Flashbacks of past investment losses with battery plant uncertainty

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Despite recent historical precedent, Automotive Parts Manufacturers’ Association president Flavio Volpe and Unifor Local 444 president Dave Cassidy are confident Windsor won’t experience the cancellation of a major automotive investment for the third time in just over two decades.

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Stellantis and LG Energy Solutions followed up their accusation made on Friday, that the federal government was reneging on funding promises, with an announcement on Monday that the partnership was halting construction of a portion of the NextStar Energy battery plant. That brought back flashbacks of the cancellation of the Pilette Road van plant project by Daimler Chrysler in 2001.

Similarly to the partially built battery plant, the company — Stellantis’s predecessor — had already invested $100 million of the $1.5 billion committed to the Pilette Road site for a new paint shop when it decided to scrap the project.

Two years later, Daimler Chrysler also cancelled a proposed new small pickup truck plant due to financial cost-cutting.

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“I think where we are is a day or two away from confirming that we are in Windsor to make batteries,” Volpe said Monday.

“This is a plan (Stellantis) started over a year ago. Over the past year, they’ve put in place their production plans for 2024, ‘25 and ‘26.

“They’ve made program commitments to different assembly plants that absolutely cannot afford a delay in timing on this plant because they’ll miss the market on those.

“They’ve negotiated and grinded supplier agreements and hired staff. To move this plant today would be a disruption of all the products in their network in North America and they’re not going to do that.”

Volpe added the $5-billion NextStar plant is not only central to Stellantis’s North American battery plans, but it also underpins its Windsor and Brampton production plants and a 650-person addition to its local Automotive Research and Development Centre.

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Volpe said the Biden administration’s Inflation Reduction Act (IRA), however, came in after the original Stellantis/LG deal was announced and has changed the rules of the game.

“In fairness to them, they absolutely should get what they’re entitled to and we should be defending that,” Volpe said.

“If we walk away from this deal, it would be difficult to turn around and chase another company’s investment. I have zero concern we’re going to risk that.”

Cassidy said at the centre of the discussions is the $10/Kwh subsidy for the module component of the battery plant. The module component is the process of putting together all of a battery system’s parts, such as the cell, management electronics cell balancing, connectors and voltage and temperature measurements.

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The other $35 of the $45/Kwh subsidy offered by the IRA bill deals with production of the battery cells.

“We’ve got the $35 covered on the cell side but not the $10 on the module side,” Cassidy said.

“I recall (Deputy Prime Minister) Chrystia Freeland saying here in Windsor at the APMA (Automotive Parts Manufacturers’ Association) conference, and in the fall economic statement and 2023 budget the federal government would be there for the companies on the IRA bill.

“Well, there’s no such thing as only partially being there. We’re going to hold the government to that. We’re not interested in losing the few hundred module jobs, we want them all here.”

Cassidy said he understands the politics involved in the federal government being seen spending billions in Ontario on the automotive industry. However, he argues the return on investment is going to benefit the entire country.

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“It’s the start of a new era,” Cassidy said.

“This is an investment in the future, not foolish spending. We miss the boat on this and we’ve failed Canada.”

The stakes for the area are enormous. Windsor Mayor Drew Dilkens was openly critical of the federal government over the weekend for being perceived to be dragging its feet on finalizing a new agreement with LG/Stellantis.

In an emailed statement Monday, a vacationing Dilkens took a more collaborative approach while expressing fear at the consequences of failure.

“The City of Windsor is fully committed to utilizing all available resources in order to gather vital information, stay well-informed and be prepared to offer assistance in any capacity necessary to reach a resolution to the impasse between Ottawa and all involved parties,” said Dilkens.

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“The potential impact on our community is significant, with thousands of jobs at risk. Windsor has fulfilled its responsibilities and commitments for the NextStar EV plant and negotiations between the parties are ongoing.

“Our collective focus remains steadfast on assisting to find a constructive solution for the benefit of our community.”

A parallel discussion is also going on between the federal and provincial governments.

The federal government would like to see Ontario boost its financial support in the new deal. Until now, the province has viewed the incentives battle against the Inflation Reduction Act to be a federal matter.

“We’re in uncharted territory because of the IRA,” Volpe said.

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“There are some things the feds could do for the province to help them out like on the Ring of Fire or the 413 (highway). There’s a lot of federal regulations for environmental assessments and maybe co-investments in infrastructure.

“There’s a tradeoff here and maybe they convince the province to do something that isn’t in their jurisdiction.

“The goodwill between the partners making sure this deal works for everybody is still in place. I can confirm that this partnership is negotiating other deals at the moment.

“That is part of my confidence that we will be making batteries in Windsor.”

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