TORONTO — Ontario’s economic development minister — the third in a year — said the provincial government’s long-promised plan to cut electricity rates for businesses would be unveiled in “the near future,” but he would not disclose details or a timeline.
“We’re still working on the announcement of a hydro plan for Ontario,” said Vic Fedeli, “but we’re absolutely cognizant of the comments from the auto manufacturers as well as the parts producers. We hear from them and things that they need.”
Automakers have long been pressing the province to lower electricity rates, which have risen over the past several years and rank among the highest in North America.
A 2018 report by Ray Tanguay, the former federal-provincial auto adviser, listed electricity costs as a key area of concern for the auto industry.
Linamar Corp. CEO Linda Hasenfratz said last year that rising electricity costs can reduce profitability, though she said rates were not high enough on their own for her to consider moving plants out of Ontario.
“It’s an issue,” she said. “Electricity costs in Canada are higher than they are in the U.S., and that’s a problem. It dilutes profitability, and that’s never good because it gives you less cash to invest in the future.”
Asked what proposals Ontario was considering to lower electricity rates, Fedeli said only that the province has moved to stem rate increases.
“The hydro file is a little further than a quick flick of the switch, but what we did immediately was stem the increases by cancelling 752 wind and solar projects, saving $780 million,” he said. “So we were able to cancel the Green Energy Act and cancel those projects, stemming the increase.
“We stopped the bleeding very quickly, and now we’re tending to the wound.”
But, Wayne Gates, the Ontario NDP’s auto and manufacturing critic, faults the government for cancelling the green-energy contracts, saying it cost the province at least $231 million. He instead urged the government to focus on promoting green and autonomous vehicles as a way to boost the province’s auto manufacturing outlook.
“Major auto and auto parts industry job losses in Windsor, Oshawa and Oakville are the tip of the iceberg if Ontario doesn’t put a strong Auto Strategy in place,” Gates said in a statement.
Fedeli said that cancelling the green programs reduces costs to help make Ontario more attractive for investment, especially as auto companies prepare for higher local content rules under the new North American free trade deal, which is expected to be ratified in the United States and Canada this year.
“Once [the United States-CanadaMexico Agreement] passes, the clock will start ticking, and it’s very real that if you want to sell parts in North America, you’re going to have to make them in North America,” he said during a November interview.
Fedeli’s comments come amid questions surrounding the future of Canada’s auto sector. In the past year, General Motors announced plans to end vehicle assembly in Oshawa, Ont., while Ford Motor Co. and Fiat Chrysler Automobiles have also announced job cuts at Canadian plants.
In June, Fedeli became Ontario’s third minister of economic development under Conservative Premier Doug Ford, who assumed office in June 2018. Fedeli replaced Todd Smith as part of a cabinet shuffle, while Jim Wilson resigned the post in November 2018 after sexual-misconduct allegations.
Highlights from recent interview with Automotive News Canada included:
Fedeli on the perception that the future of Canada’s auto industry lies in technology, not manufacturing:
“They’re wrong. … If you want to manufacture anything, if you want to provide goods and services and you need a safe place to do it, a solid financial place to do it, you come to Ontario. So that’s what I say to the naysayers.
“Right now, we’re in a state of transition, but we’re very confident. Look at Toyota. First of all, their first-ever plant outside of Japan, they choose Ontario back when they did. [Last] year, not only did they announce their $1.4 billion investment, which is very significant and confidence-building, they also announced the Lexus NX line.”
On Ontario’s shortage of skilled labour:
“We have been continuing to work on our apprentice programs in our schools. There’s been a real mismatch of what people are trained for going one way and the jobs that we need filled going completely the opposite way.
“We need to get to the kids earlier. High school is almost too late to talk to kids about getting into skilled trades. [Suppliers] said we have to get to these kids earlier. … We have a shortage of skilled trades, and that’s why we’re investing so much in these apprentice programs and skilled trades programs through our colleges and universities.
On meeting with northern Ontario mining groups about automotive:
“In the automobiles of the future, where you have batteries, whether it’s [an electric vehicle], AI or just the cars of the future, you’re going to need batteries. And what do they need? Nickel, lithium, graphene and cobalt. Well, in the town of Cobalt, … they mine cobalt. In the town of Hearst, they mine graphene. North of Red Lake in northwestern Ontario, they mine lithium, pure lithium, so pure they think they’ll make glass out of it. And Sudbury is the nickel capital of the world.
“So, we brought those mining groups together and said, you are the suppliers of the future in automotive.
“In the north, we’ll take the graphene out of the ground and the lithium out of the ground and the nickel, but we want to produce the products in the north. We really want to do the research, innovation and production of the battery of the future. We want to be able to produce that. And that’s why we had our first auto meeting in northern Ontario.”
On the government’s role in developing the charging infrastructure for electric vehicles:
“It’s not a regulated industry, nor should it be. We believe that the market dictates it. The critical answer to that is that we let the market demands dictate how the market rolls out.”
On whether the government would pursue an auto plant from a Chinese automaker:
“It’s not out of our realm of thinking that we can continue to attract a good OEM business for the province of Ontario. We’re absolutely the right place for these plants.
“Our economic development prospects, we keep close to our vest. There are always competitors out there. But I tell any company, that we will have sites ready and trained talent that we will put up against any talent worldwide, and we have the economic environment that is attractive to OEMs.”