New Ontario Volkswagen EV battery factory to create 3,000 jobs

The small southwestern Ontario city that gained fame more than a century ago as Canada's railway capital is being remade as "the national anchor" of Canada's electric-vehicle supply chain, Prime Minister Justin Trudeau said Friday at the official launch of a new Volkswagen battery plant.

He made clear it's a project that will also become an anchor of his party's next re-election plan, too, delivering a biting criticism of his chief political rival and all but outright daring Conservative Leader Pierre Poilievre to campaign against the investment.

Volkswagen announced last month that its new electric vehicle battery company, PowerCo, had selected St. Thomas, Ont., for its first gigafactory outside of Europe. The official announcement with details of the plan didn't come until Friday.

Canada's political leaders and PowerCo's executives were grinning like cats as they chatted giddily about the 3,000 direct and 30,000 indirect jobs expected as a result of the new factory, and tossed around random comparison numbers in a bid to explain to Canadians the scale of the planned factory.

It will have six production blocks on a 370-acre site that sits inside a new 1,500-acre industrial park on land St. Thomas purchased just for this purpose last year.

PowerCo CEO Frank Blome took the European approach and said the factory will be the size of "210 football fields," before pausing to clarify that he, of course, meant soccer.

Industry Minister François-Philippe Champagne came at it from the North American view and said his number is "378 football fields," clearly referring to American football.

Ontario Premier Doug Ford went after the Volkswagen love, and said the new industrial park is so big it could cram 700,000 Volkswagen Golfs onto its land.

But the biggest numbers, without doubt, are the government subsidies that sealed the deal.

Canada has committed $700 million and Ontario another $500 million in up-front capital costs towards the $7-billion price tag to build the factory.

Canada offered between $8 billion and $13 billion more in production subsidies that will be paid once batteries are made and sold. They are designed to match the size of production tax credits the United States was offering through its Inflation Reduction Act.

Canada's production subsidies aren't tax credits and will disappear or be reduced if the U.S. supports within the Inflation Reduction Act are eliminated or phased down.

Volkswagen was also considering some U.S. sites for the factory — which would have put it in closer proximity to its existing U.S. auto plants. Canada won out.

"Congratulations from our side for outperforming the competition and bringing this gigafactory to St. Thomas," Blome said at the announcement. "That wasn't easy."

He said about 200 factors were considered in making the decision. Canada's abundant critical minerals, which are used in the batteries, and the availability low-cost, clean electricity were among them.

So money, said Blome, wasn't the only factor. But it was "the first entry."

"You have to be competitive," he said. "If your product is not competitive in product or in cost, you have no future."

Trudeau said every cent is worth it.

"Let's be really clear about what's happening today," he said. "Other parts of the world, including our neighbours to the south, were willing to put up an awful lot of money to get this project there," he said.

"Everyone wanted this, so yes, we put up a lot of money. Money that's going to come back in economic investments very quickly."

The federal government said that with the economic benefits from the plant, the government investments will be recouped in just five years.

The importance of the project to the region, the province and the country was apparent in the number of politicians showing up to get a piece of the good publicity. In addition to Trudeau and Ford, almost every federal, provincial and municipal politician with even a tenuous connection to St. Thomas or southwestern Ontario was in the crowd.

Local Conservative MP Karen Vecchio was among them. Trudeau said her presence made clear she understood the value of the deal. Her leader, he said, does not.

"I'll be direct and honest," he said. "You have some work to do to convince your leader, Pierre Poilievre, who thinks this investment is a waste of money."

Last month Poilievre criticized the deal and demanded to know how many jobs the government was buying, even before the exact size of the dollar figure was known.

“This money belongs to Canadians," Poilievre said on Twitter. "Not to a foreign corporation. Not to Justin Trudeau."

In question period Friday, Nova Scotia MP Rick Perkins asked a similar question about how many jobs the "$14-billion subsidy" guaranteed.

"Liberals surely would not give away $14 billion in taxpayer money without a contract on the exact commitments of jobs in the plant," he said.

Trudeau has accused Poilievre of stoking anger among Canadians, and said Friday it's not good enough to throw up your hands, get mad and say that "Canada is broken." The latter is one of Poilievre's most frequently used talking points to criticize the Trudeau government.

"Sorry, anger doesn’t deliver this plant in St. Thomas," Trudeau said. "Confidence, hard work, optimism and a willingness to invest in Canadians and in the brightest possible future for all — that's why we're here today."

Vecchio, sitting among the VIPs alongside the podium, smiled politely.

Trudeau's political posturing moments aside, the mood in St. Thomas was mostly jubilant.

"What a great day," Ontario Economic Development Minister Vic Fedeli roared.

"This is truly our moment to shine," declared a glowing Champagne.

The aim is for the plant to become the centre of a supply chain that starts with Canada's critical mineral mines and includes all stages of processing them into the various components that make up an EV battery.

The spinoffs from Volkswagen's deal may already be falling into place. Fedeli said additional manufacturers are being attracted to the St. Thomas industrial park to supply critical components for the batteries.

And Brome said PowerCo had already signed a deal with Umicore, a Belgian company, to provide cathode materials used in EV battery cells. Umicore said last summer it was building a cathode materials plant in Kingston.

This report by The Canadian Press was first published April 21, 2023.