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1 DRIVE TO WINA utomotive Advisor Report R al (Ray) Tanguay, Automotive Advisor to the Minister of Innovation, Science and Economic Development and the Ontario Minister of Economic Development and GrowthJanuary 20183 DRIVE TO WIN AUTOMOTIVE ADVISOR REPORTTABLE OF CONTENTSM essage from the Automotive Advisor 4 Executive Summary 5 Why an Automotive Advisor? 9 Review and Progress of CAPC s 2014 Recommendations 10%JCPIKPI &G PKVKQP QH VJG #WVQOQVKXG +PFWUVT[ 14 Framework for Future Success 18 Technology 19 People Development 23+PHTCUVTWEVWTG 26 Value Proposition 28 Conclusion 31#PPGZ # +PFWUVT[ 1 WVTGCEJ CPF 'PICIGOGPV 33 Annex B: Technology Roadmap 38#PPGZ % #UUGUUOGPV QH VJG +PFWUVT[ 41 Annex D: Promotional Materials 46 Annex E: Process of the Automotive Advisor 524 DRIVE TO WIN AUTOMOTIVE ADVISOR REPORTMESSAGE FROM THE AUTOMOTIVE ADVISORA fter more than two years as the Automotive Advisor to the federal Minister of Innovation, Science, and Economic Development (ISED) and the Ontario Minister of Economic Development and Growth (MEDG), I have summarized O[ PFKPIU and recommen- dations in the report that follows.]]]]

2 This comes as a culmination of GZVGPUKXG EQPUWNVCVKQPU GPICIGOGPVU and collaboration with various stakeholders in Canada, /KEJKICP CPF QVJGT international jurisdictions. &WTKPI VJKU VKOG + JCXG YQTMGF KP ENQUG EQQRGTCVKQP YKVJ the Canadian Automotive Partnership Council (CAPC). Established in 2002, CAPC includes all principal stake-holders relative to the automotive industry in Canada, YKVJ VJG QDLGEVKXG QH ETGCVKPI C WPK GF XQKEG QP JQY YG can improve our automotive industry in Canada. As one QH VJG HQWPFKPI OGODGTU QH %#2% + RNC[GF CP CEVKXG TQNG KP EJCKTKPI XCTKQWU EQOOKVVGGU CU YGNN CU EQPVTKD-WVKPI VQ VJG RWDNKUJKPI QH DQVJ XGTUKQPU QH %#2%oU Call to Action KPENWFKPI VJG TGEQOOGPFCVKQPU NKUVGF KP VJKU report (see pages 10 13).%#2% JCU DGGP C ITGCV OQFGN HQT JQY VJG KPFWUVT[ NCDQWT CECFGOKC CPF IQXGTPOGPVU ECP YQTM VQIGVJGT and my experience with CAPC was one of the main reasons that I accepted the role of Automotive Advisor.]]

3 I am passionate about our industry and its future and I understand the impact the automotive industry has on our economy in terms of jobs and prosperity that is my motivation! As I close the chapter in this role, I would like to express my sincere appreciation to ISED and MEDG staff for their relentless professional support on all my CEVKXKVKGU 6JG /GOQTCPFWO QH 7 PFGTUVCPFKPI /17 YKVJ /KEJKICP VJG TGUGCTEJ HQT C 6 GEJPQNQI[ Roadmap developed for the automotive industry, and the North #OGTKECP CWVQOQVKXG EQORGVKVKXG DGPEJOCTMKPI CPCN[-UKU CNN EQORNGOGPV VJG VJKPMKPI QWVNKPGF in this report. When you look at Annex A, all this outreach was coordinated by ISED and MEDG in our effort to better understand with our own eyes and ears. I appreciate VJG UWRRQTV CPF GPEQWTCIGOGPV D[ %#2% CPF KPFWUVT[ leadership. You all made my job as Automotive Advisor KPVGTGUVKPI CPF TGYCTFKPI tthank 1: Mr.]]]]

