Canada gambles with electric car investment in Oakville
Last February, Navdeep Bains’s plan to bring electric vehicle manufacturing to Canada was not much more than a fishing expedition.
The federal minister for innovation and his staff had embarked on a letter-writing campaign, contacting every single EV manufacturer in the world with a personalized message, asking them to come to Canada and build their cars here. No luck. He rubbed elbows with them every chance he got, but executive after executive told him they weren’t ready for that kind of market, or else he had already missed his chance. All those production mandates had already been spoken for.
That was until Bains ran into Ford Canada’s president Dean Stoneley at the auto show in Toronto last winter and sensed an opening.
Canada rushed in, with months of lobbying, union support, tales of fabulous workforces, plenty of cash and a splash of luck.
And despite the pandemic and the sudden reorientation of the auto sector towards manufacturing ventilators, it worked.
“I had a really good conversation with Dean and we really opened the door,” Bains recalled in an interview Friday.
The result is a high-risk foray into a market that Canada hopes to catch up to, reviving the auto manufacturing sector in southern Ontario and proving to skeptics that it is possible to cut emissions and make money at the same time.
It’s risky because the federal and provincial governments have now put $600 million on the table to persuade Ford to rejuvenate its Oakville plant with a $2-billion pledge to build batteries and electric vehicles there for more than a decade, entrenching government involvement in the troubled auto sector for the foreseeable future.
It’s risky because $600 million is 30 per cent of the total investment. That’s a lot higher than the traditional 20 per cent — and it could well be an invitation to the rest of the world’s global manufacturers to expect much higher subsidies than in Canada’s past.
And it’s risky because, in the process of luring Ford to build EVs in Canada, Ford had to nix an undertaking somewhere else in the world (Mexico) — something other countries don’t usually take kindly to. The federal government has signalled that it’s willing to engage in the ugly combat to win production mandates, even when it’s not necessarily a neighbourly thing to do.
“This project was heading for Mexico and we were able to turn it all around,” says Jerry Dias, national president of Unifor, the union representing the majority of Ford workers.
“All kinds of little things have gone our way.”
A turning point for both Dias and Bains came in June when they heard rumours that the Ford was going to wind down production of the Edge in Oakville. Such a move would spell the end of a significant
Ford presence in Canada, a disaster for the industry that is a mainstay for Ontario’s economy.
Dias got to work on the phones and let it be known that if Ford moved to shut down Oakville, he would not hesitate to have his union strike the engine plant in Windsor, Ont., which supplies the F150 and the Mustang, among Ford’s top sellers.
Bains, who has a deep understanding of the company because he worked in finance there for three years before getting into politics, got on the phone with Jim Farley. At the time, Farley was chief operating officer and a key decisionmaker in where the company would expand or shrink.
“I made the whole pitch to him. And I think it resonated,” Bains said.
A few days later, as luck would have it, Farley was named chief executive officer.
Bains had to convince the rest of his cabinet colleagues that putting up a huge chunk of money for a non-pandemic industrial adventure would be well worth it.
He brought Stoneley and Dias together to make the pitch to his industrial strategy council. Bains turned to the Strategic Innovation Fund for funding. They all talked incessantly to Ontario Premier Doug Ford’s staff and cabinet. And the case was made.
By the time Unifor sat down with Stoneley to renegotiate the union contract and set the tone for a larger round of negotiations with other auto manufacturers in Ontario, almost all the pieces were in place.
The company and the union reached a deal to maintain employment, mass produce electric passenger vehicles in Canada for the first time, and make their batteries too.
It’s definitely a victory for Ford and more than 4,500 of its workers.
But before the federal and provincial governments can call it a success, they need to show that the huge investment in Oakville is just a starting point for setting up Canada as a competitive hub for the burgeoning electric vehicle market.
That’s something Bains knows all too well.
“It’s one story in a chapter in a book called the new, smart industrial policy,” he says.
The rest of the book is still being drafted.