The federal and provincial governments will officially welcome German auto maker Volkswagen to Canada on Friday, unveiling what will be a massive plant in St. Thomas, Ont., that will employ up to 3,000 people.
The federal government agreed to give Volkswagen up to $13 billion in subsidies over the next decade, part of a deal to lure the company to build its first North American electric vehicle battery plant in southern Ontario.
On Friday morning, Prime Minister Justin Trudeau, Premier Doug Ford, and executives from PowerCo, the Volkswagen subsidiary that makes batteries for electric vehicles, are expected to reveal more details of the mega-plant.
The federal government will provide annual production subsidies to the German automaker and kick in funds for the massive factory in St. Thomas, which is estimated to be the size of 391 football fields, making it the largest factory in Canada.
The province is expected to reveal Friday how much it contributed to the pot to sweeten the deal for Volkswagen.
Billions in taxpayer money for a profitable auto maker like Volkswagen doesn’t make sense at first glance, but does once you consider that Canada is up against the United States’ Inflation Reduction Act, which offers billions in subsidies to companies to locate in that country, said Andreas Schotter, a professor of international strategy at the Ivey School of Business at Western University and a former marketing sales controller for North America at Volkswagen.
“That Inflation reduction Act has really pushed up the need to open the pockets wider for attracting investments in green technology and battery plants. Otherwise, the plant would have been put in the United States or Mexico, but likely the U.S.”
A massive automotive plant like the VW battery plant could bring as many as 30,000 spillover jobs.
“We need to attract industry,” Schotter said. “Volkswagen is a global player. Attracting this plant here, from a Canadian perspective, makes sense. Price tag? You pay the price and you get them.”
Innovation Minister Francois-Philip Champagne says the $13 billion dollar deal with the automaker is going to bring more jobs to St. Thomas, Ont. and represents a ‘generational opportunity.’
Bloomberg News first reported the federal subsidy amount. Sources with knowledge of the deal have confirmed the details of the contract with CBC News.
According to details of the deal, federal production support for the plant is expected to range from $8 billion to $13 billion over 10 years. Ottawa is also offering about $700 million in capital expense grants to Volkswagen through its Strategic Innovation Fund.
“This is game-changer for our nation,” said Innovation Minister François-Philippe Champagne while fielding questions from reporters Thursday.
More to come
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