NextStar turmoil `like amateur hour'
Dilkens urges Ottawa to solve dispute to save plant construction
Windsor Mayor Drew Dilkens urged the federal government to quickly reach a final agreement with Stellantis and LG Energy Solution to end what he called the embarrassing public negotiation of subsidies for the NextStar Energy battery plant.
“I think it's an embarrassment for the whole country,” Dilkens said in a phone interview Wednesday.
“It's an embarrassment for the city because it's playing out in our backyard, but Canada looks like amateur hour on this.”
Dilkens made the comments in reaction to sources telling the Star the companies were preparing for a complete halt to construction at the battery plant site. They said the automaker would be reviewing its Canadian footprint, potentially putting the future of its Brampton production facility in peril if a deal doesn't materialize.
The federal government and the two firms have been negotiating an updated funding agreement since last August to address the massive subsidies in the Biden administration's Inflation Reduction Act for building battery plants in the U.S.
Though he's out of town on vacation, Dilkens said he's been working the phones with all the key players in the discussions, pressuring the sides to get the deal over the finish line.
“I thought about coming home, but I can do everything I'd be doing at home here,” Dilkens said. “This is really something that has to be solved at a higher level than I'm at, so I've been lobbying them to do that.”
Dilkens said this scenario rings all too familiar for Windsorites.
The worst-case scenario he fears is a collapse of the plant deal at the cost of thousands of jobs leaving the city. And then there's the 240 acres of land with several partially finished structures that has cost local taxpayers $50 million to $54 million to buy and service to this point.
“We know what it feels like to be burned,” Dilkens said. “The worst thing for business is uncertainty.
“It's fair to say they had an agreement in February.”
“The bond of trust has been broken with these companies, and the federal government needs to move quickly to repair it.”
The mayor also expressed concern that the federal government might abandon a piece of the battery project, such as the module plant, to reduce costs or redirect funds to another battery plant elsewhere. Sources have told the Star that Quebec is being studied by companies for another Canadian battery plant.
“A real concern for us is the feds hinting at not funding the module plant — that's about 300 jobs,” Dilkens said. “If they don't fund the module plant, is there a relation to the research and development jobs (in Windsor)? Are those 650 jobs in jeopardy?”
Modules contain a cluster of battery cells, and several modules packaged together form the battery packs that are inserted in electric vehicles.
While the cells remain the main value piece of the battery, modules are becoming increasingly important to automakers as they make progress on reducing the size and weight of the modules and packs installed in vehicles.
Dilkens said letting the dispute drag on risks Stellantis/lg pulling the plug on the Windsor battery plant, and sends a negative message to firms considering investing in future deals in Canada.
Ontario Premier Doug Ford seemed determined to ensure that didn't happen in remarks he made at Queen's Park Wednesday.
“Our goal is to protect the people and jobs in Windsor and we'll do whatever it takes to protect those jobs,” Ford said. “We're working very hard on that right now.
“(Deputy Prime Minister) Chrystia (Freeland) and I get along very well together, I'm sure we'll come up with a solution.”
Ford admitted he was puzzled by the federal government's late request for additional provincial funding related to the Ira-related
incentives when Ontario was not part of those discussions. He said the Ontario government had committed the same funds and incentives to both the Stellantis and Volkswagen deals.
“We believe in working with the federal government,” Ford said. “We can't afford to lose Stellantis.
“My question is what is our fair share?”
Windsor-tecumseh Liberal MP Irek Kusmierczyk remains confident a deal will get done.
However, he wouldn't comment directly on the differing funding approaches for Stellantis/lg compared to Volkswagen, or respond to concerns over the threat to the future of the Brampton plant that would substantially shrink Stellantis's footprint in Canada.
With just over 9,700 employees, Stellantis is Canada's largest automotive employer and third-oldest automaker, tracing its 96-year-old roots in this country back to its founding as Chrysler.
“You have to take the two investments as a package,” Kusmierczyk said. “We'll get both the plant in Windsor and the one in St. Thomas built. They're foundational pieces to our future auto industry.”
Kusmierczyk agreed the size of the subsidies is challenging federal finances, and Freeland said Wednesday regional fairness is also an issue with the Liberal caucus and other premiers raising concerns about Ottawa's massive investment commitments in Ontario's auto sector.
With more battery companies looking at locating in Canada, it's been suggested the government is trying to set a precedent with the Stellantis deal of involving provincial governments in the Ira-related subsidies in any future transactions.
“I would agree with that,” Kusmierczyk said. “(President Joe) Biden's IRA bill created a new reality.
“For us to be successful for future investments, we need all hands on deck. It's not just Ontario, but also for Quebec or any other jurisdiction. We need partnership.”