The recent investments in the auto sector indicate Canada is still appealing to foreign investors and manufacturers, says the head of the Automotive Parts Manufacturing Association.
Last week The Solcz Group Inc. sold auto supplier Valiant TMS Group of Companies to an unnamed Chinese consortium of companies and investors. That followed the recent investment commitment by Fiat Chrysler Automobiles and General Motors during contract negotiations with Unifor.
“Investments like this tell everybody that Canada is worth investing in,” said APMA president, Flavio Volpe. “We’re inundated with the negative perception of where the Canadian growth chart is going.”
During contract negotiations, GM and FCA combined to promise about $900 million in Canadian investments. Unifor is currently in negotiations with Ford Motor Co. and seeking investment in the company’s Windsor engine plants.
Two GM plants and two FCA plants will see significant upgrades and investments and FCA has already spent about $3 billion retooling its Windsor, Ont., assembly plant where it builds the Chrysler Pacifica minivan.
Volpe said the Oct. 20 Valiant sale, and the recent investment commitment by FCA and GM are good indicators for the future of the Canadian industry.
“The fact a foreign investor, regardless of origin, sees a Canadian supplier as a strength is always good news,” he said.
It also means the Chinese are looking to expand into the North American market.
“The Chinese have been making acquisitions large and small around the world including in the Great Lakes in automotive for the past several years. This one hit our radar and other people’s radar because Valiant is such a high-profile company and such a big player in Canadian automotive,” Volpe said. “It looks like an acquisition of a strategic asset to serve a market here.”
Volpe said the Chinese group will gain “ready-made business access” to North American assembly and supply.
“They certainly see the value in supplying the American, Japanese, European and Korean customers of Valiant in North America,” he said. “They maybe want to have a footprint here for when Chinese assemblers show up, they could supply them directly.”
The group may also be taking advantage of Valiant’s long-term desire to expand in the Asia-Pacific market, Volpe said. Valiant already developed Valiant TMS Technology in Shanghai a few years ago.
“They may want to supply in-house needs for machines for their assembly in China,” Volpe said of the Chinese consortium.
Volpe said “everything about the deal is right” and predicted that it’s likely not the last investment in the country.
“You can surmise from this that there are other active conversations ongoing,” he said. “It’s probably happening on a wider scale than you can imagine.”