not met by other institutions. Toyota University, forinstance, is part of an overall initiative to instil a learning culture and develop resources for thecontinuous upgrading of production staff. It emphasizes distance learning, combined with someon-the-job and classroom Woodbridge Group operates the Woodbridge Institute for Learning (WIL) in cooperationwith Sheridan College. Woodbridge has a policy of avoiding off-the-shelf training programs asmuch as possible, and works with Sheridan to design custom programs that meet a company sspecific needs. The programs include manufacturing and technical programs, including advancedquality planning; health safety and environmental programs; management and supervisoryprograms; and a variety of specific functional programs such as finance and materialsmanagement. Teaching staff (referred to as learning facilitators) are almost entirely chosen fromcurrent Woodbridge Corp has recently established the Magna Technical Training Centre in Markham, centre works in partnership with Durham College and Humber College, which providetheoretical training as part of a process leading to certification to both Canadian and Europeanstandards in a range of technical specialties. The current capacity of the centre is roughly 50students in the inaugural program (40 tool and die and 10 industrial electronic), although thisnumber will increase in coming years. All students are Magna employees and are hired at theplant level and assigned to the centre for further training. After the training program at the centre,students rotate through actual production jobs as part of the certification process. Magna iscurrently in the process of setting up a management development centre to meet its non-technicaltraining and upgrading
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileAPPENDIX I: SOURCE DATAAutomotive Industries Association of Canada. The Automotive Aftermarket Industry in Canada. Outlook Study. 1997. Summary version available on Industry Canada s Web site. (Backgroundanalysis undertaken as part of Automotive Competitiveness Review).Automotive Parts Manufacturers Association. Automotive Components Industry Outlook. June1997. Summary version available on Industry Canada s Web site. (Background analysis doneas part of Automotive Competitiveness Review).Automotive Parts Manufacturers Association. Moving Ahead. High Tech ManufacturingCareers in Canada, Parts Manufacturers Association. Statistical Analysis of the Skilled Trades PeopleWorkforce in the Ontario Auto Parts Manufacturing Industry, April Parts Manufacturers Association. The Competitiveness of Canada s . PartsSector: A Survey and Comparative Study. 1997. Summary version available on IndustryCanada s Web site. (Background analysis done as part of Automotive CompetitivenessReview).Chrysler Canada. The Link Is Forged. Windsor Experiment III, and Immigration Canada. Canadian Automotive Parts Industry. Human ResourceStudy, and Immigration Canada. Report of the Automotive Industry Human ResourcesTask Force, and Young and Angus Reid Group. Ontarians Attitudes Towards Careers and the SkilledTrades, , Michelle. Skills Challenges Facing Key Sectors of the Canadian Economy. AConsultation Report. Industry Canada, August 1998. [Typescript]. Harbour and Associates. The Harbour Report, North America. 1997, 1998. Summary andanalysis contained on Harbour Web site ( Ann. Our Education System: Our Supply Base. Slide show presentation to the APMAHuman Resources Development Committee, 1998. Industry Canada. Automotive Industry. Part 1 Overview and Prospects. Sector Competitiveness Frameworks Series, Canada. Automotive Sector Summary Report: Report on Consultations, June Canada. Canadian Industry Overviews. Available on Industry Canada s Strategis Canada. Canadian Industry Statistics. Available on Industry Canada s Strategis Automotive Competitiveness Review. A Report on the Canadian AutomotiveIndustry. June Canada. The Automotive Competitiveness Review. Industry Identified Issues, June
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileIndustry Canada. The Canadian Automotive Industry Today, 1997 Edition. Automotive andTransportation Branch, Industry Canada. Available on Industry Canada s Web , Daniel andAdam Rogers. The Car of the Future. Newsweek, November 23, , Aaron. Methanol-powered minivan puts GM in the fuel-cell race. Automotive News,October , Derwyn. Critical Skills in Five Canadian Industries: A Summary Report of SectoralInterviews. Paper prepared for the Expert Panel on Skills, Advisory Council on Science andTechnology, June & Production. Connecting on quality. Tooling & Production. , April . States Department of Commerce. Office of Technology Policy. The . AutomobileManufacturing Industry. Meeting the Challenge: . Industry Faces the 21st Century, December 1996. Ward s Auto World: (list of articles follows) Global engineering: solving the puzzle, Ward s Auto World, Vol. 34, 1998. pp. 37-123. Is Ste. Therese the next GM plant on the bubble? Ward s Auto World. Vol. 34, . 22-23. Suppliers want more sharing of costs and benefits from systems engineering. Ward s AutoWorld. Vol. 34, 1998. Gardner, Greg. Crunch time for skilled trades. Ward s Auto World. Vol. 34, , Greg and Tom Murphy. Chrysler s Sidlick philosophical about supplierconsolidation. Ward s Auto World. Vol. 34, , Greg and Tom Murphy. Supplier technology adds fourth leg to GM s stool. Ward sAuto World. Vol. 34, , Tanya. A firm believer in teamwork. Ward s Auto World. Vol. 32, April 1996,pp. , Jeff. Canada: view from the roof. Ward s Auto World. Vol 32, October 1996, p. , Jeff. Multitude of technologies via for new generation vehicle. Ward s Auto . .34 March 1998, p. , Tom. Close enough to perfect. Ward s Auto World. Vol. 34, , Tom. Rapid cost cuts. Ward s Auto World. Vol. 34, , Tom. Welcome to the table. Ward s Auto World. Vol. 34, February 1998, p. , Donald W. Ballard battling to break through. Ward s Auto World. Vol. 34, March 1998,pp. , Stephan. Wake-up call. Ward s Auto World. Vol. 34, , Herb and Drew Winter. Big global growth predicted for plastics within five years. Ward s Auto World. Vol. 34, 1998, pp.
FINAL REPORT OF THE EXPERT PANEL ON SKILLS: Supporting Documents Automotive Sector ProfileWinter, Drew. Cleaning up the auto industry s other tailpipes. Ward s Auto World. Vol. 34,, Drew. Lightweight structures in limelight: vehicles may get lighter even withoutmandates. Ward s Auto World. Vol. 34, 1998, p. , Drew. Turning up the juice. Ward s Auto World. Vol. 34, SitesIndustry Canada s Strategis Web site: Auto Workers (CAW): Parts Manufacturers Association: and Associates: Anne Cool, Director of Human Resource Development, and President of Skills CanadaAnn Herten, Director of Human Resources, Woodbridge GroupPat Lang, Vice-President Academic, Georgian CollegeJohn Morrissey, Vice-President, Van Rob Amos, Executive Vice-President for Administration and Human Resources, Magna Corp.,and member of Industry Canada Automotive Industry Advisory Group, and Max Amtmann,Manager of the Magna Technical Training Centre22
