Creating Jobs in Canada's Auto Sector

TORONTO, ONTARIO--(Marketwired - April 28, 2015) - Industry Canada

The firms that supply Canada's auto companies are essential to the success of the Canadian economy. In order to create new jobs and stay competitive, companies must continue to develop cutting-edge products.

Industry Minister James Moore today announced details of the Automotive Supplier Innovation Program (ASIP) outlined in Economic Action Plan 2015. The new fund will support innovation in Canada's automotive industry by encouraging important new investments in the country's auto sector.

Minister Moore was joined by representatives of the Automotive Parts Manufacturers' Association and Canadian Manufacturers & Exporters, who praised today's announcement.

The Government will support auto suppliers in developing groundbreaking, advanced products. This support is essential to helping small and medium-sized businesses bring transformative ideas in their early stages to the marketplace. The fund will support activities such as prototype development, process engineering and product testing.

The Government of Canada will begin accepting applications for contributions under the ASIP in June 2015.

Quick facts

• The Automotive Supplier Innovation Program complements the Automotive Innovation Fund (AIF), which was first introduced by the Government in 2008 and renewed in 2013 (both for $250 million over five years). In Budget 2014, the Government announced another $500 million over two years for the AIF. Since 2008, the AIF has leveraged almost $2.8 billion in Canada's auto industry.
• Canada's auto parts sector represents close to $24 billion in sales annually and employs over 65,000 people. It contributes $8 billion to Canada's GDP.
• The Government has also provided other fiscal and economic measures to help keep the auto industry competitive, including a sound banking system; red tape reduction; the lowest overall tax rate on new business investment in the G7; the lowest debt-to-GDP ratio in the G7; and a triple-A credit rating.

Quotes

"This important support allows Canada's small and medium-sized businesses to do what they do best: innovate and contribute their expertise to creating jobs in Canada's auto sector. Our government is committed to taking the steps necessary to ensure that Canada's manufacturing sector remains a vital part of this country's economy."

– The Honourable James Moore, Minister of Industry

"Our government's new auto innovation program is great news for families in Vaughan. Canadian auto parts manufacturers are critical to the success our economy. The new program will support innovation and jobs, as well as the global competitiveness of our cutting-edge Canadian auto suppliers."

– The Honourable Julian Fantino, Associate Minister of National Defence and Member of Parliament for Vaughan

"Canada's auto suppliers are among the most competitive in the world today. Their future success, however, will depend on their ability to develop and market automotive innovations for customers around the world. The funding that Economic Action Plan 2015 provides for the sector will be critical in helping Canadian suppliers take new technologies from prototype to full commercialization, while expanding their business along the way."

- Jayson Myers, President and CEO, Canadian Manufacturers & Exporters

"This government's investment in the competitiveness of the Canadian automotive supply chain demonstrates its commitment to the industry's long-term health in this country and shows that it understands that the relationship between opportunity and innovation is the key to continued success."

- Flavio Volpe, President, Automotive Parts Manufacturers' Association

Related product

• Backgrounder

Associated links

• Automotive Supplier Innovation Program
• Automotive Innovation Fund

Backgrounder

Automotive Supplier Innovation Program

The Harper Government is committed to creating jobs, growth and long-term prosperity and to advancing the global competitiveness and investments in innovation of Canada's automotive manufacturing sector now and in the future.

A key component of Canada's automotive industry is its world-class suppliers. Already highly innovative, Canadian suppliers will need to invest and innovate even more to bring groundbreaking products to market in order to compete and to meet the demands for the next generation of technologies.

On April 28, 2015, Industry Minister James Moore announced details of the new Automotive Supplier Innovation Program (ASIP) outlined in Economic Action Plan 2015. The new fund will help Canadian automotive suppliers develop and demonstrate innovative technologies, ensuring that they can continue to innovate and compete.

Vehicle manufacturers are demanding a supply of innovative products to meet new fuel-efficiency, emission and safety standards and to address the growing consumer interest in connected and automated vehicle technologies. Suppliers that can demonstrate an ability to meet these demands will not only succeed in winning business from domestic manufacturers but will also be well positioned to market their solutions globally.

