Like the mythical phoenix, Canadian economic forecasters see the Windsor metropolitan area rising from the ashes of almost two decades of deterioration in automotive manufacturing, to lead the country in GDP growth for the next two years.
The Conference Board of Canada forecasts the Windsor census metropolitan area, which includes Lakeshore, Tecumseh, Lasalle and Amherstburg, will hit 2.4% GDP growth this year. That’s more than any of the 24 major Canadian cities included in the study, and a phenomenal 12 times the GDP growth rate forecasted for the Ontario economy and nearly double the growth forecasted for the country. And the region is expected to outpace both the provincial and national growth expectations yet again in 2024, growing another 2.1%.
“The outlook for Windsor is particularly bright,” according to Conference Board of Canada senior economist Richard Forbes.
The Windsor area is also home to a quarter of North America’s tool, die and mouldmaking industry and accounts for 80% of the sector in Canada. More than 200 machine, tool die and mould making companies are clustered in the area and more than 90% of them are automotive focused and have been for a long time. How will Windsor’s automotive manufacturing resurgence affect them? The answer is not as obvious as it seems; there are both benefits and challenges to such aggressive growth as is forecasted for Windsor. And inherent risks too.
To fully appreciate the situation, it’s important to understand the magnitude of the expectations for Windsor along with the depth of the economic hole the area is climbing out of.
Windsor’s forecasted resurgence goes to show how a technological revolution and some massive investments designed to seize the opportunities of that revolution can transform the prospects for a region. The revolution, of course, is the move away from internal combustion engine vehicles and the embracing of a battery electric vehicle future. The investments include the 4.5-million-square-foot lithium-ion NextStar Energy battery production plant, expected to begin operations in 2024 and be at full capacity by 2025. It’s a joint venture by LG Energy Solution and Stellantis, and at an estimated $5 billion it was the largest private-sector automotive investment in Ontario history until recently when Volkswagen announced its own plans to build an electric car battery gigafactory in St. Thomas. Stellantis, parent company of Chrysler, Jeep and Fiat, is spending another $1 billion to revamp the Chrysler plant in Windsor to make next generation hybrid and electric vehicles. Construction of the Gordie Howe International Bridge and a new hospital are also adding to the growth prospects for the Windsor area.
The high GDP forecast for Windsor doesn’t surprise Jonathon Azzopardi, president and CEO of Laval Tool & Mould Ltd. in Tecumseh, Ont.
“Windsor has always been a manufacturing juggernaut. It has always punched above its weight when it comes to size just because of the amount we do produce with the people that we have. And that’s a testament to advanced manufacturing and really strong supply chains and high efficiencies that this area is really well known for,” Azzopardi says. “When manufacturing is hot, Windsor is red hot because we are the tip of the spear. As we enter into a manufacturing renaissance, Windsor is always the first to enter, because we are advanced manufacturing, we are heavy machinery, we are right on the doorstep of the automotive capital of the world, we are really advanced when it comes to technology.”
Azzopardi believes automotive manufacturing is at the cusp of a renaissance and electrification in all aspects, not just automotive, is paying off. Although the electrical vehicle lineup is different in design and requires fewer parts, mould making remains highly relevant to the new technology. Also, as public acceptance of electric vehicles grows, automotive market experts anticipate the number of electric car models to increase, expanding the opportunities for mould makers.
“You have to understand why Windsor stands to get such a large share, and mould making is just one example,” Azzopardi explains. “All these manufacturers need parts. I guarantee you that a good chunk is being done in Windsor. They need automation. A good chunk of that is being done in Windsor. There is development that needs to be done. A good chunk of that is being done in Windsor. Windsor has amazing technical and engineering experience that you just can’t find anywhere else. That’s why stuff is landing here, because you can pretty well get whatever you need in the supply chain within a short distance. You can’t find that anywhere else…It’s like all roads lead to Windsor. ”
But it’s a long way back for Windsor, once the manufacturing jewel of southwestern Ontario with the 11th highest median income in Canada. Windsor experienced the worst of its region’s and the province’s fall from manufacturing’s prowess. Ontario was the worst performing province in Canada from 2005 to 2019, according to research from the Fraser Institute. Ontario experienced just a 5% increase in median income during that period compared to the national average of 11.1%. The decline was much more precipitous in the Windsor region, however, with median income falling 7.1%, dropping the region’s median income all the way down to 33rd in Canada. The Windsor census metropolitan area was one of only two areas in Canada to see a drop in median income.
