150K Government Grants Available from O-AMP 

Automotive parts suppliers based in Ontario can now apply for support for modernization or lean manufacturing initiatives through the Ontario Automotive Modernization Program (O-AMP). The O-AMP is a government program that aims to help small and medium-sized manufacturers adapt to change, streamline their operations, and become more competitive in the global economy.

If your company is selected as an applicant, you will receive up to $150,000 to cover up to 50% of eligible project costs. Applicants will be responsible for at least 50% of the remaining project costs, either through working capital or a bank loan.

Applications for the program opened on November 15, 2021 and will close on January 4, 2022. Award decisions will be announced in late March or early April 2022.

Examples of projects include hardware and software upgrades, technical training, and manufacturing efficiency improvements. Eligible projects include process technology adoption, such as implementing an ERP system or hiring a consultant for lean implementation.

Prepare for Growth with Digital Transformation

The O-AMP program is an excellent opportunity for automotive component manufacturers to improve their competitiveness in the global automotive component industry. But which initiatives are right for your company and how should you implement them?

Start by systematically assessing all aspects of your business, including strategy, operations, people and technology. Then develop an action plan to help you achieve your business goals.

Growth plans should address both customer experience and operational efficiency. Other possibilities include workforce utilization, business intelligence gathering and new revenue streams. Technologies to consider include IoT, cloud, AI, robotics, control systems, and enterprise software systems such as ERP.

Enterprise resource planning – or ERP – is business software that integrates a company’s business processes across all critical functions (think supply chain, sales, manufacturing, finance, and so on), providing a central planning hub and tightly integrated finance and accounting functions. Increasingly, companies are looking to gain last mile benefits by tightly linking their ERP system to their manufacturing execution systems (MES) and production control systems.

This type of integrated architecture improves business agility and frees up human resources to focus on higher-value decision-making activities. When implementing a new ERP, begin by defining your goals, creating a customized due diligence plan, and evaluate the software and services based on your company’s specific needs.

Here are five potential use cases for O-AMP funding:

1. Selecting, acquiring, and implementing a state-of-the-art ERP software system.
2. Selecting, acquiring, and implementing a manufacturing execution system (MES)
3. Accelerating your adoption of smart manufacturing and Industry 4.0 by integrating your ERP and enterprise asset management (EAM) systems to your MES systems and production equipment.
4. Delivering operational improvements by optimizing your existing business processes and ERP software systems.
5. Implementing a targeted business intelligence (BI) strategy by identifying the right KPIs and building the analytics to deliver the right analysis to the right people at the right time.

Partner with Pemeco – The ERP Consulting Experts 

Pemeco has 40-plus years of experience successfully leading complex digital transformation and ERP projects for automotive manufacturers such as Arvin Sango and Lucid Motors. We help you assess your situation, select the right ERP and MES software and project manage and optimize your implementation to assure a successful outcome. Contact us today to learn how your business can leverage $150,000 in O-AMP grant funding to accelerate your digital transformation.

“Pemeco is a strong business partner whose in-depth business process expertise is helping us succeed on a major digital transformation project.”

“Pemeco’s high caliber and collaborative team, combined with their project management discipline, business process knowledge and technology expertise have been instrumental – they have led our business requirements and road-mapping analysis that spanned customer experience, ERP, PLM, MES and other cross-functional areas. They then led us through a methodical evaluation of ERP, HCM, and CPQ solutions and were instrumental in helping us find the right long-term technology partners.”

Growth and Opportunity for the Ontario Auto Industry

In 2019, Ontario auto parts manufacturing seemed to be headed towards its demise. General Motors closed its Oshawa plant as part of a comprehensive restructuring plan, laying off 2,300 employees and causing thousands more layoffs across its supplier base.

Now, Ontario’s auto parts manufacturing industry is experiencing a reversal of fortune. Not only has GM resumed car production, it has also announced an investment of about $1.3 billion. And that’s just the tip of the iceberg.

The auto industry is growing faster and faster, with industry revenues potentially rising 30 percent to $1.5 trillion. Consumer confidence is increasing as we emerge from Covid-19 lockdowns and, according to global consultancy McKinsey, consumer demand for new and used cars is almost back to pre-COVID-19 levels.

Global trends such as car-sharing, autonomous vehicles, and electric vehicles will have a significant impact on the industry. What does this mean for Ontario auto parts manufacturers?

With the increase of ride sharing services like Uber and Lyft, one can be forgiven for thinking that fewer cars will be built. Forecasts and purchase intent suggest otherwise – the industry is forecast to grow by 2 percent.

There’ll be an increased demand for high-utilization ride-sharing vehicles. New types of autonomous cars are expected account for 15 percent of passenger vehicles sold worldwide in 2030. And by then, the share of electrified vehicles could range from 10 percent to 50 percent of new-vehicle sales.

Electric vehicles will become more widely accepted due to an expanding charging infrastructure and stricter emission regulations. They are expected to achieve cost competitiveness with conventional vehicles as battery costs decrease to $150 from $200 per kilowatt-hour over the next decade.

Managing Change and Preparing for Uncertainty 

Meanwhile, legacy automakers are facing industry disruption from both within and outside of their industry. New entrants from other industries include mobile service providers like Uber, tech giants like Apple, and specialized luxury autonomous OEMs like Tesla, Pemeco client Lucid Motors, and Rivian. Software development is becoming a key industry differentiator in components such as active safety/ADAS, connectivity and infotainment. Meanwhile, pressures from within industry competition is also accelerating. China remains the world’s largest automotive manufacturing country, accounting for approximately 30 percent of worldwide vehicle production.

Automakers must continually anticipate new market trends and innovate their business models. Supplier and service providers must forge new partnerships and participate in the new infrastructure for autonomous and electric vehicles.

And, Ontario auto manufacturers are well positioned, particularly given favourable tax treatments under Canada-United States-Mexico Agreement (CUSMA) given to North American manufacturers that produce cars with North American content requirements gradually shifting to 75 percent for passenger vehicles and light trucks and 70 percent for heavy trucks.

The Ontario Government is seizing upon the opportunity to transform its automotive manufacturing sector into one that’s positioned for long-term success. And, for present purposes, it’s doing so through strategic grant funding programs targeted to small and mid-sized automotive parts manufacturers.

Government Assistance for Auto Parts Manufacturers 

In 2019, the Ontario government launched the Driving Prosperity program. On November 17, 2021, the government announced Phase 2 of Driving Diversity – The Future of Ontario’s Automotive Sector. Phase 2 is focussed on turning Ontario into an innovation hub for electric, autonomous vehicles with the stated goal of building 400,000 electric and hybrid vehicles by 2030. The program’s website notes the following four goals:

• Reposition vehicle and parts production for the car of the future through new automaker mandates for hybrid and battery EVs, attract a new battery assembly plant and increase exports of Ontario-made auto parts and innovations
• Establish and support an electric battery supply chain ecosystem that connects Northern Ontario’s mineral wealth with the manufacturing strength of Southern Ontario
• Innovate in every stage of development from creation, to design, to adoption of new products and services
• Invest in Ontario’s auto workers by equipping them with the skills they need to secure rewarding, high-paying jobs in the auto sector and across the broader supply chain.

The program already appears to be paying dividends.

GM and Ford will invest an additional $4 billion in Ontario assembly plants. Ford announced it will invest $1.8 billion to produce a battery EV at its Oakville assembly plant. GM also announced a $1 billion investment in its Ingersoll plant to produce an EV delivery van.

To meet demand, auto parts manufacturers must respond quickly to the need for advanced technology and real-time information. To help them do so, the Ontario government has launched a program that provides up to $150,000 grants per company.