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NAFTA transformed truck making

Posted: January 23, 2018 by John G. Smith

LAS VEGAS, NV – U.S. President Donald Trump continues his threats to pull Canada’s largest trading partner out of NAFTA. But when it comes to heavy truck manufacturing, Canada may have experienced some of the biggest losses.

“If I were Canada, I’d be upset because all the business is gone,” observed Stu MacKay of MacKay and Company, sharing statistics during the annual Heavy Duty Aftermarket Dialogue in Las Vegas.

In 2001, Canada produced 16,000 Class 8 trucks for the U.S., and imported 12,000 units in return. None of the trucks came from Mexico, he said. Facilities on this side of the border made 6,000 trucks for domestic needs at that time.

But Freightliner closed a Western Star plan in Kelowna, B.C. in 2002. Daimler’s Sterling product line – born from the acquisition of Ford’s heavy truck business – was shut down in 2009, ending production in St. Thomas, Ontario.

Fast forward to last year, and Canada didn’t make any Class 8 trucks at all. It imported 17,800 units from the U.S. and 9,100 trucks from Mexico. The southernmost member of the NAFTA trading block has seen its heavy truck business grow fourfold, and last year exported 69,300 trucks to the U.S, and sent 3,700 to global markets.

Just don’t think truck manufacturing of every sort has come to an end in Canada.

The truck manufacturing that remains is focused on medium-duty products. Paccar has its facility in Ste. Therese, Quebec. The 150,000th truck rolled off that assembly line in 2016, in the form of a Kenworth T370. And Hino opened an assembly plant in Woodstock, Ontario, in 2006.

In 2001, Canada made 2,000 medium-duty units for domestic use, and exported 6,000 to the U.S. The U.S. sent 5,000 units in return. Last year Canada made 2,700 of the trucks for itself and exported 14,300, he said. Another 2,500 came from the U.S., while 1,100 came from Mexico.

And NAFTA has had other undeniable benefits for trade, especially when it comes to automotive manufacturing.

“Many companies – especially the automotive manufacturers – have based their supply chains on putting plants in the North American region,” said Bill Strauss, senior economist and economic advisor with the Chicago Federal Reserve.

The future direction of trade, though, will depend on whether Trump follows through on his threat.

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