The reason for the drop in median income was closely tied to manufacturing. Manufacturing jobs in the Windsor census metropolitan area peaked in 2006 at 42,900 but by 2010, after the two years of the Great Recession, had shrunk to 28,700 following the closing of GM’s Windsor transmission plant and other companies abandoning Windsor for lower-cost locations. That massive loss of manufacturing jobs more than a decade ago could plague Windsor’s renaissance now. The billion-dollar manufacturing investment announcements have been made, the bricks and mortar for the new facilities are being laid, and Windsor’s tool, die and mould making shops are ready and eager to provide their services. But can Windsor grow its pool of skilled labour fast enough to keep up with the demand?
Looking at the latest data it would seem Windsor is doing a good job at attracting the new labour it will need. Statistics Canada’s February Labour Force Survey reported the region was again pushing towards record levels of manufacturing with 39,100 employed in that sector.
But that’s not how it feelson the front ranks of mould making shops.
“There are all these good news stories about Windsor—the battery and automotive plants, the second bridge going in, a new hospital going up— but there is also a lot of anxiety because a lot of the small shops are worried about how many skilled tradespeople they’re going to lose,” says Kim Thiara, board chair of the Canadian Association of Mold Makers and president of AceTronic Industrial Controls. ‘The new LG plant is looking for something like 3,000 employees and they’re going to require a considerable number of skilled tradespeople to run that plant. And then you have the Volkswagen plant opening in St. Thomas. They’re going to be offering higher salaries than the typical mould shop. How are the small mould shops going to compete with that? We already have a skilled trades shortage across the board in all facets of manufacturing, not just mould making. This could compound that even further.”
Azzopardi runs one of the larger operations in the industry, but concurs about the increasing pressure on recruitment and retention.
“Everything is in demand. It’s construction, its Tier 1 suppliers, Tier 2 suppliers, Tier 3 suppliers, it’s people moving out of town because opportunities may be a bit better in a certain region that’s hiring, it’s salaries going up so people are hunting around for better pay—that’s what you’re dealing with,” he says. “We make commitments for long term contracts. Those commitments are going to start coming off the table if we can’t ensure quality, and quality is delivered by good workers.”
Working to Windsor’s benefit is the fact that both the federal and provincial governments are increasing immigration to deal with the shortage of skilled labour and that the Windsor area has become a popular destination for immigrants. That may help satisfy the immediate needs for skilled labour but Marc Hasrouny, president of Canadian Machine Tool Distributors Association and general manager of Megatel, believes that immigration can only go so far in addressing long-term needs for skilled labour. To truly address the problem requires a much more comprehensive approach with all major stakeholders working together.
“My biggest issue with the labour shortage discussion is that it’s not only the government or the industry or education system, it’s a combination of all of those parties coming together and finding the right solution to the problem. I think this is where we are lacking. We are not coming together. Everybody is trying to do something on their own to remedy the problem,” Hasrouny laments, warning that “the way that it is being done now, I don’t think it’s going to necessarily remedy the problem long term.”
Thiara agrees, adding that while there is obvious interest from government in fixing the skilled labour shortage dilemma, things are not happening with the same intensity as the business flowing into the region.
All three say the major stakeholders must come together to forge a strategy that in addition to skilled immigration includes a strong focus on upskilling the current workforce, attracting the younger generation to manufacturing, and embracing automation as a way to create more attractive jobs.
Thiara adds that CAMM is planning to take a leading role in bringing stakeholders together to tackle the issue, starting with an event in September at Humber College.
“We want to make it inclusive to all industry—your mould makers, processors, service providers, educators. We want to include government and the big stake holders,” Thiara says. “At the end of the day, if we don’t have a vibrant and skilled workforce all of us will suffer. We need to roll up our sleeves. We need to come together as a community and get a program up and running.” SMT