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Most Canadian trade sectors have bounced back after the pandemic, but the auto industry has struggled to get back on its feet and not just because of the latest strike.

The industry, which is the country’s second-largest exporter after oil, has suffered multiple blows in recent years, Benoît Carrière, an analyst at Statistics Canada, said. For example, the pandemic disrupted supply chains in 2020 and there was also a global semiconductor shortage in 2021 that got so bad that Canadian manufacturers had to drop certain car models from their production lines, he said.

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The industry’s numbers have yet to fully recover. Though exports of motor vehicles and parts were up 12.5 per cent in 2022, they were still well below 2019 levels, Statistics Canada said in its annual review of international merchandise trade.

Pent-up demand dating back to 2021 has enabled the Big Three automakers — General Motors Co., Ford Motor Co. and Stellantis NV — to report profits topping US$21 billion in the first half of this year. The Canadian industry has benefited from that bump since roughly 93 per cent of the country’s car exports go to the U.S., according to the Canadian Vehicle Manufacturers’ Association.

“The auto sector has seen strong export (and) import growth recently due to the fact that the global semiconductor shortage has been easing, which is enabling companies to boost production and sell more cars and trucks,” Alan Arcand, chief economist at the Canadian Manufacturers & Exporters, said in an email. “There is significant pent-up demand for vehicles since they were in such short supply during the pandemic.”

But unions say the benefits from these soaring profits have not been distributed equally. The United Auto Workers, which represents workers at the Detroit Three in the U.S., went on strike on Sept. 15, demanding pay increases.

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Companies such as GM have made “mind-boggling profits” in the last decade, UAW president Shawn Fain said in a July 25 statement, “but autoworkers and our communities have yet to be made whole for the sacrifices we’ve made since the Great Recession.”

If the UAW strike continues, it could stunt the recovery of Canada’s auto-parts industry, which has struggled to get back on its feet after the pandemic.

“It’s inevitable that the UAW strike will affect Canadian parts producers,” Greig Mordue, an associate professor of engineering at McMaster University in Hamilton, Ont., and former general manager of Toyota Motor Manufacturing Canada, said in an email.

The health of the U.S. auto industry generally has a knock-on effect for the Canadian equivalent because the two are tightly integrated. But the impact of the strike on Canadian parts manufacturers will not be uniform, Mordue said, since it will depend on whether they are exposed to operations where workers are represented by the UAW.

“In the end, Canadian suppliers will have to decide whether and how to respond,” he said. “Do they ride it out? Do they issue short-term layoff notices? Do they allow workers to determine if they want to come in and do alternative work? Do they allow workers to take unscheduled vacations? Do they encourage or allow workers to take a leave of absence?”

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These won’t be easy decisions, Mordue added. But layoffs would be risky, because autoworkers tend to be highly skilled and might be hard to replace, so recruitment and training will be costly.

Canadian employees at Ford nearly went on strike, too, but workers on Sept. 24 ratified a three-year contract with the automaker that calls for a wage increase of 10 per cent in the first year, two per cent in the second year and three per cent in the final year.

“We know this is a challenging time for all workers and this agreement tackles the affordability issues so many face today,” Ford master bargaining chair John D’Agnolo said in a statement.

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