Cars + Trucks
How Does The US Auto Industry Affect Canada?
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Are Canadian auto companies in as much trouble as the American Big Three? How does the state of the auto industry in the U.S. influence the industry in Canada?
Neighbours To The South
Lack of sales is the biggest reason for the failed auto industry in the U.S. and as long as the economy in that country continues its downward slide, Canada's auto industry could be affected. If the slump in auto sales continues, Canada could see as many as 400,000 jobs lost. President of the Canadian Auto Workers union, Ken Lewenza, has said that he believes if Canada's government offers their help, they could possibly avoid the loss of jobs for those in the auto industry in Canada. Japan’s Honda company has also announced that, although it is cutting production in the U.S. because of low sales, this will not affect the 4,600 people in the industry in Canada.
Canadian Auto Workers local 222 said that GM would shut down the Oshawa, Ontario plant for approximately six weeks starting sometime in January. However, in Ontario, some production will go on as scheduled. The only thing Canadians can do is wait and see how much of their production will end because of the failing auto industry in the US. All of the auto plants in Canada will face shut down at some point if things do not get any better.
What Is A Bailout?
A bailout is provided to companies that have overextended their working capital and no longer have the means to pay their bills. For Chrysler and GM, this has been a problem for years, but with the failing economy, they finally hit bottom. They had nowhere else to turn. They had to ask for a bailout that would give them back some working capital. This could stop any future bankruptcies, but if the economy does not pick up, it will only fix the problem for a short time.
Is There An End In Sight?
What could a failed auto industry in the United States mean for the Canadian auto industry? If a bailout does not give the U.S. auto industry the help that it needs, millions of people could lose their jobs and the economy could get even worse. In Canada, the government could choose to step in and grant more money toward the bailout in this country, but that will not help the auto industry overall. The Big Three could continue to have problems, which may result in the companies ceasing to make any new vehicles.
The industry did not get this far in debt over night; it took time and time is the only way the industry can get back on top. In Canada, all eyes on what is taking place in America.
The Future Outlook
If the bailout fails to make a positive change in the industry, the cars you see today will be what you have to choose from when shopping for a new vehicle. This sounds bad, but with so many vehicles sitting on the car lots, there will be many to choose from in time. The small business owners running car dealerships will be hit hard with the slumping auto sales and may need to shift their autos around to other dealers. This could produce a low sticker tag in the window and more incentives to buy new.
The future of the automobile depends on the state of the economy in the U.S. The lack of sales and available credit to buy new vehicles will continue to plague the Big Three automakers. In Canada, the economy has not seen the steady drop in sales that has been seen in the United States. One day, everyone will look back at this time, remember the way it was and hopefully find better ways to avoid such devastation.
All eyes are on the auto industry. It will take some time before anyone knows for sure what will happen in the future. Have we seen the last new model car for a while? This all depends on the economy and consumers’ spending habits.
Sources:
CTV.ca
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