Secretariat

DRAFT OUTLINE
December 9, 2002

INTERVIEW REPORT - TERMS OF REFERENCE

Executive Summary

1. Introduction

This section will include the purpose and objective of conducting the analysis as well as the methodology of doing it.

1.1 Background and Objective

The automotive industry is a major contributor to the Canadian economy, generating about 14% of manufacturing GDP and providing high value-added and highly paid jobs in vehicle and parts manufacturing as well as in the retail of automotive products. The automotive industry contributes to about 25 percent of all Canada=s merchandise exports. It also generates the highest capital investment among all manufacturing industries in Canada. The automotive industry acts as a driver for innovation in many other sectors, including: advanced materials, electronics, fuel cells and alternative fuel technologies, advanced manufacturing processes and technologies as well as E-commerce and E-business.

Canada competes with the US and Mexico for automotive investment and production in North America. To keep Canada competitive for new investments and for maintaining existing investments in the automotive industry, it is important to understand how competitive Canada is relative to other jurisdictions competing for automotive investment. To achieve this, the newly established Canadian Automotive Partnership Council requested that Industry Canada undertake a study to analyse the relative importance of factors driving the automotive investment decisions and competitiveness of Canada for automotive investments.

1.2. Scope and Methodology

The analysis will verify what are the key factors that drive the investment decision and which factors determine the final decision on the investment site. The analysis will be conducted through a series of interviews with senior automotive industry executives whose company has made automotive assembly investments in North America.

2. Overview of automotive investments in Canada and the US over the last Decade

This section should review cases of automotive investment made in the US and Canada over the last decade to establish bases for analysis and targeted companies for interview.

3. Interview with Automotive Industry Senior Executives

In most of the cases, key investment decisions are made at the headquarters or the main office of the regional operations of the respective company. To ensure close reflection of the key factors affecting investment decision making, the interview should be with senior executives at the respective company's NA regional office, if not the headquarters.

3.1 Development of Questionnaire

The set of questions for the interviews should include the importance of a list of factors that affect automotive investment decisions and site selections. The list of factors should include non-discretionary factors that affect normal business costs and investment climate as well as the discretionary factors that have impacts on the return on investment (ROI). It would be interesting to find out the timing at which these factors come into play. What factors are most important at what stages of the decision making process.

3.2 Interview

The objective of the interview is to get the views from the decision makers what are the factors that drove these investment decisions and what are the rationales for these investment decisions. Why was particular jurisdiction was preferred to others as the investment site for their investments in North America over the last decade. This should shed some light on whether these investments were even considered for Canada. The interview should also solicit the views of the executives on their overall perception of Canada as a competitive site for automotive investment and their specific views on what needs to be improved to enhance Canada's competitiveness as a good site for automotive investment.

4. Interview Results and Conclusion