The rigid steel sheet enters a sizzling 900 C oven, leaving a brilliant red. Then it’s stamped, plunged into 400 gallons of cool water and becomes a pillar.
At the Formet Industries auto parts plant, general manager John Wyskiel is beaming, shouting above the din of the factory floor.
“We are the only ones in Canada doing this now that I know of,” he says of the hot stamping process. “This is new technology.”
That pillar is for a new car, to separate the rear window from the front.
But it’s also a metaphor for what’s happened to this plant — diversification that’s helped it put the worst downturn in the auto industry’s history in the rear-view mirror.
Formet and its sister factory, Presstran just down the road, are poster-child plants for the industry’s comeback in Southwestern Ontario — and North America, five years after an industry meltdown so bad it triggered billions in taxpayer bailouts and thousands of job losses. Many questioned the industry’s very survival in North America.
In Southwestern Ontario, where the industry has long been a key economic engine, the worry — and the job losses that hit — were especially bad.
But auto production across North America has roared back, to nearly 17 million forecast for 2014 from 8.8 million vehicles in 2009.
Now, a smaller, leaner, smarter industry in the London region is firing on all cylinders.
“If you look at vehicle production, we are back to levels before the downturn and we will see levels that match the peak in 2000,” says Carlos Gomes, a senior economist and automotive analyst with Scotiabank. “The (companies) that have survived are definitely stronger and will remain here going forward,”
The Magna-owned St. Thomas plants, like others in Southwestern Ontario, have taken their fair share of that turnaround, Wyskiel suggests.
“We are one of the most diversified metal processors in the world,” he says of how the company has been able to bounce back.
It’s a mantra repeated by just about every auto and auto parts plant left standing.
Formet opened in 1998 as a one-product, one-customer operation making truck frames for General Motors.
Making truck frames accounts for 60% of the company’s business. It now has about 10 different capabilities.
Now, it can work at complete body structures, full frames, hot stamping, hydro-forming and laser-cutting, Wyskiel boasts.
“We work with aluminum and steel, and we can do a variety of coatings and we are a full-service supplier. We can do it all.”
From one company as an original customer, the plant now counts the Detroit Three automkaers and Japanese giants Honda and Toyota.
In 2000, at the auto industry’s peak, Formet had about 2,000 workers. After the 2008 meltdown, its workforce was chopped to about 1,000.
“It was a wake-up call,” Wyskiel says.
Efforts to diversify began in earnest in 2009 and by the next year “we had gained traction and accelerated,” Wyskiel says.
Since 2009, Formet has added 550 workers and now employs about 1,450, with more hires forecast for the new year.
“There’s an old saying there’s no accomplishment without diversity. We went through some very trying times in 2008. We developed a strategy that we cannot let this happen again,” Wyskiel says.
Down the road at Presstran, whose workforce was nearly halved after the 2008 downturn, to about 450 from from 820, jobs are returning. The company recently hired 50, bringing its workforce to 600.
And plant manager Mark Whitten doesn’t see growth slowing.
“We are bouncing back, absolutely,” he says. “We have come full-term and are winning new business.”
Like Formet, diversification and aggressively going after new business has helped Presstran come back, he says.
“We see a big difference with customers today. They are very aggressive. They know what the cost is and they set very aggressive targets for us, That has driven us to think differently. If we are not at the target, we are not invited to the party.”
One way Presstran has helped hit those targets is with buy-in from workers who were shaken by the downturn, but now help drive change, he says.
“My role is to make sure everyone here can retire if they choose — that means winning new business.”
2000: 17.7 million, peak year
2007: 15.4 million, pre-recession
2009: 8.8 million, post-recession
2013: 16.5 million
2014: 16.9 million forecast
2000: 3 million, peak year
2009: 1.49 million, lowest point.
2010: 2.06 million
2013: 2.35 million
CANADIAN AUTO INDUSTRY JOBS
(Including assembly and parts plants)
2000: 150,000, peak year
2009: 96,000, post-recession
2013: 104,000 (65,000 in parts, 39,000 in assembly).
2014: 106,000 forecast
THE MELTDOWN’s TOLL
1,000+: At Ford’s St. Thomas assembly plant, which closed in 2011 after an eight million-vehicle, 44-year run. Among the cars built there were the Crown Victoria, its police cruiser variant, the Mercury Grand Marquis and the Lincoln Town Car.
