GM-Honda Alliance presents opportunities to local suppliers
Friday, September 4, 2020
The Windsor Star/Dave Waddell
Canadian Association of Mold Makers chair Mike Bilton said southern Ontario’s automotive supply chain is in ‘prime position’ to take advantage of the newly announced General Motors-Honda North American alliance if the sector utilizes the same collaborative approach.
In a joint announcement Thursday, the two auto giants said they’d enjoy savings on operational costs by co-operating on purchasing materials, connected services, research and development and production of some vehicles.
Honda would use GM’s electric vehicle platforms and Ultium batteries, but both companies would retain their distinctive nameplates.
“In the same fashion, Tier 1 and 2 companies should look for opportunities to co-develop new tech, product design and optimized manufacturing principles together and extend that up to the OEM level,” Bilton said.
“This in turn will open doors and will ultimately drive sales through collaborative effort.”
Bilton said nearly three-quarters of automotive suppliers in the region already do business with GM. About 15 to 25 per cent list Honda among their customers.
He added suppliers to one of the companies now will likely get a chance to get involved in the supply chain of the partner company.
“People realize the times are changing,” said Bilton of breaking down the old beliefs that saw local companies keep their proprietary projects to themselves rather than collaborate.
“COVID has also changed things. We saw lots of positives out of collaborative relationships.”
Bilton, who has an extensive background working with Honda and Toyota, was also very specific on what he felt suppliers need to focus on.
“Tech adaption and product development,” Bilton responded.
“Those two buckets are full of opportunities consistent with our strengths in Windsor-Essex.
“We’re on the leading edge of tech for autonomous vehicles, radar systems and vehicle-to-vehicle or vehicle-to-infrastructure communication. We’re awfully strong in the automotive technology space.”
Automotive Parts Manufacturers Association president Flavio Volpe said the Honda-General Motors alliance puts Ontario in an enviable position.
“Ontario and Ohio are the only two places where Honda and General Motors have production facilities in the same jurisdiction,” Volpe said.
“Honda’s global lead plant on the Civic, which epitomizes the company, is in Alliston (Ont.). Its Canadian headquarters are in Richmond Hill.
“GM has planted its flag for EV and AV research and development for cars of the future in Ontario by hiring 1,000 engineers in the Greater Toronto area and there’s an idle Oshawa plant about an hour away from Alliston.
“If I’m in the provincial and federal governments, I’m on the phone with these two and have something in the upcoming federal budget. We have to give them something to take to Detroit and Japan.”
Volpe and Bilton agree the companies’ partnership looks a solid fit.
It follows the industry’s consolidation trend that has seen Volkswagen and Ford, PSA (the Peugeot, Citroën, DS, Opel and Vauxhall brands) and FCA and Nissan and Renault all form tandems in recent years.
“In a COVID-19 reality, working capital is restricted and return on investment is paramount,” Volpe said.
“Two leaders who typically don’t compete in the segments that drive their individual firms sharing notes on powertrains, architecture and the brains of the car makes a lot of sense.”
Volpe said the two companies make direct contributions in excess of $10-billion per year to the Canadian economy.
He added the agreement makes for two OEMs that are stronger to face what he believes will be a serious challenge from Chinese automakers over the next decade.
“For suppliers, that $10 billion is more secure with this alliance,” Volpe said.
“The two companies will learn from each other without consolidating their offerings.”