Province to provide $5B in tax breaks, economic development minister says, with other $10B coming from Ottawa
The deal between Stellantis and LG Energy Solutions to continue construction on the NextStar electric vehicle (EV) battery plant could be worth up to $15 billion in tax breaks for the project, the province said Wednesday night.
Victor Fedeli, minister of economic development, job creation and trade, told CBC News the province would provide up to $5 billion in tax breaks based on production over a 10-year term. He said the other $10-billion in tax breaks would come from the federal government.
"It's not like the incentive money that the province and the feds delivered to the battery company," he said. "We invested $500 million in capital. This is like a performance incentive or a tax break. It's not a cheque per se."
The deal, he said, helps Ontario remain "competitive on the global stage."
"Quite frankly, what we ended up with is a brand new agreement between the province and the feds to secure these jobs," Fedeli said.
'Good deal' for workers, Fedeli says
"That's a good deal for the workers. It's a good deal for the industry. It protects thousands of jobs, especially in Windsor," he said, noting the deal is conditional on the continuation of the U.S. Inflation Reduction Act.
Stellantis first confirmed the deal in a statement Wednesday evening, and said construction has resumed.
"We are pleased that the federal government with the support of the provincial government came back and met their commitment of levelling the playing field with the [Inflation Reduction Act]," said Mark Stewart, Stellantis' chief operating officer North America.
In a statement Wednesday night, Deputy Prime Minister Chrystia Freeland and François-Phillippe Champagne, minister of innovation, science and industry, said the deal was good both for workers and the country as a whole.
"It will create and secure thousands of jobs — both in the auto sector and in related industries across Canada — and will further solidify Canada's place as a leader in the global electric vehicle supply chain," the statement read.
It's been more than seven weeks since it was learned that the future of the plant being built in Windsor was in jeopardy. Stellantis says NextStar Energy is the first large-scale EV battery plant in Canada.
In early June, Stellantis and the federal government confirmed the automaker and LG Energy Solution received an offer from Ottawa, and their financial and legal teams were mulling it over.
What the deal to resume construction at Windsor's NextStar Energy plant means
Head of the Automotive Parts Manufacturers Association Flavio Vople gives his reaction to the deal, the expected costs and what effect these negotiations happening in public have moving forward.
Unifor Local 444 president Dave Cassidy told CBC News Wednesday evening it was a "milestone" investment.
"Exciting. We've been waiting in excess of 40-some days now to see where this was going to go," Cassidy said. "The negotiations back and forth between the feds and Stellantis and then finally we have a resolve to this, [it's] just amazing."
Flavio Volpe, president of the Automotive Parts Manufacturing Association, said the public negotiations prompted "anxiety" in the supply industry.
"But I've said from the beginning, I never lost faith that the company was going to be fully committed to the entire footprint and that both governments, the federal and provincial governments, would do nothing less than the full investment."
Volpe said he was not concerned that the deal's re-negotiation would set a precedent for future negotiations.
"Anybody else having the discussion is under the new rules, and so I'm not worried about a precedent here, anybody that is negotiating a similar investment didn't have a previous terms and conditions in place."
'Moment of truth' for community: MP
Windsor-Tecumseh MP Irek Kusmierczyk said in a statement that the deal represented a "moment of truth" for the community.
"The sun is rising on a new morning in Windsor-Essex County," his statement read. It went on to note that auto manufacturing in the community "is back in a big way."
Unifor National president Lana Payne said the deal would help solidify Stellantis' footprint not just in Windsor, but in Canada and at its Brampton assembly plant.
"All of it was, really, potentially at risk here," Payne told CBC Windsor. "It's really the linchpin for the investment that we're going to see and the plans for Stellantis in Canada."
Unifor, which represents many Windsor autoworkers, said the deal will preserve jobs. An earlier statement from Payne acknowledged the "high stakes" of the deal.
"We knew these commitments had to be kept because the alternative would have been unthinkable for so many workers," the statement read.
Prime Minister Justin Trudeau previously said the offer was "respectful to taxpayers" and would create "great jobs" for generations to come to secure a future in communities across southern Ontario.
In May, Stellantis said it was moving to "contingency plans" because the federal government wasn't honouring its agreement. That's when the automaker stopped most of its construction at the site.
Word of a tentative deal being reached was first reported by the Toronto Star on May 31.
Canada's financial package with another automaker, Volkswagen, which plans to open a massive factory in St. Thomas, Ont., was believed to be connected to the impasse, according to industry experts, as was new U.S. legislation that enables unprecedented incentive offers for companies — something Canada could have difficulty matching.
Windsor, Stellantis and subsidies: A look at how we got here
U.S. bill 'changed landscape'
Ontario Premier Doug Ford said the province would be covering one-third of the cost of an agreement. He also said he didn't believe giving Stellantis more was setting a bad bargaining precedent for the province.
South Korean battery-maker LG Energy Solution and Stellantis announced the $5-billion project last year, and said it was expected to create 2,500 jobs and open sometime in 2024.
In a media release, Stewart, COO of Stellantis, said the U.S. Inflation Reduction Act, which added incentives for companies to locate EV plants south of the border, "changed the landscape for battery production in North America, making it challenging to produce competitively priced, state-of-the-art batteries in Canada without an equivalent level of support from government."
Dong-Myung Kim, president and head of the Advanced Automotive Battery Division of LG Energy Solution, called Wednesday "a good day not only for our joint venture, but also for Canada."
How a U.S. law contributed to the stalling of the Stellantis plant | About That
When automaker Stellantis announced a halt in construction on an EV battery plant in Ontario, it revealed a dispute with the federal government. Ottawa promised big tax incentives for the plant, but a few months after the deal was signed, an American law came into effect that changed everything. About That's Lauren Bird explains how unprecedented investments south of the border led to the Stellantis stoppage.
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