2.1 Supporting at-risk firms

The shift to electrification brings major opportunities that Canada can harness but also poses notable risks. Addressing these risks is crucial in order to both sustain and grow the domestic industrial footprint, including among the auto parts supplier base.

It is widely understood that ZEVs, specifically electric vehicles, contain far fewer complex powertrain parts than traditional gas-powered cars. Conversely, EVs contain more electrical and electronic components than gas-powered cars. In a study published through the Future of Canadian Labourforce (FOCAL) initiative, researchers examined 303 component parts connected to gas-powered vehicle engines, drivetrains, exhaust systems, fuel systems, as well as the steering and suspension systems, more than half of them were identified as non-transferrable to BEVs. The FOCAL report also identified roughly 16,000 Canadian auto parts jobs in “high impact” workplaces (i.e. those producing parts not transferrable to EVs) accounting for approximately one-fifth of all parts employment in Canada.

Expanding the footprint of electric vehicle and parts production in Canada is crucial. The greater the scale of new production capacity, the greater the opportunity for workers to continue plying their skills in this growth industry. However, governments cannot ignore the disruptive effects this transition may have on workers. Adequate protections must be in place to help workers adjust to this changing industry, upgrade skills and secure high-quality auto jobs for years to come.

  • The federal government must dedicate resources to undertake a comprehensive risk assessment of Canada’s auto parts industry. This work must be done in partnership with provincial governments and under the oversight of the proposed Ministry of Automotive Supply Chain Development, It is critical for government to understand the country’s supplier vulnerabilities, where these firms are located and develop strategies to support them. Proactively identifying at-risk suppliers and coordinating directly with them around future product plans, advising them of government supports and linking them with new customers as the EV industry grows, will enable governments to manage this transition in a constructive way. By working with unions, governments can also determine the most appropriate training and transitional supports workers need. It is also necessary to make transition supports conditional on firms maintaining both collective bargaining agreements and production in Canada.

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