4 R al (Ray) TanguayOn June 9, 2015, Mr. R al (Ray) Tanguay was named to the position of Automotive Advisor to the Minister of Innovation, Science and Economic Development Canada and the Ontario Minister of Economic Development and Growth. Mr. Tanguay retired as Chair of Toyota s Canadian operations on March 31, 2015. In 1991, Mr. Tanguay joined Toyota Motor Manufacturing Canada Inc., and was a leading force in instilling innovation within the company. Under i > ` ] / LiV> i i w / > manufacturing plant outside of Japan to produce Lexus vehicles, beginning in 2003. In 2005, the decision of TMMC to build a new $ plant in Woodstock, Ontario was bolstered by the excel-lent reputation of its Canadian operations. In 2005, i LiV> i > >} } "vwVi v / > Corporation in Japan, Executive Vice-President at Toyota Motor Engineering in North America, Senior Vice-President at Toyota North America, and iv , "vwVi v / > North 2011, Mr.

5 Tanguay was promoted to Senior > >} } "vwVi v / > > ] Li } i w > > i i ` ` > ` that 2012, Mr. Tanguay was recognized with an honourary Doctorate of Laws from Laurier University and an honourary Doctorate of Engineering from the University of Waterloo. His achievements were further recognized in 2017 when Mr. Tanguay was inducted into the Order of Canada, one of Canada s highest civilian honours for his contributions to strengthening and promoting the automobile manufacturing sector in Canada .5 DRIVE TO WIN AUTOMOTIVE ADVISOR REPORT':'%76+8' 57//#4;This report, on the state of the Canadian automotive industry and actions for the future CTTKXGU FWTKPI C RGTKQF QH WPRTGEGFGPVGF FKUTWRVKQP UVGOOKPI HTQO ENKOCVG EJCPIG PGY VGEJPQNQIKGU CPF UJKHVKPI GZRGEVCVKQPU CPF WPEGTVCKPVKGU UWTTQWPFKPI VTCFG CPF KPXGUVOGPV For Canadians and communities across the country YJQ CTG FGRGPFGPV QP C XKCDNG CPF GPFWTKPI %CPCFKCP automotive industry, the expectations are that policy makers at all levels will identify the impacts of these VTCPUHQTOCVKQPU CPF EJCNNGPIGU CPF VCMG FGNKDGTCVG OGCUWTGU VQ RTQVGEV CPF UVTGPIVJGP QWT CWVQOQVKXG industry in Canada.

6 $[ OCP[ UVCPFCTFU + CO RNGCUGF D[ VJG RTQITGUU YG have made over the past two years. Governments at all NGXGNU JCXG FGOQPUVTCVGF C YKNNKPIPGUU VQ GPICIG YKVJ KPFWUVT[ VQ CFXCPEG %CPCFCoU CWVQOQVKXG UGEVQT .CDQWT JCU DGGP C VJQWIJVHWN RCTVPGT 'FWECVKQPCN KPUVKVWVKQPU and research centres have reinforced their commitment to timely research and relevant instruction. The private UGEVQT JCU RTQXKFGF C UVTQPI CPF EQOOQP XQKEG $[ EQPVKPWKPI VQ YQTM VQIGVJGT HQT C EQOOQP RWTRQUG this will ensure that Canada is poised to seize opportu-PKVKGU HQT HWVWTG ITQYVJtDQVJ KP OCPWHCEVWTKPI CPF KP our research and development (R&D).+P VCTIGVKPI RTQURGEVU HQT C UVTQPIGT CWVQOQVKXG industry in Canada, we have to understand and remove barriers for investors because in order for Canada to win investments we cannot just be competitive we need to be better than other jurisdictions south of the the past two years, there has been a renewed commitment to the automotive industry by both the HGFGTCN CPF 1 PVCTKQ IQXGTPOGPVU JKIJNKIJVGF D[ VJG TGCNKIPOGPV QH VJGKT KPXGUVOGPV RQNKEKGU YKVJ VJG PGGFU QH VJG KPFWUVT[ +P VJG HGFGTCN $WFIGV OCLQT EJCPIGU KPENWFGF 1.]]]]]]]