350: Auto parts plant Therm-O-Disc of St. Thomas closed.
120: A. Schulman Inc. of St. Thomas closed.
150: German seat-frame maker Keiper closed a newer plant in London.
170: At Lear Seating, a Ford supplier in St. Thomas.
450+ At Accuride in London, which now employs 150.
SOUTHWESTERN ONTARIO SURVIVORS
— Magna plants: Formet with 1,450 workers and Presstran with 600, in St. Thomas
— Cami Assembly, Ingersoll: 3,000 workers.
— Toyota Manufacturing: 6,500 workers, Woodstock and Cambridge.
— Brose Automotive, London, makes vehicle door and seat systems. Employs about 800.
— Qualtech, London, makes seat systems. Employs about 200.
— Autoneum, London, makes vehicle carpet systems. Employs about 300.
— Vari-Form, Strathroy, makes parts using hydro-forming technology. Employs more than 260.
— Vuteq, Woodstock: makes automotive window glass, door trim. Employs about 300.
The London region has about 40 remaining parts makers, the London Economic Development Corp. estimates.
The St. Thomas plants aren’t alone in the region’s comeback:
In Ingersoll, the GM-owned Cami assembly plant is running at capacity, employing about 3,000 people to make the Equinox and Terrain.
Toyota Canada, at its plants in Woodstock and Cambridge, which build the RAV4, Corolla, Matrix and Lexus RX350, employs about 6,500. The company added about 500 employees in January and will boost that by 500 in 2014 as it expands its Lexus line.
THE TALE OF THE TAPE
The Magna plants, part of a division called Cosma International, are the most successful parts makers in the region.
Here’s how two Magna-owned plants in St. Thomas have bounced back:
— Truck frame maker
— Has diversifed
— Has more than 900 production robots
— Builds 500,000 truck frames a year
— 1,450 employees over three shifts
— 1.1-million-sq.-ft. plant
— 97 suppliers
— 215 trucks, 25 rail cars arrive daily
— Stamping plant in St. Thomas
— 330,000 sq.-ft.-plant
— 600 employees
— Uses 670 tons of steel to produce 157,000 medium to large stampings, 4,600 tubes for 11,700 chassis and underbody parts
— 119 welding robots
AN EXPERT LOOKS AHEAD
There’s no question the auto sector has come “ripping back,” says Hendrik Brakel, an economist who oversees the sector for Export Development Canada. “The question is, how is Canada going to benefit?”
With Ford investing $700 million in its Oakville plant and GM spending $250 million at Cami, Canada is getting a nearly $1-billion injection into its auto sector this year.
But from 2010 to 2012, Canada landed only about 5% of new North American auto investment, much of which migrated to the southern U.S, and Mexico.
“It’s a tough industry, but we have seen a spectacular bounceback” Brakel says.
He says he believes Canada will have a smaller, but stable, auto sector going forward and will keep the investment it has.
Despite the fact it has fewer assemblers left — the casualties included Ford’s St. Thomas plant and a GM plant in Oshawa — Canada’s production remains high, says auto analyst Dimtry Anastakis of Trent University.
Canada is also valued for quality, he adds. He points to launches here for the Camaro, Impala, Equinox, Terrain, Chrysler minivans, RAV4 and Lexus hybrids, due next year, to name a few. “Canada is getting very important vehicles. That reflects on quality.”
“The reality is North America is doing well — it is coming back from a sharp downturn and if you look out over the next decade, at the growth in emerging markets, a lot of people will be buying their first vehicles. It’s important to have a footprint and supply those markets.”
— Carlos Gomes, senior economist and automotive analyst, Scotiabank
“The (Cami-built) Equinox and Terrain sales were good and they’ve kept going. The parts businesses are booming and it’s been amazing. It has really provided a boom to business here.”
— Mike Van Boekel, chairperson of Unifor Local 88, the union for Cami workers
“The overall nature of the industry is moving toward automation — smaller, fewer facilities. But our production (in Canada) is high and will increase. I would argue our plants are vital to the automakers. Look how important Cami is to GM.”
— Dimitry Anastakis, automotive analyst, Trent University