Canadian car parts manufacturers hope military contracts open new doors amid Trump trade war

Canadian Tooling and Machining Association members are hopeful that military contracts will bring opportunities for some manufacturing companies looking to diversify away from the auto sector amid the ongoing trade war with the United States, according to the association’s head Louis Jahn.

In response to Prime Minister Mark Carney’s pledge of an extra $8.7 billion earmarked for defence spending by the Department of National Defence (DND) or other government departments, Jahn expects there’ll be some opportunity for manufacturing companies.

But, he said, the runway to get to that point where companies can actually get a contract is long.

There’s a lot of legislative hurdles put in place — controlled goods certification is probably the number one barrier to enter that space, and to get that certification, it’s a long and arduous process. It’s costly and it takes time, Jahn told CBC Radio’s Windsor Morning guest host Chris Ensing on Wednesday.

In the meantime, your company has to survive, so what we need to do is have some mechanism to make us competitive in all spaces, but defence is wonderful.

Carney announced in June that Canada would spend an additional $9 billion this fiscal year to meet its NATO commitments, and plans to spend even more in the years to come.

Jahn, who is also president of Jahn Engineering in Tecumseh, Ont., said some companies could possibly shut down as the trade war continues.

You can’t ignore that realistic possibility. I don’t think all the companies within Windsor-Essex will survive this situation we’re going through right now unless things change and change quickly, he said.

“It’s very unfortunate, but to pivot, every company around here is trying to pivot. It’s not that easy because we just don’t have the relationships, the contracts, the certifications to do that kind of work.

We all have the expertise, the know-how, the equipment and the infrastructure to do it, but we don’t have those other relationships necessary to get that work immediately. So yes, we have thousands and thousands of amazing skilled workers in this area who will be looking for work, there’s no doubt about that, added Jahn.

‘This is just the tip of the iceberg’

Jahn’s company and others that are part of the Canadian Tooling and Machining Association produce tooling that makes parts for cars.

Since the U.S. trade war commenced earlier this year, Jahn said the companies have felt a downturn in business, and the slowdown has led to lots of employee layoffs.

We like to think that the tooling companies are like the canary in the coal mine. So, when things go bad for us, that means that six months or maybe a year from now or maybe 18 months from now, it’s going to show up in the economy in a big way, he said.

So, we think that this is just the tip of the iceberg, and unless things pivot and change quickly, I think there’s going to be a lot of problems in the economy.

‘We need funding:’ chamber president

Ryan Donally, president and CEO of the Windsor-Essex Regional Chamber of Commerce, said with the federal government committing to spend a percentage of Canada’s Gross Domestic Product on defence, his association is advocating for a guaranteed percentage of Canadian made product being included in that spending.

Donally said companies will need financial help to pivot away from the auto sector.

Let’s say we do want to get in defence or we do want to go more international and grow our relationships with Europe or South Asia, we need funding to make that happen, Donally told CBC Windsor.

It’s not something that overnight someone can just say, ‘OK, I’m switching to defence, I’m going to change a whole bunch of my product lines, I’m going to bring in new equipment.’ This is going to be hundreds of thousands of dollars if not millions, and it’s going to take months, if not a year or two to make these transitions.

This article is republished from RCI.