7 6JG )QXGTPOGPV QH %CPCFCoU HQTOGT #WVQOQVKXG +PPQXCVKQP (WPF #+( VJCV YCU EJCPIGF HTQO CP KPVGTGUV HTGG NQCP VQ C ITCPV KU PQY RCTV QH VJG 5 VTCVGIKE +PPQXCVKQP (WPF +V KU PQY YQTMKPI KP a more complementary manner with the Ontario Jobs and Prosperity Fund;2. The Government of Canada and the Ontario Government announced the creation of investment QTICPK\CVKQPU KP TGURQPUG VQ KPFWUVT[ PGGFU 6 JGUG QTICPK\CVKQPU YKNN HCEKNKVCVG VJG RTQEGUU QH KPXGUVOGPV D[ RTQXKFKPI pQPG UVQR UJQRq QT EQPEKGTIG UGTXKEGU important for investors and site VJGUG CTG KORQTVCPV EJCPIGU VJG EJCNNGPIG HQT CVVTCEVKPI OCPWHCEVWTKPI KPXGUVOGPVU TGOCKPU KP our ability to be the most cost competitive. Ontario and Canada do well on key performance indicators like safety, quality, and productivity as well as our CDKNKV[ VQ OCPCIG EQORNGZKV[ TGUWNVKPI HTQO QWT JKIJN[ GFWcated workforce. Our performance in these areas is well TGEQIPK\GF CPF CRRTGEKCVGF D[ RCTGPV JGCFSWCTVGTU 1WT EJCNNGPIG KU KP VJG NQECN RTQEGUUKPI costs, which includes elements and factors such as labour and DGPG VU YCIGU CPF PWODGT QH RCKF FC[U off), electricity costs, Cap and Trade, administrative DWTFGPU CPF EWTTGPE[ GZEJCPIG TKUM 9 JGP 1 PVCTKQ is compared to other automotive jurisdictions across 0 QTVJ #OGTKEC QWT NQECN RTQEGUUKPI EQUVU RNCEG WU KP VJG OKFFNG QH VJG ITQWR 9 KVJ QWT NQYGT %CPCFKCP FQNNCT 1 PVCTKQ EQUVU CTG NQYGT VJCP KP VJG )TGCV.]]]]]]]]

8 CMGU similar to VJG 5 QWVJGTP 75 CPF JKIJGT VJCP /GZKEQ 6 DRIVE TO WIN AUTOMOTIVE ADVISOR REPORT6 JKU KU CP KORQTVCPV EQORCTKUQP HQT IQXGTPOGPVU to TGEQIPK\G CU KV CHHGEVU OCPWHCEVWTKPI KPXGUVOGPVU When a corporate decision is made to invest, company executives will ask for a comparison of various sites and options. An Evaluation Matrix (as the one shown QP RCIG KU V[RKECNN[ RTGRCTGF D[ UKVG UGNGEVQTU CPF EQPUWNVCPVU CNQPI YKVJ KP JQWUG URGEKCNKUVU +V becomes the most KP WGPVKCN FQEWOGPV HQT FGEKUKQP OCMKPI 6 JKU UGTXGU CU C TGOKPFGT QH MG[ HCEVQTU YJGTG Canada must always be better than others to even be shortlisted for investments.$G[QPF OCPWHCEVWTKPI VJG KPFWUVT[ KU WPFGTIQKPI OCUUKXG EJCPIG YKVJ PGY VGEJPQNQIKGU QP VJG JQTK\QP FG PKPI VJG car of the future. Thanks in part to our OCPWHCEVWTKPI DCUG CPF QWT 4 & ECRCDKNKVKGU %CPCFC is incredibly well positioned. For example, Canada JCU UVTQPI ECRCEKV[ KP emerging technologies such CU NKIJV YGKIJVKPI OCVGTKCNU OQDKNG EQOOWPKECVKQPU sensors and controls, software development, data ana-N[VKEU CTVK EKCN KPVGNNKIGPEG E[DGTUGEWTKV[ CPF CFXCPEGF battery capabilities, backed by our talent pool and access VQ INQDCNN[ TGEQIPK\GF TGUGCTEJGTU CTG RWVVKPI %CPCFC QP VJG OCR #U C TGUWNV UKIPK ECPV RTQITGUU JCU DGGP OCFG KP CVVCKPKPI PGY KPXGUVOGPVU D[ DQVJ VJG RTKXCVG CPF RWDNKE UGEVQTU KP UVTCVGIKE CPF KPPQXC-tive areas.)]]]]]]]]]]]]

