Competitive Analysis for North American Automotive Investments

1.0 PURPOSE

The department of Innovation, Science and Economic Development (ISED) Canada requires services to perform a competitive analysis of selected North American locations for automotive investments.

The services will be required for a period commencing from contract award to June 15, 2017.

2.0 TITLE OF PROJECT

Competitive Analysis for North American Automotive Investments

3.0 BACKGROUND

ISEDC leads federal efforts for fostering growth and competitiveness in Canada’s automotive manufacturing industry, and ensuring that the business environment is conductive to maintain and attract investment. The automotive industry is a major contributor to the Canadian economy. The industry provides high paying jobs in vehicle and parts manufacturing, and is also a major purchaser of the output of many manufacturing sectors. The automotive industry also drives innovation in many types of advanced technologies and manufacturing processes.

Both Canada and the United States (US) have well established automotive industries that are highly integrated, and Mexico’s automotive industry has grown significantly over the past two decades. Canada continues to compete with both the US and Mexico for new automotive investments and reinvestments. Companies deciding on a site for a new plant or a major re-tooling consider a wide variety of factors relating to both business costs and the business environment before making their investment decision. As such, ISEDC is interested in analysis of the competiveness issues for Canada and competing jurisdictions.

4.0 PROJECT REQUIREMENTS/OBJECTIVES

Innovation, Science and Economic Development Canada (ISEDC) requires the services of an external automotive expert or industry group with extensive understanding of the North American automotive industries and experience in identifying and quantifying comparative advantages of various North American automotive jurisdictions. ISEDC also seeks access to a computerized application that would permit customized cost modelling.

The objective of this study is to examine major site selection factors considered by automotive assemblers when making investment decisions. More specifically, the tasks are to:

1. Conduct a comprehensive analysis of competitiveness issues for automotive assembly plants in major North American automotive jurisdictions to assess the impact on new automotive assembly investments (greenfield), powertrain investments and reinvestments (e.g., retooling) within North America. This includes compiling a comprehensive list of cost variables for those automotive jurisdictions, along with other factors affecting costs and the business environment, including government incentives, exchange rates, and inflation. Preferably, the contractor would have the ability to compare costs and business environment issues to past analyses conducted.

1. Create an interactive cost-modelling tool, which includes the key cost variables and incentive structures to permit simulation of a particular investment scenario (a greenfield investment, a retooling or re-investment, and powertrain investments).

5.0 SCOPE OF WORK/PROJECT DETAILS

1. Perform research on the key automotive jurisdictions selected for the comparative analysis to understand their cost components and comparatives advantages. Targeted jurisdictions include:
   • Canada: Waterloo (ON), Oshawa (ON), and Oakville (ON)
   • The US: Detroit (MI), Nashville (TN), Youngstown (OH), Atlanta (GA), Greenville (SC), Jackson (MS), Lafayette (IN), Montgomery (AL), and Louisville (KY).
   • Mexico: Toluca or Guanajuato (MX)

1. Identify major site selection factors considered by automotive firms when making major investment decisions to be included in the cost model (e.g., production, transportation, labour, and utility costs). 

1. Identify recent incentives granted for greenfield, re-tooling and powertrain investments at vehicle assembly plants in the jurisdictions noted above and complete a review and analysis of recent trends in incentives.

1. Finalize a list of factors, including those cost variables relevant to the decision-making process for site selection for major investments as well as the potential incentives that may be offered. 

1. Perform a comparative cost analysis of the business costs for assembly plants in each of the jurisdictions noted above. Consider the implications of this analysis on the competitive position of Canada in attracting investments.

1. Complement the above cost‑oriented analysis with an assessment of other non-cost-related business factors affecting investments, such as economic, environmental, labour, transportation, and social considerations.

1. Create an automotive cost model to conduct cost modelling and comparisons affecting investment in, and operations of, an automotive plant (assembly/powertrain) in the jurisdictions noted above, incorporating up-to-date and relevant cost data (e.g., parts and components, logistics, energy, capital equipment, payroll, etc.) and incentive structures. The model should permit customized cost modelling by flexibly allowing factors to be included or excluded to support simulating costs for various scenarios.

6.0 DELIVERABLES AND TIMELINES

The contractor will be requested to fulfill the following deliverables:

1. Initial meeting or call with ISEDC to confirm the scope, expectations, and timelines for each task; to be scheduled by February 13, 2017.
2. Deliver a comprehensive list of factors for approval by ISEDC prior to continuation with the measurement process; to be delivered by February 20, 2017.
3. Draft report with preliminary findings to ISEDC; to be delivered by March 20, 2017.
4. Customized cost model for review and comment by ISEDC; to be delivered by March 20, 2017.
5. Full report with comprehensive findings to ISEDC for comment; to be delivered by April 20, 2017.
6. Final report, including executive summary and a deck presentation to ISEDC; to be delivered by May 15, 2017.
7. Presentation of final results and cost model either in‑person or via video‑conference; to be delivered by June 15, 2017

It is estimated that the project will be completed by June 15, 2017.

Throughout the project, the contractor will engage and communicate with ISEDC as required.

7.0 REQUIREMENTS

The contractor must meet the following requirements:

• Significant and relevant knowledge in automotive manufacturing operations and the North American automotive industry.
• Significant knowledge in international business competitiveness and site selection evaluation.
• Significant experience conducting high-quality market research and analysis.
• Significant experience illustrating complex subjects through the use of intuitive models and in writing and presenting reports.
• Significant experience in financial modeling and evaluation and a demonstrated ability to construct an interactive financial cost model.
• Sound project and financial management skills to meet the deadlines and requirements of the contract.
• Previous experience in conducting the scope and nature of work identified above as well as in developing a customized financial modelling tool to assist in making the project cost-effective. 

8.0 LANGUAGE REQUIREMENT

The contractor may work in the official language of their choice, though final deliverables, including the facilitated session, are to be delivered in English.

9.0 MANAGEMENT OF THE PROJECT

Automotive and Transportation Industries Branch will be responsible for project.

10.0 SECURITY

There is no security for this requirement.

11.0 CLIENT SUPPORT

ISED will support the contractor throughout the project in the following ways:

• Provide access to official(s) that can respond to the contractor’s requests for clarification, guidance, assistance, or support (as appropriate) regarding specific work items.