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Japanese automaker Honda is injecting $15 billion into its Ontario operations with a new electric vehicle manufacturing plant in Alliston, Ont. with a combined $5 billion coming from the federal and Ontario governments.
Prime Minister Justin Trudeau, Ontario Premier Doug Ford and Honda executives made the announcement at the Alliston plant Thursday morning.
“This is a historic day with the largest auto investment in Canadian history,” Trudeau said at the start of his remarks Thursday morning.
“With this investment we will create Canada’s first end-to-end electric vehicle supply chain.”
The $15 billion project also includes plans to retrofit Alliston’s existing equipment to make only electric vehicles, build a battery factory nearby and two battery facilities elsewhere in Ontario.
“The world is changing rapidly and we must work towards the allies in carbon neutrality to maintain the global environment. Honda is making steady progress towards our goal of having electric and battery electric vehicles represent 100 percent of our vehicle sales by 2040,” said Honda global CEO Toshihiro Mibe.
Canada’s target is to ensure that all new consumer vehicles sold are emission-free by 2035.
Mibe added that North America is their biggest market and he sees Canada and the United States as central to the company’s plans for the future. Honda aims to have the electric vehicle facility up and running in 2028, with an annual production target of up to 240,000 vehicles.
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The company says this will create 1,000 more jobs, in addition to the 4,200 that already exist at the assembly plant. Trudeau added that additional construction jobs will be associated with the project.
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Unlike previous electric vehicle deals highlighted by Ottawa and Ontario, this one does not include production subsidies.
Instead, the federal government is contributing $2.5 billion through tax credits under the existing clean technology manufacturing program and a proposed electric vehicle supply chain tax credit included in the 2024 budget.
Ontario is contributing $2.5 billion through direct support on capital costs and indirectly through paying land servicing costs for future facilities.
The Conservatives say when public money goes into projects like this, there should be a guarantee that any jobs created will be filled by Canadians and not temporary foreign workers.
“We cannot trust that his latest announcement of $5 billion in Canadian taxpayer money to another large multinational corporation will be any different. The Conservatives will not let Justin Trudeau sell out union workers and Canadian taxpayers again,” innovation critic Rick Perkins and trade critic Kyle Seeback said in a joint statement.
“Canada deserves a government that will stand up for Canadian workers. Common-sense Conservatives will ensure that Canadian tax dollars are used wisely, and that any taxpayer-funded jobs go to Canadians, not foreign workers.”
Stellantis subsidiary NextStar has indicated plans to bring in up to 900 temporary workers, mostly from Korea to help build their $15 billion subsidized battery factory in Windsor, Ont. jointly by the federal and Ontario governments.
During the Honda press conference, Trudeau said only 72 of the 2,000 construction workers in Windsor are temporary foreign workers. He added that their main job is to train Canadians on how to use specialized equipment.
The prime minister defended public funding in this deal with Honda, saying moves like this were vital to competition in a changing global vehicle market.
“It’s a legitimate argument, but I think they’re wrong as the world is turning to new ways of manufacturing and cleaner products, cleaner vehicles, changing the way we build things, changing what we construction, countries around the world are competing for investments,” Trudeau said.
“Yes, there are politicians who sit back and say ‘No, no, no, no, no. We have to balance the budget at all costs. Even if it means not investing in Canadian workers and investing in the future.’ Well, I think they’re wrong.”
Ford echoed Trudeau’s defense of moves like this in attracting investments from multinational automakers like Honda.
“This is a generation. This is decades and decades down the road. What price do you put on that? There is no price you can put on that because we invest in the people. The money stays here in Ontario. He doesn’t go abroad. It’s not going down to the U.S. It’s staying here in Ontario for decades and generations to come,” Ford said.
EV subsidies in the past
The federal and Ontario governments have already raised a combined $28.2 billion in subsidies to attract battery plants from Volkswagen and LG’s Stellantis to St. Thomas and Windsor, Ont. in that order. This tactic was used to attract the plants to Canada instead of the United States, which included incentives in the Anti-Inflation Act.
These subsidies are conditional on meeting hiring, construction and production targets, which are expected to be rolled out over the years, ending in 2032.
The federal government pays two-thirds of these costs, with the Ontario government covering the rest.
A report by the Parliamentary Budget Officer (PBO) last September said it will take 20 years for Ottawa to recoup costs on what the government characterizes as an investment.
At the time, Innovation Minister Francois-Philippe Champagne said the PBO report did not capture wider economic impacts on the supply chain associated with more battery production, and said it could increase the economic benefit of the subsidies.
With files from The Canadian Press.
& copy 2024 Global News, a division of Corus Entertainment Inc.
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