Canadian auto suppliers say they are being pulled by the gravity of U.S. President Donald Trump's protectionist policies.
Government support, logistics and politics all played roles in an Ontario injection molder's decision to open a $20-million plant in Toledo, Ohio, rather than expand in the province, and it's not alone in feeling the heat to invest south of the border.
Axiom Group Inc., based in Aurora near Toronto, said in November that it planned to open its first U.S. manufacturing operation in an Ohio industrial park, building plastic injection-molded parts for Jeep models assembled at plants in Michigan. The company, whose major customers include Fiat Chrysler, Volkswagen and Tesla, has cited incentives, logistics and U.S. economic and trade policies as reasons for the move.
"We're already in Ontario and Mexico, and we were getting some pressure to have a presence in the United States," said Chris Moschopedis, Axiom vice-president of corporate strategy. Axiom employs 300 people, including 80 in Mexico.
The adoption of just-in-time parts delivery is also at play. As automakers invest in the United States and Mexico they are likely to want suppliers nearby, meaning Canadian companies have to invest in the vicinity of new plants.
"Suppliers feel pressure to locate near where their customers are, and that's become a more important thing as [automakers] look at the entire value chain," said Julie Fream, CEO of the Original Equipment Suppliers Association, a U.S.-based auto supply group.
Ontario has lost out on potential investments in recent years as companies are lured to invest south of the border. Jurisdictions in the United States and Mexico frequently have lower wages than those in Canada, while U.S. states are often eager to provide financial support, real estate and other incentives.
In Ohio, Axiom is receiving "significant support," Moschopedis said. JobsOhio, a nonprofit that seeks to attract investment to the state, will prescreen people who apply for the 250 or so jobs at the plant, Moschopedis said.
"You don't have that kind of support in Ontario," he said.