What used to be seen as a positive side of building cars and other goods in Canada, the country’s cheaper dollar, is no longer contributing to companies’ decisions to operate there. As Reuters reports, many automakers, General Motors included, aren’t taking the loonie’s recent dive in the value as a sign to ramp up Canadian production.
GM CEO Mary Barra previously stated currency fluctuations would have no impact on their production decisions. A falling Canadian dollar was seen as a potential plus for GM’s Oshawa Assembly plant, which is rumored to close after production commitments expire in 2016, however many auto execs see it as merely a fluctuation and not a trend that’s here to stay.
Other automaker echoed Barra’s statements when asked about the value of Canadian currency. Like GM, Honda takes into account multiple factors when making investment decisions, such as logistics, labor costs, infrastructure and government subsidies.
“”We don’t believe making a strategy, or a business strategy based on exchange rates is sound business logic,” Jerry Chenkin, CEO of Honda Canada, told Reuters in a phone interview. “Exchange rates as we’ve already seen, go up, go down and are impossible to control.”
Canada’s weaker dollar previously made it an attractive venue for auto production operations, but as Fiat Canada CEO Reid Bigland said, that feeling has faded in recent years.
“Under normal circumstances, when it comes to Canadian manufacturing, when the Canadian dollar goes down it’s really an opportunity to strike up the band,” Bigland said. “Unfortunately the (Canadian) dollar has been strong for so long that a lot of the band has left.”
The GM Oshawa plant’s consolidated line is expected to close in 2016 unless GM allocates a new product to the plant. The automaker is expected to make an announcement in regard’s to the plant’s future in 2016, however Canadian workers’ unions are pushing for early negotiations.