Canadian auto parts companies say the current North American trade agreement is helping them managing the headwind from the south of the border, even the tariff disruption in the previous months has intensified.
With recent income reports by Martinria International Inc. and Linmar Corp, both firms highlighted compliance with the Canada-US-Maxico agreement as a source of shelter from the rigorous tariffs installed by the United States.
Linda Hasenfrats, Linmar’s executive vice-president said, “Despite the innumerable tariffs in the last several months, Linmar may release the minimum bottom-line effect. Some areas have some effects in some areas, but not at a physical level,” Linda Hasenfrats, Linmar’s executive Vice-Chair said on an earning call.
He highlighted some reasons that the company is capable of reducing tariffs.
“For products produced in Canada and Mexico, our products correspond to the USMCA, which we ship in the US, which means that there is no tariff on the mobility side for our customers, where they are importers of records or for us on our industrial products, where we are the importers of records,” he said.
Hasenfratz also highlighted the strategy of production of products in the same continent as its customers, while “did not pursue low -cost labor worldwide.” In contrast, he said that making products in Europe or Asia and shipping them in the United States would trigger tariffs.
He also said that fewer American plants mean a total of less tariff.
“I will note that our American footprint is only 10 out of 7 of 75 plants globally, which means that the tariff on any imported product from the supply chain is not the material for our overall business performance,” said Hasenfrez.
Martinria also said that its tariff effect is manageable.
“Remember that USMCA-compliance auto parts are exempted from Section 232 auto tariff, which is positive for us as well as our industry. It’s a very good thing.”
“We have some tariff exposure on some products that we get from two suppliers and from steel and aluminum tariffs affected. So our results have some tariff effects.”
The board’s Martinria Executive Chairman Robert Wildbair said that the company is estimating the “quite solid” next year, although it would depend on how the North American economy performs in the coming months.
“Tariff cutting tariff is not almost bad as bark,” he said.
Moving forward, Hasenfrez stated that he was worried about the impact of tariffs on the automaker customers.
“Costs for our customers, as we have seen, are in Arabs. I have some concern about the potential impact of vehicle pricing and therefore demand for a long time,” he said.
Martinria recorded a decline in profit during the second quarter. The Toronto -based company said it made a profit of $ 38 million during the second quarter, which was below $ 40.97 million during the same quarter last year.
Martinria maintained her view for the year, expected to be sold, its sales between $ 4.8 billion and $ 5.1 billion, and despite free cash flow between $ 125 million and $ 175 million, despite expecting a low sales in the company’s second half of the year, compared to the first half.
The auto parts supplier said that its total sales for the quarter were $ 1.27 billion, compared to $ 1.3 billion a year ago.
Linmar reported a net earning of $ 126.9 million during his second quarter, below $ 174.1 million a year ago. Guelph, ONT.-based auto parts manufacturer said its sales were $ 2.6 billion during the quarter, which was below $ 2.8 billion during the same period last year.