9 A series of important policies and measures JCXG CNUQ DGGP CPPQWPEGF VJCV CTG GPGTIK\KPI KPPQ-vation in the industry. The Innovation and Skills Plan and the development of Superclusters will move us in VJG TKIJV FKTGEVKQP 6JG FGOCPFU HQT PGY VGEJPQNQIKGU CNQPI YKVJ QWT ECRCDKNKVKGU to support their develop-ment has led to the need for an updated vision that KPENWFGU VGEJPQNQI[ CPF RGQRNG FGXGNQROGPV #U UWEJ + TGEQOOGPF VJG HQNNQYKPI UVCVGOGPV CU %CPCFCoU #WVQOQVKXG 8 KUKQP To be the location of choice for automotive manufacturing, services, and research by developing our people, skills, and technology to compete and to contribute to a prosperous Canada. 1WT OKUUKQP UVCVGOGPVU JKIJNKIJV YJCV KU PGGFGF to RTQRGN %CPCFCoU CWVQOQVKXG KPFWUVT[ VQ CVVTCEV KPXGUVOGPV KP DQVJ 4 & CPF OCPWHCEVWTKPI 1. Foster a culture of innovation, creativity, and continuous improvement; 2.]]

10 'PEQWTCIG KPXGUVOGPV KP RGQRNG VQ RTQXKFG RTQURGT-ity and quality of life for Canadians;3..GXGTCIG CPF CVVTCEV VCNGPV VQ RQUKVKQP %CPCFC as a centre of excellence;4. 5 WRRQTV VGEJPQNQIKGU VJCV CTG MG[ VQ CFXCPEKPI VJG CWVQOQVKXG OCPWHCEVWTKPI CPF TGUGCTEJ UGEVQTU 5. #FFTGUU VJG QRGTCVKPI GPXKTQPOGPV HCEVQTU VQ GPJCPEG EQORGVKVKXGPGUU CPF ITQYVJ CPF 6. (QEWU QP DTCPFKPI %CPCFC D[ TCKUKPI QWT XKUKDKNKV[ CPF UJQYECUKPI PGY VGEJPQNQIKGU KP MG[ OCTMGVU 6Q ITQY KPXGUVOGPVU YG PGGF VQ HQEWU QP MG[ CTGCU QH FGXGNQROGPV VGEJPQNQI[ RGQRNG CPF KPHTCUVTWEVWTG 6 JGUG HWPFCOGPVCN RKGEGU CNN EQOG VQIGVJGT KP VJG followKPI FKCITCO OGCPV VQ FGRKEV C JQWUG YJGTG YG EQPPGEV CNN VJG EQORQPGPVU CU CP KPVGITCVGF UVTWEVWTG that makes up our value proposition for PROPOSITIONTECHNOLOGYPEOPLEINFRASTRUCTUR EENTREPRENEURIAL CULTUREFIGURE 1: FRAMEWORK FOR SUCCESS7 DRIVE TO WIN AUTOMOTIVE ADVISOR REPORTThe value proposition is what Canada has to sell for DQVJ OCPWHCEVWTKPI CPF 4 & KPXGUVOGPVU 7 PFGT GCEJ of the main components of the house, I recommend CEVKQPU VJCV ECP JGNR VQ KORTQXG %CPCFCoU QXGTCNN value proposition.)]]]]]]