Investment

Stop politicizing job-creating foreign investment

Published

9 months ago

December 8, 2023

The NextStar Energy battery plant construction site in Windsor is shown Nov. 30, 2023. Photo by Dan Janisse /Windsor Star

By: Brian Kingston

Canada is on a foreign investment winning streak.

According to the OECD (Organization for Economic Co-operation and Development), Canada ranks third in the world for incoming investment through the first part of 2023, the best ranking Canada has held in 20 years.

But recent politicization of major new investments jeopardizes our hard-won progress.

Stellantis and LG Energy Solution are in the midst of building Canada’s first large-scale lithium-ion battery plant that will support the production of 2.5 million electric vehicles in North America.

The $5-billion investment has created 2,300 jobs locally to build the facility with an additional 2,500 full-time jobs created once the plant is up and running.

Instead of celebrating a facility that will put Canada at the forefront of the automotive transformation to electrification, politicians are attacking the battery plant on the premise that foreign workers are required to help set it up on a temporary basis.

These short-sighted criticisms ignore the reality of Canada’s role in the global economy and worse, threaten to put a chill on our investment climate.

Let’s set the record straight on why foreign direct investment (FDI) is critical to the economy and Canadians. As a relatively small open economy, Canada depends on foreign investment and international trade to generate economic growth.

Foreign capital and trade has been the foundation of Canada’s economy for over 150 years. British investment in the mid-19th century built our rail and canal systems while U.S. investment played a pivotal role in the development of our resource and manufacturing sectors.

Successive governments at both the provincial and federal levels, from both leading parties, have understood this fact and worked tirelessly to welcome job creating FDI into Canada.

The results of this work are paying off. Just three years after global investment flows fell off a cliff during the pandemic, Canada has emerged as one of the top destinations in the world for foreign investment.

Nowhere has this been more pronounced than in the automotive industry, which is undergoing a once-in-a-century transformation to electrification.

Thanks to a welcoming investment climate, foreign multinationals account for 12 per cent of all employment, 15 per cent of Canadian GDP, as well as the majority of the country’s trade in goods and commercial services.

In addition to creating jobs and driving growth, foreign investment makes Canada more productive.

Investors bring new technology and know-how, contribute to skills upgrading of local workers, boost supply chain integration and international trade, and foster competition among domestic firms.

FDI fuels investment in machinery and equipment, a key driver of labour productivity growth. In fact, foreign multinationals account for almost one-third of machinery and equipment investment in the corporate sector.

All of this results in a more productive and prosperous Canadian economy.

By winning major EV battery plant investments, Canada will benefit from world-class battery manufacturing technology that will make us all more prosperous.

And while these investments on their own will make huge contributions to the economy, there is potential for Canada to play an increasingly important role in the auto sector as it transitions to electrification.

Automakers are actively building a more integrated, North American EV supply chain that requires just what Canada offers — mineral reserves, sustainable approaches to mining, and smart people to process, recycle and develop them.

This presents a generational opportunity for Canada with its abundance of minerals and good fortune, since the 1960s, to be integrated into the North American auto market.

It is easy to criticize public incentives for profitable companies in order to attract these investments, but in doing so we risk losing out on tax revenues generated by the companies and their partners, and the tens of thousands of jobs they support throughout the auto supply chain.

Tax revenues and benefits to communities that will far exceed the public investment. Canadians benefit when we win foreign investment.

It is time to stop politicizing our success and get to work building the cars of the future.

Brian Kingston is president and CEO of the Canadian Vehicle Manufacturers’ Association.

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Economy

Energy stocks help lift S&P/TSX composite, U.S. stock markets also up

Published

18 hours ago

September 17, 2024

Anne Joseph

TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.

The S&P/TSX composite index was up 34.91 points at 23,736.98.

In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.

The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.

The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.

The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.

This report by The Canadian Press was first published Sept. 17, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX gains almost 100 points, U.S. markets also higher ahead of rate decision

Published

5 days ago

September 13, 2024

Anne Joseph

TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.

“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.

In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.

The S&P/TSX composite index closed up 93.51 points at 23,568.65.

While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.

Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.

But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.

Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.

“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.

“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.

A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.

It would also be “counter to what they’ve signaled,” he said.

More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.

“That’s going to be more important than the size of the cut itself,” he said.

In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.

“Here, the labour situation is worse than what we see in the United States,” he said.

The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.

The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.

The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX composite down more than 200 points, U.S. stock markets also fall

Published

2 weeks ago

September 6, 2024

Anne Joseph

TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.

The S&P/TSX composite index was down 239.24 points at 22,749.04.

In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.

The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.

The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.

The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.

This report by The Canadian Press was first published Sept. 6, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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