As part of a roundtable on May 21, the Canadian Club Toronto invited high-level panellists to discuss Perspectives on the Canadian Automotive Industry: Navigating a New Era of U.S. Tariffs. Blair Sheppard, former global head of strategy; Flavio Volpe, president of the Automotive Parts Manufacturers’ Association (APMA); and Rob Wildeboer, Executive Chairman of Martinrea International, each spoke in turn to share their views on this major issue that is drastically affecting the sector.

“Up until November, the industry was back on track,” Mr. Volpe noted. Announcements and investments from major multinationals had promised prosperous years ahead. Then, like an unwelcome surprise, the change of administration south of the border disrupted what is probably the most integrated transnational industry in the world. Canada must absorb an unprecedented shock without having a negotiating table of its own.

Although no one can predict what comes next, Mr. Volpe believes the Canadian automotive industry has all the assets needed to weather this crisis. Project Arrow demonstrated that when there’s a will, there’s a way. “We have all the tools necessary to do things differently, but a change in culture is essential.”

Mode Shift

Trump changed the rules of the game, and playing in the minor leagues is no longer an option for Canada. Mr. Volpe urges a national ambition to step out of our comfort zone—where safety and security hold sway—and fully exploit our potential. “You never win by just playing defense. Someone has to pick up the puck and cross the line.”

Mr. Wildeboer suspects that the White House does not grasp the intricacies of a manufacturing supply chain, given the inconsistency in Washington. Despite the current chaos, he remains optimistic that “something better will emerge.” Geopolitically, he believes “North America has everything it needs to become the best economic region in the world.” But to achieve that, “the United States must recognize who its friends and allies are.”

For the Executive Chairman of Martinrea International, the current state of affairs compels us to acknowledge our weaknesses—which we must address—as well as our strengths. He recalls that in 1967 Canada ranked third globally in per-capita income. “Canadians can compete with the best in the world,” he said, adding, “apart from the Chinese,” since “they are subsidized.” He went on to say, “We can outperform them. Our industry is doing reasonably well, but in the current context we’re not moving fast enough. We’re playing on the international chessboard, but we’ve grown complacent. We’ve become overweight and lazy. In the end, we simply need to get back in shape.”

Like Mr. Volpe, he remains optimistic about the outcome. He nonetheless maintains that government alone cannot—and should not—bear full responsibility, as that would be ineffective. He favors creating “an environment that rewards entrepreneurship and capital creation, lowers taxes and opens market access. Remove the handcuffs! Don’t tell us what to do; just give us the conditions to act! We’ll then attract the best talent in the world and become the best in the world!”

Drawing Lessons

In an uncertain environment, Mr. Sheppard admits it is more difficult to plan. He nonetheless emphasizes the importance of learning from the situation. Trump’s election, he argues, reveals the darker side of the United States: “An extreme response to legitimate concerns” that Americans must grapple with daily—eroding of the middle class, disparity in healthcare access, and loss of the ability to clothe, feed, manufacture and build.

“There will be no turning back,” he proclaims. “The automotive parts market, together with energy, may represent Canada’s best opportunity.” He foresees significant turbulence between the two countries over the next 10 to 20 years. The global model is also shifting, and we will have no choice but to “reinvent the entire technological system.” Passivity is no longer an option. We must leverage our strengths and collaborate with all parties to co-create a new ecosystem. “Flavio has proven that Canada can succeed,” recalls the former global head of strategy.

“Canada must recognize just how unique it is and choose to take the lead in areas where it holds a competitive advantage,” concludes Mr. Sheppard. “If it does not, it risks losing big. Values are evolving worldwide at an unprecedented pace: there will be great winners…and great losers.”