North American Auto Manufacturing and the Canada

Slide 1:North American Auto Manufacturing and the Canada – US Border

Slide 2:Presentation Overview Background on the CVMA and auto manufacturing industry globally The competitive challenge of an integrated industry – why border efficiencies matter in North American auto manufacturing Progress to date in streamlining border operations Border realities and major challenges that remain

Slide 3:CVMA Background CVMA Members: Chrysler Canada Inc. Ford Motor Company of Canada, Limited General Motors of Canada Limited Navistar Canada Inc. (International Truck) Key CVMA Member Canadian Statistics: 8 vehicle assembly plants and 5 major components assembly plants 50,000 Canadian employees in head/regional offices, engineering and R&D, and manufacturing 65% of Canadian vehicle production 46% of Canadian sales

Slide 4:Global Auto Industry

Slide 5:Global Auto Industry

Slide 6:Auto Manufacturers and the Border Most major auto producing regions are self-contained within single jurisdictions with no internal borders Japan EU South Korea North America is different – auto production is integrated across jurisdictions Integrated Canada/US industry results in greater focus on transportation network and border issues $93 B in two way trade expected in 2010 – 19% of total two way trade

Slide 8:Border Efficiency Matters

Slide 9:Border Efficiency Matters

Slide 10:International Comparison of Border Compliance

Slide 11:Vision for Border Efficiencies

Slide 12:Goals and Success to Date Auto manufacturers have been a driving force behind efforts for new programs and a rethinking of transportation and border networks Canada/US partnerships, have been critical to improving cooperation and setting a path towards improved efficiencies Documented through Smart Border Declaration and Action Plan Governments agreed to facilitate trade through low-risk, pre-approval programs Separates and streams traffic into high/low risk Processing designed to push data and information collection and reporting away from the border Free And Secure Trade (FAST) NEXUS Governments also mandated that all trade data must be reported in advance and electronically for easier at the border processing

Slide 13:Realities – Thickening of the Border Border operations have not been streamlined to the extent hoped Other Government Departments Estimated 45+ government departments between Canada and the US have importation requirements Over the past several years there has been an increased demand for more import documentation at the border Data requests are not aligned across government and can vary by department More data at the border results in fewer good being eligible under FAST Government departments often do not recognize low-risk programs that are rooted in customs programs and create unique and often duplicative programs CBSA PIP and Transport Canada Air Cargo Security Difficulty in implementing electronic reporting and processing Often “low-risk” loads face increased inspection rates Decreased traffic volumes, but increased “dwell” times Contingency plans developed, but unsure of effectiveness

Slide 14:Infrastructure Realities Infrastructure that is built for different realities in a different century Traffic volumes increasing with economic recovery in 2010 Trucks up 26% at Ambassador & 19% at Blue Water Governments often focused on China and other foreign trade partners Canada/US auto trade nearly doubles Canada’s total trade with China Priority on Windsor/Detroit Gateway Handles majority of automotive trade 401 not connected to current crossings No dedicated lanes for low-risk programs from Highway to Interstate Current bridge limited by only 4 lanes

Slide 15:Summary and Key Considerations Auto manufacturing remains of major economic importance and is highly integrated within North America Integration and competitive global forces require streamlined and efficient border operations 27,000 customs transactions for domestic manufacturer vs. 1 for a foreign manufacturer Has competitive implications – adds costs to manufacturing processes and consumer prices Efforts are being made towards a more efficient border Industry is partnering with government, but more needs to be done There must be a coordinated government wide strategy and commitment to streamline border operations Must be significant commitment and investment in new trade infrastructure