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The North American automotive value chain: Canada's role and prospects

Author

Listed:
  • Timothy J. Sturgeon
  • Johannes Van Biesebroeck
  • Gary Gereffi

Abstract

This paper deals with the North American automotive value chain and analyses the prospects for Canadian automotive sector upgrading. The size and importance of the automotive industry in Canada's Ontario Province is a legacy of its historic ties to the 'Big 3' US automakers and its proximity to the traditional heartland of the US industry in Michigan. Canada continues to have marginally lower operating costs than the USA and a strong industrial culture that attracts investment. But Mexico's integration into the North American production system, the rise of new centres of automotive production in the southern USA and rapidly growing flow of automotive parts from China to North America have begun to erode this advantage. Because the North American market is saturated, consisting mainly of sales of replacement vehicles, locational shifts in production and employment within North America are essentially 'zero-sum games'. If the market share of the Big 3 continues to fall and the southward shift of the industry within the USA is maintained, the sustainability of the Canadian industry could be undermined. The paper concludes with a set of policy recommendations for Canada to maintain its comparative advantage in the industry.

Suggested Citation

  • Timothy J. Sturgeon & Johannes Van Biesebroeck & Gary Gereffi, 2009. "The North American automotive value chain: Canada's role and prospects," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 2(1/2), pages 25-52.
    • Handle: RePEc:ids:ijtlid:v:2:y:2009:i:1/2:p:25-52
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    References listed on IDEAS

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    1. Johannes Van Biesebroeck, 2007. "Complementarities in automobile production," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1315-1345.
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    Cited by:

    1. Petr Pavlínek, 2012. "The Internationalization of Corporate R&D and the Automotive Industry R&D of East-Central Europe," Economic Geography, Clark University, vol. 88(3), pages 279-310, July.

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