The federal and Ontario governments will each pitch in $295 million for Ford Motor Co.’s $1.8-billion plan to build electric vehicles at its Oakville, Ont., assembly plant.
“This is just one of the first steps to build a next generation auto industry. We have the resources to do that,” Prime Minister Justin Trudeau said today from Kanata, Ont., as he digitally joined a news conference in Oakville, where fellow politicians had gathered for the announcement.
The announcement comes after Ford and Unifor last month agreed to a new three-year contract, which included a promise from the automaker to retool Oakville in 2024 to build EVs and batteries. Under Ford’s plan, the first EV would roll off the assembly line by 2026, with full capacity being reached in 2027.
Both governments see the investments as a way to secure high-paying jobs in an important manufacturing sector for the country. The investments dovetail with the federal government’s goal of boosting green technology and EV sales and reaching net-zero carbon emissions by 2050.
The provincial government, meanwhile, sees EV production in Oakville as a “critical component” in boosting Ontario’s automotive supply chain. It also sees the investment as a potential boost for Ontario’s mining industry, which mines materials that can be used for battery production.
“It will help support good-paying jobs for Ontario families and workers for years to come,” Ontario Premier Doug Ford said during the news conference. “It will allow Ontario to continue to lead in the development and production of the next-generation vehicle: connected vehicles, autonomous vehicles and, now, electric vehicles. The future of the auto industry is happening right here in Ontario.”
'WORLD LEADER' IN BATTERY PRODUCTION
Navdeep Bains, the federal minister of innovation, science and industry, said in an interview with Automotive News Canada on Thursday that the government plans to work “very closely” with Canada’s mining sector to become “better connected” with the auto industry on battery production.
“We want Canada to be a world leader when it comes to the production of batteries and the manufacturing of zero-emission vehicles,” he said.
Government incentives, though sometimes politically controversial, can influence automakers’ decisions on where to invest and allocate production. Assembly plants in the southern United States have often been recipients of tens or hundreds of millions of dollars in government supports such as tax breaks.
Unifor President Jerry Dias said major support from both governments is needed if Canada is to remain a prominent player in auto manufacturing this century. He said he was encouraged to see both governments work hand-in-hand to secure one of the largest investments in recent Canadian automotive history.
“Both governments understand where the industry is heading. You either get on board now or get lost in the shuffle,” Dias said in an interview with Automotive News Canada. “They understand this is a pivotal time for the industry.”
Trudeau said the Ford investment sends a signal that Canada is “prepared for what the future is going to bring” and is serious about playing a major role in the future of the auto industry, from assembly and the supply chain to research and development.
“What this announcement is all about … is seeing where the world is going and ensuring that Canada has a strong role to play in it, that there are good jobs for Canadians in a transforming world,” he said.
The Oakville plant currently builds the Ford Edge and Lincoln Nautilus crossovers. Under plans outlined by Ford in a letter to Dias that was part of a union contract highlights brochure, production of the Nautilus and the front-wheel-drive Edge were expected to end in 2023. The all-wheel-drive Edge will be produced through the life of the new three-year deal, which expires in September 2023.
Electric-vehicle production would begin in 2026, according to Ford. By 2027, the plant would employ about 3,000 workers, down from 3,400 today. Dias has said retirements would account for the difference.
GOVERNMENT MONEY 'VITAL'
Ford Canada CEO Dean Stoneley, speaking at the news conference, said the government incentives were important in helping the company to solidify its Canadian footprint.
“This is a vital step toward Ford’s larger multibillion dollar investment in producing electric vehicles for consumers around the world,” he said.
Dias previously told Automotive News Canada that he expected Ford to build five EV models in the plant by 2027, along with assembling the batteries that power them. It was not yet clear what those five models will be, though Dias said he expected at least one to be a crossover and that two-door and four-door vehicles were on the table.
Bains said Ford was expected to build an electric SUV model in Oakville. It was not immediately clear what percentage of those vehicles would be built for the Canadian market and how many would be exported to the United States or other markets. Most of the vehicles currently built in Canada are exported to the larger U.S. market.
“We know there’s significant demand here in Canada,” he said. “It’s difficult to say with any great deal of precision how they’re going to allocate product in Canada versus other jurisdictions. But the demand here in Canada does exist, and we as a government are going to continue to incentivize Canadians through rebates and continue to build critical infrastructure like charging stations.”
EV sales continue to account for a small percentage of overall new-vehicle sales in Canada and North America, though many automakers have ambitious plans to roll out dozens of new EV models in the coming years to meet strengthening emissions standards and other government regulations.
The investment represents a lifeline for the Oakville plant, whose was the subject of speculation in recent months following reports of the end of Edge production there. That lifeline, as well as gains in wages and benefits under the three-year contract, led to overwhelming support for the deal from voting Ford Unifor members, 81 per cent of whom voted to ratify the deal.
Still, the deal was unusual in at least one respect: The investment is slated to take place after the end of the new agreement between Ford and Unifor. Details about the transition to EV production in Oakville are sure to play a major role in bargaining in 2023.
Unifor’s focus in recent days has been on bargaining with Fiat Chrysler Automobiles. A strike deadline for those talks is set for Wednesday at 11:59 p.m. ET. The union aims to pattern the FCA deal off the Ford contract and is looking to secure new production for the company’s assembly plant in Windsor, Ont., among other goals.
Bains said the federal government has been “engaged in conversations” with FCA and other automakers throughout the year.
“We’ve been clear that we want new product in Canada,” he said. “We are in a position to build these products at a very cost-competitive price point that can service the North American market and also other key international markets.”
Dias said he was confident both governments would remain at the table in the future as automakers weigh where to invest.
“We’ve been talking about a national auto strategy for years and years and years. And this is what it looks like,” he said. “When you get the federal government, provincial government, employers and unions all in a room talking about, are we putting young people to work — that’s what it’s all about today.”