How New Brunswick's little-known auto sector is coping with tariffs
U.S. orders on hold, but Canadian ones keeping workers busy, says ambulance-maker CEO
A Dieppe company that makes ambulances and accessible vehicles is among those in the Canadian automotive sector feeling the impacts of the trade war, according to its president and CEO.
Terry Malley says his company, Malley Industries, typically sells to the U.S. and Canada. Its sales to the U.S. are now subject to tariffs.
"The biggest frustration that we've had is educating our U.S. customers what this is all about," Malley said.
"We have to communicate to them that our prices aren't changing. … These extra costs are … because of their government."
Tariffs and counter-tariffs of 25 per cent were slapped on Canadian and U.S automobiles and Canadian auto parts this month, on top of aluminum and steel tariffs introduced last month.
Malley shipped quite a few vehicles to the U.S. ahead of the latest round of tariffs — as did another New Brunswick company that makes automobiles, said Ron Marcolin, New Brunswick divisional vice-president for the Canadian Manufacturers and Exporters association, but that other company didn't want him to release its name or any other details.
Now that tariffs are being imposed at the border, some U.S. customers are asking for their deliveries to be delayed, Malley said.
"Obviously, they're concerned about their costs," he said.
Malley said he is well-stocked with vehicles that were assembled before any supply costs were inflated, but if the trade war goes on for long, he'll have to raise his own prices, too.
"Everything that happens to those [original equipment manufacturers] … comes right down to us," he said.
"Second-stage manufacturers," such as Malley operate in communities across the country, adding content to make specialized vehicles. Besides ambulances and accessible vehicles, vehicle types include RVs and commercial trucks.
Malley uses vehicle bases — or chassis — from Stellantis and Ford, that are made in Mexico and the U.S., respectively.
Other inputs come from Canada, the U.S. and elsewhere. Among these are Canadian steel and thermoform plastic parts manufactured on-site in Dieppe.
Some inputs are now subject to counter-tariffs and Malley expects more could be in the future.
It's very confusing to try to figure out what duties are applicable for cross-border sales, he said.
Marcolin, of the exporters' group, describes those calculations as "a giant matrix" that "nobody has figured out yet."
Generally, it's all done in advance for documents that accompany shipments over the border, he said.
Then, for border agents, it's a matter of checking the particulars and possibly conducting an inspection.
But everyone is learning what categories goods fit into as they go, said Marcolin.
In the last week, some New Brunswick exports to the U.S. have continued to get over the border seamlessly, while others have been held up, he said, adding that holdups seem to be the exception, not the rule.
"But we are wasting a lot of time dealing with all this paperwork," he said. "And the cost is horrific."
"We are, quite frankly, spinning our tires and wasting a lot of valuable time doing that, when we could have free trade."
Holding a lot of inventory isn't ideal either, Marcolin said. It comes with costs such as warehousing, insurance and depreciation.
Malley is hopeful that the tariffs will be short-lived.
"I do think over the next month or so, a lot of this stuff will sort itself out," he said.
"It has to."
Malley expects that plant closures and layoffs, even temporary ones, which are already happening, will make the U.S. administration sit up and take notice.
Many of his competitors in the U.S. are also affected because they use steel from Canada, he pointed out.
Malley has considered the possibility of relocating to the U.S. to try to avoid tariffs, but doesn't see a good business case for it.
"That's not in the cards," he said. "It's not an easy thing … to uproot and move to another country.
"You can re-establish there, but … it takes years. Who's going to want to do that if the rules keep changing?"
Malley has a lot of work to do for Canadian customers to keep busy, he said, and if necessary the company can "pivot."
"Atlantic Canadian companies are used to sometimes dealing in hard times," he said.
About 80 people work at Malley.
So far, no one has been laid off and no planned investments have been delayed, the CEO said.
"It might be a tough slog for a while, but I'm an optimist.
"We survived Trump before, and I think we will again. … I think we'll be here long after he is."
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With files from Information Morning