SMALL-TOWN (BIG-AUTO) ONTARIO
Small-town Ontario has a secret. As auto parts factories to the south and west close and jobs disappear, the sector is booming in places like Arthur and Palmerston, breathing new life into places so tiny, some don't even have a Tim Hortons
GREG KEENAN
AUTO INDUSTRY REPORTER
PALMERSTON, ONT. -- They are classic Ontario small towns -- main streets, stately homes and not much more -- named after a British general or a prominent prime minister.
But Arthur and Palmerston and Shelburne and other communities are harbouring a secret -- their auto parts plants are booming while cities a couple of hours south and west watch as factories close and jobs disappear.
At TG Minto Corp. in tiny Palmerston -- there isn't even a Tim Hortons -- employment is up to 340 people and construction is under way on a 50,000-square-foot expansion.
A half-hour east along the old Highway 9, Musashi Auto Parts Canada Inc. now has two plants up and running in Arthur, one of the main stops along the Butter Tart Trail.
SMALL-TOWN (BIG-AUTO) ONTARIO
Northeast of Arthur, in Shelburne, KTH Shelburne Mfg. Inc. has expanded three times since it opened in 1998. That plant and Setex Canada GP employ about 650 people between them in a town perhaps better known as the site of the annual Canadian Open Old Time Fiddle Championship.
These and other Japan-based companies are subtly changing the geography of the auto parts industry in Ontario. While several parts plants in Windsor, Brantford and Toronto are preparing to shut their doors or have already done so, those operated by Japan-based companies are thriving in a region that has always been on the fringe of Canada's manufacturing heartland.
"Our biggest export used to be our kids because there were no jobs here," Shelburne Mayor Ed Crewson says. "Whole generations of people just left."
The big draw for the Japanese companies was the 1998 expansion of Honda of Canada Mfg. to add production of a minivan at its factory in Alliston, about 90 minutes north of Toronto.
That brought Musashi to Arthur, KTH to Shelburne, Jefferson Elora Corp. to Elora and Listowel Technology Inc. to Listowel, which is northwest of Kitchener.
This is farm country. TG Minto butts against a horse farm. Across the road from Musashi, ripened corn rustles in the autumn breeze.
On the main street in Arthur, a real estate office advertises a "great, three-bedroom home" for $184,900. The town of 4,000 is named for Arthur Wellesley, the first Duke of Wellington and hero of the Battle of Waterloo.
Peter Hoffman, director of Musashi and its second employee back in 1998, points out that the Honda plant about an hour away was the original draw when Musashi, a maker of steering and suspension components, was first established.
But now, three shifts of workers at two plants are cranking out parts for General Motors Corp. and Hyundai Motor Co. as well.
"The vast majority of our product is exported to the U.S.," Mr. Hoffman says while shepherding a visitor on a tour of the two factories.
This is the only Musashi operation outside Japan that does development work, he says.
The biggest customers for TG Minto in Palmerston are Toyota Motor Manufacturing Canada Inc., about an hour south in Cambridge, and a Toyota-GM joint venture assembly plant in California.
Twelve trucks a day go south to Cambridge. Another six leave the shipping docks for California.
The first shipments of plastic components such as glove box parts, scuff plates and painted mudguards went out in 2001 from a plant that employed 30 people.
Now, with 340 people and another 35 to 40 to come after expansion, TG Minto is the largest employer in Palmerston, population 2,500.
"They're very happy that they can stay up here and live," vice-president Jim Whelan says. "A lot of people we hired previously worked in Guelph or Kitchener." In an arrangement duplicated at Musashi, Mr. Whelan occupies a desk beside TG Minto president Toyohisa Kato in an open-concept office.
Japan-based parts makers employ a little less than 11,000 people, says David Worts, executive director of the Japan Automobile Manufacturers Association of Canada.
That's expected to grow when Toyota Motor Corp. completes a new assembly plant in Woodstock, Ont., that is scheduled to begin production in 2008. Two Japan-based companies, Toyotetsu Canada Inc. and Toyota Boshoku, have already begun building factories in Simcoe, Ont., and Woodstock respectively and will employ close to 600 people between them.
But even the growth at Musashi, TG Minto and others is not enough to offset parts jobs being lost by companies that supply GM, Ford Motor Co. and the Chrysler division of DaimlerChrysler AG.
About 89,000 Canadians were employed in parts manufacturing in July (the latest statistics available), according to data compiled by DesRosiers Automotive Consultants Inc. of Richmond Hill, Ont. That was down 4 per cent from a year earlier and considerably below the recent peak of about 106,000 hit in June, 2003.
It's not exactly the land that manufacturing forgot, but the rural belt a couple of hours northwest of Toronto in the lee of Lake Huron has never shared the wealth of the Golden Horseshoe or boomed the way Windsor did when Chrysler Corp., Ford Motor Co. and GM dominated the auto industry.
These smaller communities often had textile manufacturing or manufacturing-related agriculture such as dairy processing, says Harry Cummings, a rural planning professor at the University of Guelph.
"The proximity to the excellent transportation links is what's making it a go for the automobile sector," Prof. Cummings says. "You've got some of the best road networks in the world in rural Ontario."
Avoiding organized labour is probably one reason behind the companies choosing rural locations for their plants, he says.
In Shelburne, Mr. Crewson remembers graduating from high school in a town where most graduates left to pursue other opportunities. Before KTH began making suspension components and Setex interior parts, the town's population was about 3,800, he says. Now it's up to 5,200 and there are two new housing developments.
A new engine plant Honda announced earlier this year that will be located near the Alliston assembly plant has him hoping that more jobs come his town's way. "We hope that some supplier plants to Honda's engine plant will decide Shelburne is the place," he says.
