1. Presentation to: Society of Automotive Engineers World Congress International Business Spotlight on Canada March 5, 2003 Cobo Hall Detroit, Michigan Automotive Parts Manufacturers’ Association The Voice of the Automotive Original Equipment Suppliers in Canada since 1952

2. Who are we? Since 1952 APMA has been Canada’s national association representing OEM producers of parts, equipment, tools, supplies and services for the worldwide automotive industry. APMA members and their subsidiaries collectively account for over 90% of the US $22 billion automotive parts industry production in Canada. (2001)

3. Mission Statement To engage in activities that promote the interests of automotive original equipment suppliers in Canada that enhance the economic welfare of our members and be the Voice of the Canadian automotive original equipment suppliers

4. Objective Create and execute global marketing initiatives to develop international trade and business opportunities for APMA’s members by developing working relationships with industry counterparts to promote the exchange of market information and strategic alliances

5. Canadian Vehicle Production 1992 - 2002

6. Total 14 Type of No. of Manufacturer Location Product Assembly Lines Type of No. of Manufacturer Location Product Assembly Lines List of Canadian Vehicle Assembly Plants from East to West GMOshawa, Ont.Truck & Auto3 FordOakville, Ont.Truck & Mini Van2 HondaAlliston, Ont.Auto, Mini Van & SUV2 DaimlerChryslerBrampton, Ont.Auto1 ToyotaCambridge, Ont.Auto & SUV2 CAMI (Suzuki/GM) Ingersoll, Ont.Auto & SUV1 FordSt. Thomas, Ont.Auto1 DaimlerChryslerWindsor, Ont.Van & Mini Van2

7. Canadian Assembly Plants Locations Oshawa Oakville Brampton Alliston Cambridge WindsorSt. Thomas Ingersoll

8. Takanori (Tak) Sakaue, past President Toyota Motor Manufacturing Canada Inc. “Our records for safety and productivity place the TMMC team among the industry’s best. And when it comes to quality, vehicles built at our Cambridge facility are among the highest rated vehicles in North America.” Hours per Vehicle U.S. Canada 19.8 29.8 21.0 23.1 31.9 22.4 24.4 33.2 Toyota Corolla DaimlerChrysler minivans GM full-size pickups Windsor St. Louis Oshawa Fort Wayne Pontiac East Flint NUMMI Cambridge Harbour Report Report2002 Canada = Overall Superior Manufacturing Efficiency

9. …in an environment of exceptional quality performance. With 16% of total North American assembly, Canada’s plants have won 33% (12 out of 36) of the awards given by the independent J.D. Power & Associates. Toyota Cambridge Gold - 1991, 1995, 1996, 2001 Silver - 1992 Bronze - 1993, 2000 General Motors (Car) Oshawa Gold - 2002 General Motors (Truck) Oshawa Bronze - 1999 Honda Canada Alliston Silver - 1996 Ford plant St.Thomas Gold - 1998 Silver - 1994 Canada’s quality of output is also top rated.

10. 2001 J.D. Power Quality Survey

11. Canadian Automotive Parts Shipments 1991 – 2001 (in US $)

12. “ Canadian Auto Parts Share of North American Production has grown from 11% in 1991 to 17 % in 2001” Carlos Gomas Bank of Nova Scotia

13. Sales by APMA Members (as of 2003; $US) Annual Sale of Automotive Products $0-7 million $7-14 million $14-34 million $34-67 million $67-167 million $167-334 million $334-670 million $670 million + Number of Members 67 16 20 16 14 12 1 3

14. Automotive Tier One OE Supplier Qualities 1)full service engineering support 2)product development 3)global capabilities 4)modular and systems sourcing 5)warranty assumption 6)tough target costing 7)continuous improvements everywhere 8)lean manufacturing capability

15. Increased globalization and competition are forcing new realities: - Cost reductions - Tiering - Downloading/outsourcing responsibility for design, sub-assembly - Consolidation - Globalization of vehicle platforms - Modularization of parts systems - Standardization of components - Strategic alliances But the assemblers continue to restructure, and this brings new opportunities for global players…

16. In addition to the business opportunities, one might still ask, “Why Consider Canada?” Canada’s cost advantages of doing business: -15% lower overall costs compared to USA (KPMG Study) -lower corporate taxes -higher productivity, quality -full access to North American markets -business climate: tax regime, innovation policy, programs

17. Very important is government support for development of Canada’s intellectual capability… Canada’s approach to technology: -becoming global “Intellectual Centre for automotive Research, Design, Development and Testing” - US $700 million in auto-related R&D investment over last few years

18. Canada offers real advantages for automotive R&D.. Quebec Ontario Source: Conference Board of Canada, 1999 After-tax cost of $1 R&D expenditure Illinois Ohio Michigan 0.400.450.500.55 0.60 N. Carolina Relative Competitiveness of R&D Tax System Additional government support through programs and research organizations. Automotive education and training infrastructure that includes technical colleges, trade schools and universities. Canada offers the most favorable tax treatment for R&D among the G-7: - Combined federal/provincial tax credits reduce the after-tax cost of $100 of R&D expenditures to as low as $44.

19. -co-operative links to national labs, universities, colleges -New last week- Ontario government will allocate US $ 330 million to automotive R & D Government support for development of Canada’s intellectual capability cont’d...

20. Gerry Fedchun gfedchun@apma.ca (416) 620-4220 ext. 228 www.apma.ca The Voice of the Automotive Original Equipment Suppliers in Canada