TORONTO -- Governments in Canada need to make sure existing auto assembly plants stay here and that the country attracts new investments, says Al Power, president of one of Canada's largest auto parts makers.

"I wish I could say that the Canadian automotive industry is in fine shape," Mr. Power told an Empire Club luncheon in Toronto yesterday.

"But the truth is, it's not -- and we need to act decisively and urgently to repair it."

The key factor that has led to a declining assembly industry is the country's failure to attract any of the new investment that flooded into the southern United States in the 1990s, he said, describing the moves by the Mercedes-Benz division of DaimlerChrysler AG, Nissan Motor Co. Ltd., and others as being driven by economics.

"Subsidized loans, land purchases, tax concessions -- all have been used to great success to lure investments," said Mr. Power of Decoma International Inc. of Concord, Ont.

"It doesn't mean if Alabama offers a $300-million package to a car company we have to offer a $300-million package," Mr. Power told reporters after the speech. "But clearly, zero isn't working."

The key decision coming up is Ford Motor Co.'s proposal to turn its Oakville, Ont., assembly site into a leading-edge flexible manufacturing facility that will turn out multiple models and help the auto maker react more quickly to changes in market demand.

Ford has said that it will seek at least $200-million in financial aid from the governments for the $1-billion redevelopment.

The troubles of the industry have awoken governments to the fact that their help is needed in Canada, Mr. Power said, but more needs to be done.

"While the dual advantages of a low dollar and free health care may have worked in the past, they are being decisively trumped today," Mr. Power said.

"The simple fact is this country can't compete without government investment."

The new Ontario government is listening closely to industry concerns, he said, and the federal government has begun to act through the Canadian Automotive Partnership Council, a joint industry-government committee set up to examine the health of the industry and develop a strategy for future growth.

In addition to offering competitive incentive packages to attract investment, governments should encourage more innovation by establishing an innovation fund aimed specifically at the auto industry, increase co-op education and apprenticeship training and promote high school science and technology programs.

Marketing Canada as a good place for automotive investment is also necessary, Mr. Power said.

He also advocated a new border crossing into the U.S. Great Lakes states from Ontario because of delays at the border that create delays for parts makers and increase expenses.

The delays add cost, "especially if you're delivering on a just-in-time basis," he said. For some products, Decoma is stockpiling inventory because of the delays at the border, which is an added burden at a time when auto makers are demanding price concessions from parts makers.

"It's not an insignificant amount of money," Mr. Power said.