Canada sees lowest investment in the auto industry since mid-1980s image

Canada is not experiencing a recovery such as that of the U.S. auto industry, as carmakers have adopted a new financial discipline and the local currency is getting stronger.

Automakers plan to invest $13.3 billion in U.S. plants over the next four years, but very little in Canada. Ford Motor Company closed this year an Ontario factory that had built the Ford Crown Victoria police car and the Lincoln Town Car.

Investment in Canadian auto plants may fall to $1.2 billion in 2011, the lowest since the mid-1980s and 62 percent less than the average recorded in the past decade. On the other hand, the U.S. and Mexico are leading the recovery after a 35 percent drop in North American auto investment since its 2007 high.

“You have stabilization in the U.S., you have plants in the next couple of years for Mexico and you’re not really seeing anything with respect to Canada yet. We could become somewhat of a laggard in the sector,” Carlos Gomes, a Scotiabank economist, was quoted as saying by Bloomberg.

Back in 2003, Ontario became the largest North American producer of vehicles, dethroning Michigan, the home base of GM, Ford and Chrysler. Recent decline is due to U.S. companies cutting labor costs and Canada’s surging currency.