The Canadian government will give $C100 million ($US73 million) to help Ford of Canada proceed with a plan to transform its Oakville, Ontario, assembly plant, a federal minister reportedly said on Monday.
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According to Reuters, the funds are part of a C$1 billion, five-year program of subsidies for manufacturing industries unveiled by the Ottawa-based government, with half aimed at attracting investment to the country’s automotive industry.
Canada’s human resources minister, Joe Volpe, reportedly said the money would be available to firms that meet certain criteria in research, technology, training and job creation.
The news agency noted that the fund can also be tapped at a future date by General Motors of Canada, which has also been in talks with Ottawa, to refurbish its Oshawa, Ontario, operations.
Ford is considering converting its Oakville plant, which makes the Ford Freestar and Mercury Monterey minivans, into a flexible assembly facility that can make multiple models on the same assembly line, the report added.
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By GlobalData“Really, that was one of the last elements missing,” Ford Canada chief executive Alain Batty reportedly said in an interview.
According to Reuters, Batty said the carmaker will present its business case to Ford’s board for consideration in the weeks ahead and expected a final decision by autumn.
“I’m extremely optimistic, I must tell you,” he reportedly said. “First of all, with my Canadian hat, I want this project for Canada. Second, with such a strong commitment from both levels of government and the CAW, our business case is going to be strong.”
Reuters said the Canadian Auto Workers union has already ratified an agreement on how the facility would be operated by its members – the potential retooling of the Oakville plant into a flexible facility was raised during 2002 contract talks between the carmaker and the union.
The news agency noted that Ford had long said it could not make a business case for the change without $C200 million in federal and provincial government support.
In April, the province of Ontario unveiled a $C500 million motor industry fund that could be tapped for 10% of a project’s cost up to $C100 million, covering its share of the Ford revamp, Reuters said – Ford reportedly gave the federal government a May deadline to commit the funds or risk losing the $C1 billion investment.
“The federal government will match the provincial commitment…that means C$100 million for Ford,” Volpe reportedly said in a speech on Monday, adding: “The government wants these jobs to stay and grow in Canada. We want the auto industry to stay in Canada and not move to Georgia.”
According to Reuters, industry watchers have expressed concern as Ontario, home to the automotive sector in Canada, has lost new investment to places like Mexico and the southern United States in recent years.
Both the CAW and Ontario welcomed the pledge on Monday, the news agency said.
“This is a very good day for the prospects of investments in Ontario around the world,” Joseph Cordiano, Ontario’s economic trade and development minister, reportedly said in an interview.
Reuters noted that the timing of Ottawa’s announcement – in the midst of an election campaign that shows the ruling Liberals trailing in the polls – is meant to guard against cuts in manufacturing subsidies if the Conservatives win the June 28 election.
Ford’s Batty reportedly said he understood the pledge would exist even if the Liberals were voted out of office.
“We don’t get involved in politics, it’s the Canadian voters who will decide, but a commitment seems to be a commitment for me,” he said, according to Reuters.
Conservative Party leader Stephen Harper reportedly said earlier this month he would cut corporate subsidies in favour of lower business taxes. A Conservative spokesman told Reuters on Monday the party would honour contracts if elected.
