The days of automobile plants making only one type of vehicle are coming to an end as the Canadian industry tries to remain globally competitive and grapples with green automaking, says the head of a national car-manufacturing group.

"That's the only way vehicle manufacturers - in a globally competitive market - can compete anymore," says Mark Nantais, the president of the Canadian Vehicle Manufacturers Association (CVMA).

His comments come as Canadian-based manufacturers are closing plants, revamping production schedules and switching to different types of vehicles, where possible, at existing plants.

Ford has announced plans to shut down five assembly plants and several parts operations along with two engine factories in Windsor that will eliminate approximately 2,000 jobs.

Nantais predicts auto manufacturers, mostly based in southern Ontario near the Canada-U.S. border, will convert their facilities into flexible plants that can switch the types of vehicles they make according to consumer demand.

The CVMA represents Canada's leading automakers, including DaimlerChrysler Canada Inc., Ford Motor Co. of Canada Ltd., General Motors of Canada Ltd. and International Truck & Engine Corp. Canada.

In a recent speech to the Vancouver Board of Trade, Nantais said some Canadian manufacturers have more plant capacity than they can use and more vehicles than they can sell.

He noted General Motors has invested $7 billion over the last number of years to convert facilities into advanced flexible manufacturing plants.

"So while we may be closing some plants, other plants are being converted to flexible manufacturing, so that they're more efficient, so that they can serve markets not just in Canada and the U.S., but markets abroad," said Nantais.

"They've got that flexibility. They're more efficient and therefore, they're more able to compete on that basis."

Canada, he added, can no longer rely on the 1965 Auto Pact with the U.S., which provided hundreds of thousands of jobs and "great efficiencies."

"There's nothing to keep (automakers) in Canada anymore," said Nantais. "In order to compete, we need to go into low-cost jurisdictions. But even though Canada is a (high-cost) jurisdiction, we have highly skilled labour. We have other benefits here."

Autoparts plants have also been affected.

Dura Automotive Systems Inc. recently announced it will close its only remaining plant in Canada, at Bracebridge, Ont., which spells a loss of 300 jobs. Afina Group is also closing its brake-parts plant at Sudbury, putting about 240 people out of work.

Union officials have also announced General Motors will lay off 375 employees at its Windsor transmission plant.

In recent weeks, General Motors and Ford have unveiled new subcompact-vehicle models in response to increasingly popular Smart cars and Toyota hybrids.

But Nantais says an industry-wide shift to smaller vehicles is not likely. Most manufacturers will continue to make vehicles in various sizes because of consumers' different needs.

"No one manufacturer, unless they're a small-market manufacturer, is going to produce just small vehicles," he said. "That won't happen, or at least I don't foresee that happening."

Nantais also said Ottawa must provide more incentives before buyers switch en masse to vehicles that use alternative fuels.

In 2005, Canadian automakers agreed to help reduce greenhouse gas emissions from cars and light-duty trucks by 5.3 million tonnes by 2010. But, he added, vehicles are lasting longer "and we've got over a million 1987 or older vehicles out there that emit 37 times more emissions than a new vehicle.

"The more quickly that we can remove those vehicles from the road, turn over the fleet with newer vehicles, we're going to get more environmental benefit (through) greenhouse gas reductions."

The CVMA also wants all levels of government to adopt a green-fleet strategy.

The group contends governments purchase 20,000 automobiles per year, but have not adopted green-vehicle purchasing programs.

Nantais said 51 per cent of consumers have already converted to small, sub-compact and compact vehicles because families have less disposable income.

But measures to shift commercial-fleet owners toward alternative vehicles will not be very successful, he added, because they have certain engine-horsepower needs that enable them to carry and haul cargo.

"We cannot dismiss, we cannot overlook the utility requirements that they have - and they won't shift," said Nantais.

David Adams, president and CEO of the Association of International Automobile Manufacturers of Canada (AIAMC), says the vast majority of today's new vehicles could not be sold in the future because they would not meet future fuel-efficiency standards, based on guidelines to be introduced in California between 2009 and 2016.

"The availability of the technology to meet those standards is really the key issue at this time," says Adams, adding he understands it is not yet technologically feasible.

Fuel economy and technology will continue to improve between now and 2016, but a complete redesign of all new vehicles is "probably not likely to occur, given that it takes two to five years to redesign each vehicle."

Japanese manufacturers have led the trend toward smaller, more flexible facilities and North American Big Three manufacturers Ford, General Motors and DaimlerChrysler are now catching up.

"At least in Canada, that's what their new investment has attempted to do - to get them on a flexible manufacturing footprint - so that they can respond more quickly," says Adams.

"One of the challenges that Ford had in Oakville was that they were producing the Freestar (minivan) that really wasn't selling in the marketplace.

"But they weren't set up on a flexible-manufacturing basis, so they didn't have the ability to switch over their production line to produce something else.

"With their new investment there now, that's what they've designed that plant to do."

In the future, he says, the cost of fuel in a given market may determine what types of vehicles are manufactured there.

"Now, more than ever before, all manufacturers are competing on the basis of environmental technologies," says Adams. "It's not necessarily because manufacturers want to be particularly altruistic, although some manufacturers realize the benefits of marketing vehicles from an environmental angle."

Ottawa and several provinces have indicated they want to regulate the automobile-manufacturing industry because of concerns over emissions.

Adams says it's probably best to have Ottawa set the rules to avoid "a patchwork quilt" of regulation.

Of the 18,000 hybrid vehicles registered between 2001 and 2006, almost half - 8,700 - were registered last year.

But hybrid sales still represent only one per cent of all vehicles sold.

"We're going to continue to see growth in hybrid sales," says Adams. "Is it going to be huge numbers? Probably not."

Hybrids that are powered by electric and gas engines don't require special fuelling infrastructure. But consumers can't optimize the benefits of some green vehicles because, in the case of E85 (gasoline that consists of 85 per cent ethanol) and hydrogen, the required fuel is not yet widely available.

"You can't buy E85 fuel anywhere other than a couple of stations in all of Canada," says Adams. "That's the real challenge."

Tax rebates on the purchase of green vehicles will help make them more affordable, says Adams. But, he adds, changes in regulations, types of vehicles and fuels will only make a difference if consumers are getting what they want.

"It all comes down to the consumers," says Adams.

(Monte Stewart can be reached at monte@businessedge.ca)