Japanese automaker Honda is putting $15 billion into their Ontario operations with a new electric vehicle manufacturing plant in Alliston, Ont. with a joint $5 billion coming from the federal and Ontario governments.

Prime Minister Justin Trudeau, Ontario Premier Doug Ford and Honda executives made the announcement at the Alliston plant Thursday morning.

“This is a historic day with the largest auto investment in Canada’s history,” Trudeau said at the start of his remarks Thursday morning.

“With this investment we will be creating Canada’s first electric vehicle supply chain from start to finish.”

The $15 billion project also includes plans to retool the existing Alliston plant to make solely electric vehicles, build a battery plant nearby and two battery part facilities elsewhere in Ontario.

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Honda considering an EV battery plan in Ontario according to report

“The world is changing rapidly and we must work toward the allies in carbon neutrality to sustain the global environment. Honda is making steady progress toward our goal to make battery electric and electric vehicles represent 100 per cent of our vehicle sales by 2040,” Honda global CEO Toshihiro Mibe said.

Canada’s target is to have all newly sold consumer vehicles be emission free by 2035.

Mibe added that North America is their largest market and he sees Canada and the United States as central to the company’s future plans. Honda’s goal is to have the electric vehicle facility up and running in 2028, with an annual production target of up to 240,000 vehicles.

The company says this will create 1,000 more jobs, in addition to the 4,200 that already exist at the assembly plant. Trudeau added there will be additional construction jobs associated with the project.

Unlike previous electric vehicle deals inked by Ottawa and Ontario, this one does not include production subsidies.

Instead, the federal government is contributing $2.5 billion through tax credits under the already existing clean technology manufacturing program and proposed electric vehicle supply chain tax credit included in the 2024 budget.

Ontario is contributing $2.5 billion through direct help on capital costs and indirectly through covering the land servicing costs for the future facilities.

The Conservatives say that when public money goes into projects like this, there should be assurances that any jobs created will be filled by Canadians and not temporary foreign workers.

“We can’t trust that his latest announcement of $5 billion in Canadian taxpayer money to another large multinational corporation will be any different. Conservatives will not let Justin Trudeau sell out Canadian union workers and taxpayers yet again,” innovation critic Rick Perkins and trade critic Kyle Seeback said in a joint statement.

“Canadians deserve a government that will stand up for Canadian workers. Common sense Conservatives will ensure Canadians’ tax dollars are used wisely, and that any taxpayer-funded jobs are given Canadians, not foreign replacement workers.”

Stellantis subsidiary NextStar signaled plans to bring in up to 900 temporary workers, predominantly with Korea to assist in the construction of their heavily subsidized battery plant in Windsor, Ont, which received a joint $15 billion from the federal and Ontario governments.

During the Honda press conference, Trudeau said that of the 2,000 construction workers in Windsor only 72 are temporary foreign workers. He added their main job is to train Canadians on how to use specialized equipment.

The prime minister defended public money going into this deal with Honda, saying moves like this are essential to competition in a shifting global vehicle market.

“It’s a legitimate debate, but I think they’re wrong as the world is turning towards new ways of manufacturing and cleaner products, cleaner vehicles, changing the way we build things, changing what we build, countries around the world are competing for investments,” Trudeau said.

“Yes, there are politicians who sit back and say ‘No, no, no, no, no. We’ve got to balance the budget at all costs. Even if it means not investing in Canadian workers and investing in the future.’ Well, I think they’re wrong.”

Ford echoed Trudeau’s defence of moves like this in attracting investments from multi-national automakers like Honda.

“This is generational. This is decades and decades down the road. What price do you put on that? There is no price you can put on that because we’re investing into the people. The money is staying here in Ontario. It’s not going overseas. It’s not going down to the U.S. It’s staying right here in Ontario for decades and generations to come,” Ford said.

The federal and Ontario governments have already put up a combined $28.2 billion in subsidies to attract battery plants from Volkswagen and Stellantis LG to St. Thomas and Windsor, Ont. respectively.  This tactic was used to attract the plants to Canada instead of the United States, which included incentives in the Inflation Reduction Act.

These subsidies are contingent on hitting hiring, construction and production targets, which are expected to be dolled out over the years, ending in 2032.

The federal government is covering two-thirds of these costs, with the Ontario government paying for the remainder.

A report from the Parliamentary Budget Officer (PBO) last September said that it will take Ottawa 20 years to break even on what the government characterized as an investment.

At the time, Innovation Minister Francois-Philippe Champagne said the PBO report did not capture broader economic impacts on the supply chain associated with increased battery production, which he said could increase the economic benefit of the subsidies.

With files from The Canadian Press.

&copy 2024 Global News, a division of Corus Entertainment Inc.

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Divisions within the Bank of Canada over the timing of a much-anticipated cut to its key overnight interest rate stem from concerns of some members of the central bank’s governing council that progress on taming inflation could stall in the face of stronger domestic demand — or even pick up again in the event of “new surprises.”

“Some members emphasized that, with the economy performing well, the risk had diminished that restrictive monetary policy would slow the economy more than necessary to return inflation to target,” according to a summary of deliberations for the April 10 rate decision that were published Wednesday. “They felt more reassurance was needed to reduce the risk that the downward progress on core inflation would stall, and to avoid jeopardizing the progress made thus far.”

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Others argued that there were additional risks from keeping monetary policy too tight in light of progress already made to tame inflation, which had come down “significantly” across most goods and services.

Some pointed out that the distribution of inflation rates across components of the consumer price index had approached normal, despite outsized price increases and decreases in certain components.

“Coupled with indicators that the economy was in excess supply and with a base case projection showing the output gap starting to close only next year, they felt there was a risk of keeping monetary policy more restrictive than needed.”

In the end, though, the central bankers agreed to hold the rate at five per cent because inflation remained too high and there were still upside risks to the outlook, albeit “less acute” than in the past couple of years.

Despite the “diversity of views” about when conditions will warrant cutting the interest rate, central bank officials agreed that monetary policy easing would probably be gradual, given risks to the outlook and the slow path for returning inflation to target, according to the summary of deliberations.

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They considered a number of potential risks to the outlook for economic growth and inflation, including housing and immigration, according to summary of deliberations.

The central bankers discussed the risk that housing market activity could accelerate and further boost shelter prices and acknowledged that easing monetary policy could increase the likelihood of this risk materializing. They concluded that their focus on measures such as CPI-trim, which strips out extreme movements in price changes, allowed them to effectively look through mortgage interest costs while capturing other shelter prices such as rent that are more reflective of supply and demand in housing.

They also agreed to keep a close eye on immigration in the coming quarters due to uncertainty around recent announcements by the federal government.

“The projection incorporated continued strong population growth in the first half of 2024 followed by much softer growth, in line with the federal government’s target for reducing the share of non-permanent residents,” the summary said. “But details of how these plans will be implemented had not been announced. Governing council recognized that there was some uncertainty about future population growth and agreed it would be important to update the population forecast each quarter.”

• Email: bshecter@nationalpost.com

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