Toyota plans $1.4B upgrade in Ontario

Trans-Pacific trade worries remain

Toyota Motor Corp. announced Friday that it is investing $1.4 billion to upgrade two of its manufacturing plants in Ontario, a move that comes after years of auto industry investment shifting south of the border and amid uncertainty over NAFTA negotiations.

The Japanese automaker said it will spend $1.4 billion to upgrade its facilities in Cambridge and Woodstock, where its RAV4 sports utility vehicle is produced, turning the plants into its North American hub for RAV4 production. The federal and Ontario governments will each contribute $110 million towards the upgrade, which they say will help create 450 new jobs and support 1,000 new co-op placements. Toyota said it will also commit $200 million for research and development in Canada over the next 10 years.

The investment comes as automakers in North America adjust their production mix to meet unprecedented demand for SUVs and light trucks. Last month, Ford Motor Co. said it would discontinue almost all of its car models in North America within two years, shifting focus to SUVs and light trucks.

It also sends a signal of confidence in the NAFTA negotiations, said Flavio Volpe, the president of the Auto Parts Manufacturers’ Association. Recently, pressure has been ramping up on Ottawa to conclude NAFTA talks as trade uncertainty lingers.

David Worts, executive director of the Japan Automobile Manufacturers Association of Canada, hailed the investment as an endorsement of the competitiveness of Canadian production.

While the investment was welcomed across the Canadian auto industry, some representatives who have been critical of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership said the money does little to alleviate the concerns they have about the trade deal, which still needs to be formally ratified.

Volpe said Toyota’s investment does not address concerns about the CPTPP deal, including that lower automotive rules of origin will make it easier for countries to import non-TPP sourced vehicles into Canada, and that the deal doesn’t provide increased access to the Japanese market.

“Toyota’s operations at both locations in Ontario are the highest rated plants for productivity in North America and among the elite plants from around the world .... This is the highest quality producer in their No. 1 plant deciding to reinvest in the hottest product in the fastest growing segment in the market,” Volpe said.

"(Our position is) unaffected. These RAV4s are going to be made for Canadians, Mexicans and Americans, not exported to Japan... If more than 1,000 made their way to Japan, I’d be surprised.”