Feds, province invest almost $600M to help Ford build electric vehicles in Ontario
Friday, October 9, 2020
The Windsor Star/Anne Jarvis
The federal and provincial governments will contribute a total of $590 million — $90 million more than initially rumoured — to Ford Motor Company of Canada’s plan to convert its Oakville Assembly Plant for the production of five battery-electric vehicles.
“I think the commitment is transformational,” said Automotive Parts Manufacturers Association president Flavio Volpe.
Each level of government will contribute $295 million to the $1.84-billion project. Prime Minister Justin Trudeau and Ontario Premier Doug Ford made the announcement Thursday.
It clearly signals that both governments are willing to “play at a high level” if companies bring them “transformational programs,” said Volpe.
Sometimes, government money is simply part of business, he said. Sometimes, companies hold government for ransom, threatening to move their investments elsewhere if government doesn’t ante up.
“And then there are some (requests) that come across your desk that are going to change the way the business, the industry, the jurisdiction is viewed,” he said. “That’s what this is.
“Two parties, two different levels of government, both of them are challenging automakers, saying don’t bring me business as usual. Bring me something daring, creative, high-profile, and we’ll have a different discussion.”
Said Windsor-Tecumseh MP and government member Irek Kusmierczyk: “This was Canada stepping onto the stage in a big way and saying we’re going to build the car of tomorrow.
“There’s a recognition that there’s a transition taking place. You’ve got to look to where the puck is moving to, and the puck is moving to electric vehicles. The government recognizes they have to make these investments to help companies make these transitions.
“There are a lot of jobs at stake, and if you want to stay in the game, you have to make these investments. Unless you make the investment today, the ship is going to sail.”
Sales of electric vehicles are currently less than two per cent of all vehicle sales, said Volpe, so it’s difficult for companies to shift to a segment that doesn’t have enough volume to support it. But 43 million electric vehicles are expected to be produced per year globally by 2030, said Kusmierczyk.
California, where the market is bigger than all of Canada and which drives production decisions in the United States, announced last week it will end the sale of vehicles with internal combustion engines in 2035.
It was a “watershed moment,” said Volpe.
The auto industry provides an estimated 500,000 direct and indirect jobs in Canada, contributes $16 billion to the country’s GDP and is one of its largest exporting industries.
The investment in Oakville is expected to provide huge opportunity in Windsor, helping secure its position as a leader in the future of the industry and at the same time diversifying its economy by expanding research and development and tech jobs.
The plant in Oakville will also assemble batteries for the vehicles, but Ford, Unifor and the federal and provincial governments are discussing creating a battery testing centre in Windsor at the company’s Essex Engine Plant.
“We could test batteries, no different than we test engines now,” said Unifor Local 200 president John D’Agnolo. “We have already in the plant an area where we can test batteries.”
The plant has one station that can test batteries but would need to add more stations.
The prospect “absolutely looks promising,” he said.
Details like the number of additional jobs, the cost and government funding have not been discussed yet.
“That’s all in the works right now,” D’Agnolo said.
Windsor, a leader in the tool and die industry, will almost certainly be involved in the massive retooling of the Oakville plant, which will begin in 2024 and take several years.
“I’m sure there are going to be contracts there,” D’Agnolo said.
Windsor also boasts the biggest cluster of manufacturing automation and is expected to be involved in the automation of the production process in the plant.
Then there’s the supply chain. There are already companies in this region supplying technology and capacity to Ford’s Rawsonville Components Plant, which produces batteries for battery-electric vehicles southeast of Ann Arbor in Michigan. That makes this region a logical partner for the Oakville plant’s battery supply chain.
“Anybody who is currently a supplier to Ford in Windsor can see 20 years out,” said Volpe. “There’s 20 years of opportunity.”
Said D’Agnolo: “Think about where this can go. All the stuff that it takes to make batteries we can do here in Ontario. There are a lot of tentacles to this program, and we’re going to be leaders when it comes to this plant.
“We can get more factories. We can go after General Motors. We can go after FCA.”
Ford’s investment in Oakville will reverberate throughout the global auto industry, Kusmierczyk predicts.
“It’s going to basically say, if you’re interested in building zero-emission vehicles and batteries, build it here, in Canada.”