VW plant marks ‘new epoch’ of auto investment in Canada

Volkswagen Group’s plan to build a battery cell manufacturing plant in St. Thomas, Ont., announced March 13, is part of a new chapter for Canadian automotive that will likely see more automakers put down significant roots in the country, industry experts say.

This new “epoch” of auto investment could rival other past growth eras, such as the arrival of Honda and Toyota, which both built assembly plants in Ontario in the 1980s, said Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing.

“We’re going to look back upon this as one of, if not the most, exciting times for Canada’s automotive industry, especially because it came after a couple dark years.”

Details of Volkswagen’s planned cell plant have not been released, but Federal Industry Minister François-Philippe Champagne touted the commitment as the country’s largest-ever auto investment.

“This is a completely new chapter in our auto sector,” he said.

Volkswagen will become the first European automaker to establish a significant manufacturing presence in Canada, a milestone that is particularly significant because it comes amid stiff competition from incentives offered in the United States, Sweeney said.

“This is a greenfield investment, and so it is a good indication of just how competitive we are. It is not only our incumbent manufacturers that are choosing to invest.”

The German automaker’s plan for St. Thomas follows a wave of other automotive spending in Ontario and Quebec that amounts to about $20 billion over the past two years.

Canada has proven it has “plenty” to offer prospective investors, said Sam Fiorani, vice-president of global vehicle forecasting at U.S.-based AutoForecast Solutions. Among other draws, he credits the renewed push from the federal and provincial governments to draw investors into the country.

“They have raised their profile to global automakers. Volkswagen is just the newest member to join that group, but it shouldn’t be the last.”