The Canadian automotive manufacturing industry is a complex network of interconnected businesses.

The complexity of this network has led to significant underestimation of the industry’s true employment picture.

That’s the core message of our most recent report: Importance of the Canadian Automotive Manufacturing Sector. Put bluntly, we’re bigger than we thought.

To put this latest report in context it’s important to know that since its inception the FOCAL Initiative has produced more than 40 reports examining trends and forecasting employment in Canada’s automotive manufacturing sector.

Previously published studies and reports stopped short of including employment within certain sections of the entire automotive industry supply chain. This has resulted in a significant misrepresentation of our industry’s size. As we state in our latest report:

“Previously perceived as an industry employing around 125,000 people, FOCAL’s research has indicated that the sector is much larger in size and output, with 188,000 jobs in automotive production, and an additional 22,000 jobs in automotive research and technology. With other primary automotive suppliers accounted for within the broader automotive manufacturing supply chain, the importance, impact and contributions of the sector for the entire economy are more significant than previously apparent.” 

Analyzing the automotive industry

When you analyze the automotive industry, it’s easy to see how an underestimation of this kind can happen. Automotive manufacturing in Canada includes:

• Vehicle assemblers and vehicle parts manufacturers
• Automotive suppliers self-identifying as producers of metal, plastic, rubber or glass products
• Computer and electronics manufacturers
• Engineering, design, management consulting and software services

The most visible industry segments are in the vehicle assembly category. Defined as Original Equipment Manufacturers (OEMs), these facilities employ tens of thousands of workers.

As we say in our report: “These facilities rely on a multi-tiered network of captive (facilities owned by OEMs such as Ford and Toyota) and independently owned suppliers (e.g., Magna) for modules, components, parts, materials, and tooling.”

And there’s an additional complication.

Though these manufacturing and service facilities are – primarily – dedicated suppliers to the automotive industry, some supply industries beyond the automotive sector. 

In terms of their precise impact on employment within the Canadian automotive sector, these complex connections are exceptionally difficult to track accurately. For this reason, FOCAL built an economic model that has been able to quantify the economic impact of the automotive industry. 

A picture paints a thousand words

In an effort to clarify the situation, we have created a complementary pair of graphics that break down the complexities of our reporting challenge into a series of visuals, supported by some brief explanatory text.

• The above graphic summarizes the workforce model used to estimate employment within the automotive production sector.
• The graphic includes the various approaches followed by FOCAL to determine employment in both automotive production and automotive technology.

The second graphic, carried below, represents an even more comprehensive depiction of the scope of our industry broken down into three parts including:

• Vehicle Assembly (38,000 employees)
• Vehicle Parts Manufacturing (80,000 employees)
• Other Primary Automotive Suppliers (70,000 employees)

The graphic enables you to visually trace industry transactions flowing from non-automotive industries to vehicle assembly and vehicle parts manufacturing. What is also apparent from this second graphic is the astonishing spread of the industry activities, percolating down and through a myriad of direct and indirect applications. 

Under-reporting the employment implications of this spread is inevitable. With this latest report, we’ve worked hard to rationalize it.

Conclusion

This latest FOCAL finding proves that the true size of the Canadian automotive manufacturing and technology sector – taking the broader supply chain into account – encompasses a total of approximately 210,000 employees, not 125,000 as previously reported.

By connecting the technology and innovation employment numbers to those associated with vehicle assembly and vehicle parts manufacturing, we’ve developed a far more comprehensive and accurate picture of just how important the industry is to Canada’s economy and innovation ecosystem.Our full report, of which this is a summary, can be found on the FOCAL Initiative website.

Find out more from FOCAL

The Future of Canadian Automotive Labourforce (FOCAL) Initiative is a collaboration of the Canadian Skills Training and Employment Coalition (CSTEC), the Automotive Policy Research Centre and Prism Economics and Analysis. 

Funded by the Government of Canada, you can find out more about us on our website and follow us on Social Media – LinkedIn, Facebook, Instagram and Twitter – and through our newsletter.