Windsor’s manufacturing renaissance rests on resolution of dispute over EV battery plant funding

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Construction on Windsor's $5 billion electric vehicle battery plant has been put on hold as co-owners Stellantis and LG Energy Solution increase pressure on Ottawa to provide more funding. PHOTO courtesy Stellantis.

Windsor’s manufacturing renaissance, the focus of SHOP’s June issue cover story, is on hold as the federal government attempts to settle a dispute with the disgruntled owners of the planned $5 billion electric vehicle (EV) battery plant.

Automaker Stellantis has stopped construction on a portion of the battery plant, accusing the federal government of not delivering on its promises, CBC News reports.

Stellantis and South Korean Korean battery-maker LG Energy Solution has announced their intention to build the $5-billion plants last year and started construction several months ago. The Windsor site was to produce both lithium ion cells and battery modules of connected cells. It was due to open next year, providing a huge boost to automotive manufacturing in Windsor.

But the automaker now states: “The Canadian government has not delivered on what was agreed to. Therefore Stellantis and LG Energy Solution will begin implementing their contingency plans. Effective immediately, all construction related to the battery module production on the Windsor site has stopped.”

Ottawa had agreed to contribute $500 million towards the plant but that deal was struck before the U.S. introduced its Inflation Reduction Act, which promised billions in investments to companies looking to build EV plants on U.S. soil. Canada’s subsequent deal with Volkswagen to build its own EV battery plant in Windsor included subsidies worth up to $13 billion plus a $700-million grant.

It now seems Stellantis and LG now want a similar deal and is willing to halt construction in order to send a message to Ottawa.

Windsor Mayor Drew Dilkens said in a statement the potential impact of the loss of jobs to the Windsor community was “significant.”

“Windsor has fulfilled its responsibilities and commitments for the NextStar EV plant and negotiations between the parties are ongoing,” Dilkens said in a statement. “Our collective focus remains steadfast on assisting to find a constructive solution for the benefit of our community.”

As noted in our cover story, Canadian economic forecasters expect the Windsor metropolitan area to rise  from the ashes of almost two decades of deterioration in automotive manufacturing, to lead the country in GDP growth for the next two years. This is mainly due to the NextStar EV plant as well as Stellantis, parent company of Chrysler, Jeep and Fiat, spending another $1 billion to revamp its Chrysler plant in Windsor to make next generation hybrid and electric vehicles. Construction of the Gordie Howe International Bridge and a new hospital are also adding to the growth prospects for the Windsor area.

The Conference Board of Canada forecasts the Windsor census metropolitan area, which includes Lakeshore, Tecumseh, Lasalle and Amherstburg, will hit 2.4% GDP growth this year. That’s more than any of the 24 major Canadian cities included in the study, and a phenomenal 12 times the GDP growth rate forecasted for the Ontario economy and nearly double the growth forecasted for the country. And the region is expected to outpace both the provincial and national growth expectations yet again in 2024, growing another 2.1%.

The Windsor area is home to a quarter of North America’s tool, die and mouldmaking industry and accounts for 80% of the sector in Canada. More than 200 machine, tool die and mould making companies are clustered in the area and more than 90% of them are automotive focused and have been for a long time.

Innovation Minister François-Philippe Champagne meanwhile has called on Premier Doug Ford’s Ontario government to pay its “fair share” of subsidies to break the “stalemate”, reports CBC News.

Champagne is currently in South Korea along with Prime Minister Justin Trudeau, ahead of the G7 leaders’ summit in Hiroshima, Japan, at the end of the week. He said he wants to assure the Korean partners that the Liberal government is optimistic the investment will move forward. He hopes to speak with the head of LG at a state dinner hosted by South Korea’s president and emphasized the negotiations are ongoing.

Jonathon Azzopardi, president and CEO of Laval Tool & Mould Ltd. in Tecumseh, Ont. believes automotive manufacturing in Ontario, and Windsor in particular, is at the cusp of a renaissance and electrification in all aspects, not just automotive, is paying off. Although the electrical vehicle lineup is different in design and requires fewer parts, mould making remains highly relevant to the new technology. Also, as public acceptance of electric vehicles grows, automotive market experts anticipate the number of electric car models to increase, expanding the opportunities for mould makers.

“You have to understand why Windsor stands to get such a large share, and mould making is just one example,” Azzopardi explains. “All these manufacturers need parts.  I guarantee you that a good chunk is being done in Windsor. They need automation. A good chunk of that is being done in Windsor. There is development that needs to be done. A good chunk of that is being done in Windsor. Windsor has amazing technical and engineering experience that you just can’t find anywhere else. That’s why stuff is landing here, because you can pretty well get whatever you need in the supply chain within a short distance. You can’t find that anywhere else…It’s like all roads lead to Windsor. ”

Azzopardi’s comments underscore the importance of ironing out the issues that have stalled construction of the LG plant.

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