Woe, Canada: USA's economic chill spreads north

In response, the company went after new customers in India. The fast-growing Asian nation was a natural target: Roughly one-quarter of Samco's 130 employees were of Indian descent, including Raj Kohli, the company's vice president for engineering.

Despite the steep decline in its U.S. business, Samco has been able to double total sales to $28 million in the past five years. Last year, the company scored a major order from Tata Motors, the Indian carmaker that this fall plans to introduce the world's cheapest car.

Under a $3 million contract, Samco is producing machines that will turn flat ribbons of steel into 9-foot-long structural supports for the $2,500 car's chassis. Samco is scheduled to ship the first of the 20-ton machines to India next month.

The company's success offers a lesson in how manufacturers in high-wage countries such as Canada or the United States can succeed.

Samco nabbed the Tata order because its cutting-edge metal-bending technology isn't available in India. And the production approach it designed, enabling a single machine to produce six distinct parts, was less expensive overall than traditional methods, Kohli said. "This is quite new and different. It offers substantial savings," he said.

Struggling auto parts makers won't be able to duplicate Samco's achievement overnight. And some say the industry's predicament will get worse before it gets better.

The impact of the strong Canadian dollar will only fully be felt this year as contracts that were signed several years ago come up for renewal, says auto parts industry representative Fedchun.

New U.S. security requirements have the potential to slow border traffic, discouraging automakers from placing new orders with Canadian firms. And the U.S. downturn could prove deeper and longer-lasting than expected.

"It's certainly going to get a little worse," says Fedchun. "It's pretty painful."