Auto parts industry to remain in red: study

OTTAWA - Canada's auto parts manufacturing sector will continue to lose money this year but return to profitability in 2011 and the following three years, a new study suggests.

OTTAWA - Canada's auto parts manufacturing sector will continue to lose money this year but return to profitability in 2011 and the following three years, a new study suggests.

The study was put together by the Conference Board of Canada and the Business Development Bank of Canada. The agencies project the sector will lose $41 million this year but have a $378 million profit in 2011, rising each of the next three years to $894 million in 2014.

Even this year's loss will be an improvement over 2009 when the auto parts sector lost $674 million during the worst recession in decades.

The industry outlook estimates there will be a dramatic improvement in Canadian employment by auto parts companies.

It forecasts there will 88,800 jobs in the sector in 2010, up from 71,100 last year and the first increase in several years.

The study also looked at a total of six sectors, including furniture, wood and aerospace. For the aerospace industry, profits are forecast to decline by 35 per cent to $269 million this year. The analysis projected that profits will gradually increase to $522 million in 2014.

But the conference board said that signals for demand are heading in the right direction.

"Military spending may be at risk due to the large budget deficits that many countries are now running, but demand for civil aircraft is expected to remain healthy, supported by strong demand in emerging markets and the need for airlines to increase fuel efficiency and cut greenhouse gas and noise emissions."

Challenges, however, will come from high-speed rail in Europe and China that reduce the need for flying.

In the printing industry, printers are facing technological changes — primarily from the shift to online publication — as well as environmental concerns, which limit the industry’s long-term growth prospects, the study said.

However, industry profitability is expected to grow to $240 million in 2010, compared to last year’s low of $210 million, and profits will increase modestly thereafter.

 
 
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