The ASIP will complement existing initiatives that support the automotive sector, such as the Automotive Innovation Fund (AIF), by strengthening Canada's parts supply base, creating a favourable environment for automotive research and development, and providing firms with new opportunities to enter global supply chains.

The ASIP is expected to provide $100 million in contributions to automotive suppliers over five years, starting in 2015. This funding will help Canadian suppliers move the next generation of technologies from the drawing board to commercial success, ensuring that Canadian companies are able to compete and win new business. This new program is designed to fill a gap between early-stage basic research and pre-commercial development. Eligible activities will include prototype development, process engineering, and pre-commercial product testing and validation. Each company is eligible to receive up to $10 million over the term of the program and will require a minimum of 20 percent from an SME partner.

The ASIP will help Canada's automotive industry stay competitive and remain at the cutting edge of next-generation technologies, thereby generating jobs, economic growth and prosperity.

The fund will enhance suppliers' ability to be drivers of groundbreaking technologies.

The ASIP is designed to:

• contribute to automotive technology development and demonstration in Canada;
• foster the competitiveness of the Canadian automotive supply chain;
• encourage high-value, innovative development activities in the middle phases of the technology development continuum (technology readiness levels 4 through 7), which will position Canadian automotive suppliers—particularly small and medium-sized enterprises—to develop the products of tomorrow;
• maintain high-skilled jobs; and
• support the Government's environmental, and science and technology agendas.

Canada's automotive supply sector represents close to $24 billion in shipments annually and employs over 65,000 people.

The ASIP complements the AIF, which has so far leveraged close to $2.8 billion in investments in Canada's auto industry.

The Government first introduced the AIF in Budget 2008, providing $250 million over five years. On January 4, 2013, Prime Minister Harper announced that the AIF would be renewed, providing $250 million over five years (2013 to 2018) to automotive companies in Canada in support of strategic, large-scale projects. In Budget 2014, the Government announced another $500 million over two years for the AIF.

In addition to the ASIP and AIF, the Government has also undertaken the following initiatives to help Canada's automotive industry:

• securing market access for Canadian-made vehicles, including in Europe under the Comprehensive Economic and Trade Agreement;
• securing better and faster access to the industry's primary export destination with investments of $470 million in 2014–2015 for a new Windsor–Detroit international crossing; and
• ensuring favourable fiscal and economic conditions to help keep the auto industry competitive, including a sound banking system; red tape reduction; the lowest overall tax rate on new business investment in the G7; the lowest debt-to-GDP ratio in the G7; a triple-A credit rating; and low corporate taxes.

Since 2006, the Government has taken action to reduce taxes to promote investment in Canada and to leverage the collective efforts of post-secondary institutions, industry and government to build a robust research sector.

Measures announced in Economic Action Plan 2015 that broadly support manufacturing include:

• an accelerated capital cost allowance (CCA) at a rate of 50 percent on a declining-balance basis for eligible machinery and equipment assets used in manufacturing and processing that were acquired after 2015 and before 2026;
• up to $100 million over five years, starting in 2015–16, to support product development and technology demonstration by Canadian automotive parts suppliers through the new Automotive Supplier Innovation Program;
• a national aerospace supplier development initiative modelled on the successful MACH program pioneered by Aéro Montréal, with funding of $6 million in 2016–17 reallocated from the Strategic Aerospace and Defence Initiative;
• $2.5 million per year starting in 2016–17 for Industry Canada to undertake research on Canada's defence industrial base and key industrial capabilities, which will support the implementation of the Defence Procurement Strategy and create jobs and growth in Canada;
• an additional $30 million over four years, starting in 2016–17, to support cutting-edge research and technology development in Canada's satellite communications sector; and
• $86 million over two years, starting in 2016–17, to continue to support the transformation of the forest sector by extending the Forest Innovation Program and the Expanding Market Opportunities Program.

Follow us on Twitter: @industrycanada