Stellantis and LG Energy Solution appear poised to move a portion of their $5-billion battery cell plant to Michigan amid protracted negotiations over funding for the project with the federal government.
A company source, speaking solely on background, told Automotive News Canada that plan would entail producing the modules for the components in Michigan and shipping them back to Windsor and factories elsewhere in North America, possibly Belvidere, Ill., where the automaker recently idled a factory that could be given new product.
“This full battery investment was touted as the anchor for all Stellantis operations in Canada, and that's why we all rightfully celebrated it,” said Automotive Parts Manufacturers’ Association President Flavio Volpe, whose members employ about 12,000 people that help supply Brampton Assembly Plant. “The question is: If you remove a piece, does that change the overall formula? It would be better for everyone who supplies or works for or works with Stellantis in Canada to close the original deal.”
Sam Fiorani of U.S.-based forecasting firm AutoForecast Solutions says there is some potential the automaker could decide to move electrified product planned for Brampton, Ont., to an idled plant in Belvidere, but that "it's getting late in the game to do so."
But if it makes financial sense, the automaker could do so, he said.
FEAR IN WINDSOR
Local officials in Windsor are expressing alarm at what appears to be a standoff between the companies and Ottawa.
According to Joe Goncalves, vice-president investment attraction and strategic initiatives at Invest WindsorEssex,
the companies received a letter from the federal government earlier this week stating it was willing to match incentives in the U.S. Inflation Reduction Act (IRA) for battery cell production, but not the legislation’s incentives for the module portion of the facility.
The IRA includes an incentive of US $35 per kWh of cell production and a US $10 per kWh incentive for battery module production.
The companies, meanwhile, are accusing Ottawa of reneging on its commitment to fully match IRA incentives for both the modules and battery cells.
Unless the two sides can reach a compromise on funding for the module operation, “we should brace ourselves for bad news next week,” Goncalves told Automotive News Canada on May 26.
Goncalves said that he has been informed by a source in Michigan that the companies are looking to move module production from Windsor to that state. He would not identify his source.
Stellantis halted construction on the module operation May 15, and warned that it is making contingency plans – a sign that it was willing to move the project across the border — if the federal government didn’t live up to commitments to match incentives in the IRA.
Ottawa responded by pressing the Ontario government to boost its contribution to the project. After initially balking, Ontario Premier Doug Ford said May 19 the province would increase its share of the funding. The province had initially agreed to contribute $500 million to the project.
While the module operation would employ between 300-400 people, more than just those jobs are at stake, said Goncalves.
“We have two companies directly related to the module operation signed up,” he said. “They represent between 700 and 800 jobs. Those are now at risk.”
As well two other companies – one tied to the battery cell operation, the other involved in the electric-vehicle supply chain and representing $1 billion in potential investment -- are expressing concerns about the apparent standoff over the battery plant, he added.
While construction of the module operation has been halted, three-quarters of the external structure is already completed, said Goncalves.
“They’ve ordered all of the equipment,” he said.
‘A FUNDAMENTAL PROBLEM’ BREWING?
Unifor Local 444 President Dave Cassidy, who represents thousands of workers at the Stellantis Windsor Assembly Plant, where the company’s flagship minivan is made, said the federal government accepted Ford’s additional money but is using it to offset its own contribution to the cell production.
In essence, Ontario’s contribution does not increase the incentives previously offered by the federal government.
“The province said they would come up, they’ve done their share and what was asked of them. I don’t know why the negotiations are held up. I don’t know what the number is, but the province has paid their fair share. If the government is taking that provincial money and dumping it into their own, we have a fundamental problem.”
Volpe said he hopes the federal government hasn’t rolled the provincial money into its own and not upped the offer.
“If the original stumbling block was the province needed to pay their share — and they’ve done that — I would then assume the offer is whole, or more so when all this started,” Volpe said. “I’m not sure what the stumbling block is. My understanding is the province has come to the table to up the ante. The feds are the lead on the discussion with the company. Perhaps it’s just confirming all the details of the different components, including R&D and Brampton.”
A spokesperson at Stellantis North America said the company would not be commenting.
PETITION WRITING
Meanwhile, Windsor Mayor Drew Dilkens is petitioning the federal government to finalize the federal funding agreement.
Dilkens on May 26 launched a petition at Change.org, seeking to “protect Windsor’s EV battery manufacturing facility and economic future”
“This impasse jeopardizes not only the completion of the EV plant but also our efforts to attract additional investment to the region, and places 3,000 Windsor jobs, livelihoods, growth and development, reputation and strong economic outlook at significant risk,” the petition reads.
Dilkens then took to Twitter to plead with his residents to send a message to members of parliament.
“We need you to add your voice, and your signature, to our call to the Federal Government to urgently finalize all outstanding financial matters to provide for the successful completion of all planned and promised components of the NextStar EV battery manufacturing facilities,” Dilkens wrote in a tweet.
Windsor-Tecumseh Liberal MP Irek Kusmierczyk did not return a request for comment.
A spokesperson for the federal Ministry of Innovation, Science and Economic Development was not immediately available for comment.
And a media request to Premier Ford's office went unanswered.
