Job shop executives serving the automotive industry may be feeling overwhelmed after another year of supply chain bottlenecks, inflationary pressures, political uncertainty, and now, recessionary forecasts. But there are many reasons to remain optimistic about the future, according Rob Wildeboer, executive chairman of Martinrea International.
Wildeboer, co-founder of the global automotive supplier, was the keynote speaker at the Shop Metalworking & Technology Mold Expo, put on by Shop Metalworking Technology magazine in Windsor. He encouraged executives to look beyond the doom and gloom scenarios currently circulating.
Joking that economists have successfully predicted “seven of the last two recessions”, Wildeboer said auto sales are showing an upward trajectory.
“We are in a growth business. We are headed into a good cycle,” Wildeboer said, adding that the Canadian economy is largely driven by the U.S. economy and that’s looking “pretty solid” despite current challenges.
“Purchasing power is solid in the U.S. People have money to buy vehicles. Back in 2008 (during the Great Recession), Americans were highly over leveraged. The balance sheets of Americans today are pretty good and housing prices there are not ridiculously high. There is a lot of money sitting in bank accounts,” Wildeboer said.
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High fuel prices are not putting as much of a damper on car sales as one would expect because today’s cars are more fuel efficient, he reasoned.
If normal car sales for the market are 15-16 million vehicles annually and we are currently selling below that due to supply chain challenges, it shows there is considerable pent-up demand.
“The average age of a vehicle in North America is 12.2 years. If your vehicle is that old you are missing out on a lot of technology,” Wildeboer said in making the case for increased demand in coming years, also noting that the U.S. market is adding about two million drivers per year.
Wildeboer is also optimistic about Canada’s fortunes because we are part of a trading bloc with the U.S. and Mexico that has strong growth prospects.
“I think that growth is going to be regional and North America is poised to excel as a trading bloc. It will be the top trading bloc region of the world this century,” he predicted, adding that China’s ascendancy is threatened by its now declining population.
Geopolitical events such as the ongoing COVID 19 pandemic, the war in Ukraine, and political upheaval may seem like insurmountable threats to continued global growth, but Wildeboer says it’s nothing we haven’t faced before. He pointed to the year 1968 as an example. In that year, the world was dealing with the Hong Kong Flu, which had killed up to four million people, there were race riots in America, Martin Luther King and Bobby Kennedy had been assassinated, the U.S. was fighting in Vietnam and Russia had invaded the Czech Republic.
“We live in a broken world. But we always have. There is a lot of risk. Being an entrepreneur is not about rolling the dice. It’s about understanding risk better than anyone else. And understanding that the biggest risk is standing still,” Wildeboer said.
