Ford deal to build electric cars in Oakville comes amid $500M government cash to upgrade plant


The federal government and Ontario have pledged to spend up to $500 million to make the Ford plant in Oakville, Ont., able to build electric vehicles.

The future of the plant has been a key question for Canada’s automotive industry ever since the Unifor union started negotiating with the automaker for a new three-year pact to cover the company’s Canadian workforce.

The two sides struck a deal a few hours after a midnight strike deadline on Tuesday morning, one that will see the company commit $1.98 billion to build five new electric vehicles and an engine contract that could yield new jobs in Windsor, Ont.

Ford has previously committed to spending $11 billion US to develop and manufacture electric vehicles, but so far all of that money was earmarked for Ford plants in Mexico and the company’s home state of Michigan.

“With Oakville gaining such a substantial portion of Ford’s planned investment, the assembly plant and its workers are better set for employment going forward,” said Sam Fiorani, vice-president of global forecasting at AutoForecast Solutions.

Currently, the plant builds the Ford Edge and Lincoln Nautilus, but concerns over the plant’s future emerged earlier this year when a report suggested Ford was contemplating scrapping the Edge altogether. The new vehicles will come as welcome news for the plant, even as Fiorani says he worries that demand for the electric vehicles (EV) has so far not lived up to the hype.

“The EV market is coming, and Ford looks to be preparing for it. However, the demand is just not growing in line with the proposed investment from all vehicle manufacturers,” he said.

Plant needs upgrade first

And the plant can’t simply flip a switch and start building an entirely new type of vehicle. It will require a major retooling, and that will require time — and cash — to happen, which is where government cash comes in.

As first reported by the Toronto Star, the two branches of government have committed to spent up to $500 million combined to upgrade the plant so that it can build electric vehicles.

“The retooling will begin in 2024 with vehicles rolling off the line in 2025,” Unifor president Jerry Dias said. “So we know this is a decades-long commitment.”

It’s not clear what portion of the cash will come from what branch of government, but CBC News has previously reported that Wednesday’s throne speech is expected to contain a number of policies aimed at beefing up Canada’s electric vehicle industry, both on the consumer side and for businesses that build them.

Ontario’s finance minister welcomed the news of a tentative deal on Tuesday and confirmed that Queen’s Park legislators stand ready to do their part.

“Our government will always work with our federal colleagues, workers and the auto sector to ensure the right conditions are in place for the industry to remain stable today and seize the new opportunities of tomorrow,” a spokesperson for Vic Fedeli told CBC News in an emailed statement Tuesday.



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Ottawa says governments offering $500M to bring electric vehicle production to Ford’s Oakville plant


The federal government has indicated that it’s willing to put up to half a billion dollars into financing electric vehicle production in Oakville, with some money coming from the provincial government — an offer that could allow the Ford plant to stay open for years to come, the Star has learned.

Ford Motor Co. and its main union are in the midst of labour negotiations ahead of a deadline midnight Monday night, and a push for a retooling of the plant for mass production of EVs and their high-tech batteries is central to the talks.

After months of discussion and pressure from environmentalists and labour, Ottawa has told the company it is willing to do what it takes to bring electric vehicle production to Ontario and expects its funding to be part of an eventual $2-billion investment for a new mandate at the Oakville Assembly Complex.

The exact amount from the Ontario government is still being negotiated, a federal source, said, and all of it is wrapped up in the broader labour talks between Ford Canada and its biggest union, Unifor.

The money would be a major lifeline for the plant. Retooling is expected to start as soon as next year, giving the Oakville Assembly Complex and its thousands of workers a new lease on life.

The plant has had a question mark over its head for months now amid analysts’ projections that it would stop producing the Edge SUV. The mandate for the Edge ends in 2023, and there is no firm commitment from Ford that production would continue in Oakville after that time, throwing more than 4,000 jobs into a state of uncertainty.

Unifor’s national president, Jerry Dias, has been pushing for an electric vehicle mandate and substantial federal funding for Oakville. But reached on Sunday night, Dias said he was not aware of the federal offer.

Unifor targeted Ford for the first of its Big Three automaker negotiations, which come every four years. The hope was to set a high bar for negotiations with the other automakers.

Ottawa is set to use its Strategic Innovation Fund to finance the contribution.

For the federal government, the deal checks off quite a few boxes.

Innovation Minister Navdeep Bains has been increasingly concerned that auto manufacturing in Ontario has dwindled and that the province needs to get into the EV market in order to flourish into the future.

He has argued that Canada should be able to marry its traditional expertise in the auto sector with its abundance of many of the natural resources that are needed to make electric-vehicle batteries.

At the same time, pushing Canada towards electric and autonomous vehicles is central to Canada meeting its environmental goal of having net-zero emissions by 2050.

“The choice to dedicate the Oakville Assembly Plant to the production of battery electric vehicles shows alignment between Ford’s commercial priorities and Canada’s commitment to sustainable growth,” Bains says to Dean Stoneley, president and CEO of Ford Canada, in a draft letter obtained by the Star.

“It also reflects our productive dialogue in recent months, built on top of an enduring partnership.”

In parallel with the talks between the company and Ottawa, Unifor has been pushing Bains for months to use federal funding to ensure electric vehicle production in Ontario. Unifor represents 6,300 workers at Ford Motor Co.

In the draft letter, Bains says he sees the arrangement with Ford as a jumping-off point to modernize the entire auto sector in Canada, and turn it into a global powerhouse for electric vehicle production.

“The size and the scope of the proposed investment reflect this significance.”

A spokesman for Bains would not comment directly on the labour negotiations on Sunday, but issued a statement about the value of attracting mandates for electric vehicles in Canada.

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“Minister Bains believes that Canada is well positioned to become a leader in electric vehicle and battery production. Developing domestic manufacturing in this sector will secure more good paying jobs for Canadian workers, and more opportunities for Canadian businesses. It will position Canada’s auto industry as a global leader in a growing market, and help us meet our climate ambitions,” spokesman John Power said in an e-mail to the Star.

An April report put together by the Pembina Institute and the International Council on Clean Transportation found that Canada has steadily lost global market share in auto manufacturing over the past 20 years and is dramatically under-invested in the rapidly growing EV market of the future.

The report says Canada manufactures about two million light-duty passenger cars and trucks a year and is the 12th largest auto producer in the world, down from fifth largest in 2000.

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