Re-embedding, Japanese investment and the restructuring buyer-supplier relations in the Canadian automotive components industry during the 1990s

In this paper, I draw on the developing embeddedness literature in economic geography and consider the impact of Japanese automotive transplants on the Canadian automotive components sector. Following Sako, 1992, I argue that Japanese firms are seeking to 're-embed' their obligational contractual relations (OCR) supply operations in North America. While this has had a significant impact on North American assemblers and Canadian suppliers, strong elements of the more price-focused and adversarial arm's length contractual relations (ACR) system remain. Although Japanese assemblers share greater non-price information with suppliers and have encouraged greater supplier collaboration, Canadian firms primarily supply low value-added components. Smaller production runs and the sourcing of sophisticated components from Japan and kieretsu operations in the US mean that dense, localized supplier networks are less likely to develop in Canada than in Japan or the US. Attempts to develop greater sectoral and labour management collaboration by Canadian suppliers over product development and training have also been limited.