Champagne says Ontario needs to ‘pay fair share’ to end ‘stalemate’ with Stellantis

Innovation Minister François-Philippe Champagne is calling on Premier Doug Ford’s Ontario government to pay its “fair share” of subsidies to break the “stalemate” that saw Stellantis halt construction of its electric vehicle battery plant in Windsor, Ont., this week.

Stellantis said it stopped construction on a portion of the plant because the federal government had not delivered what it promised. The company said it would move to “contingency plans” if Ottawa does not fulfil its commitments.

“The message to our colleagues in Ontario is, pay your fair share and we will bring this stalemate, if you want, to a conclusion,” Champagne told reporters in Seoul, Korea on Tuesday.

Champagne, Foreign Affairs Minister Mélanie Joly and Prime Minister Justin Trudeau are in South Korea ahead of the G7 leaders’ summit in Hiroshima, Japan, on May 19 and 21.

Trudeau is meeting with South Korean President Yoon Suk Yeol to discuss economic security, but It remains unclear whether the prime minister will also talk to executives of South Korean-owned LG and its partner Stellantis about the NextStar Energy investment in Windsor, Ont.

Champagne said he is there to assure Korean partners that the Liberal government is optimistic the investment will move forward, but Ontario has to put up cash to make that happen.

“I’m very confident that we’ll come to an agreement with LG and Stellantis,” he said.

“I think that Canadians want us to reach a good deal for the autoworkers, for the auto industry and for Canadians in general … We need our friends and partners in Ontario to pay their fair share, as they have always done in every transaction we have done.”

Champagne said he hopes to speak with the head of LG at a state dinner hosted by South Korea’s president and underlined that negotiations are still ongoing.

“I negotiate with these guys every day,” he said. “The CEO calls me every day, they text me every day. There’s negotiation, that’s fair. But my job and our job is to fight for Canadians.”

The U.S. Inflation Reduction Act

The automaker — which makes Chrysler, Ram and Fiat cars, among others — and South Korean battery-maker LG Energy Solution announced the $5-billion plant last year and said it was expected to create 2,500 jobs.

The plant is due to open next year. Ottawa’s contribution was to be about $500 million. Recently passed U.S. legislation is complicating the deal.

The U.S. Inflation Reduction Act (IRA) is a multi-billion dollar program aimed at boosting the American manufacturing sector by expanding the clean energy technology supply chain.

Champagne said Tuesday that because the Windsor deal was announced before the IRA was in place, it did not contain an agreement to subsidize production at the plant in the same way the $13 billion Volkswagen deal does.

“When we started with Volkswagen the IRA was already in place,” he said. “When [Stellantis] came to us, I think in good faith, we sat down with them and said, ‘We hear you’ … Now we’re saying to our provincial friends in Ontario, ‘Be with us as you have always done.'”

Champagne said plants like the ones being built by Volkswagen and Stellantis will remain in operation for 50 to 100 years, providing economic benefits to the province for generations.

“That’s why we think it’s only fair, in a federation, that the province would pay their fair share when it comes to these strategic investments,” he said.

According to details of the deal with Volkswagen, federal production support for the plant is expected to range from $8 billion to $13 billion over 10 years. Ottawa is also offering about $700 million in capital expense grants to Volkswagen through its Strategic Innovation Fund.

Canada’s production subsidies will stay in place only as long as the U.S. Inflation Reduction Act remains in force. Production subsidies will come into effect after the company builds the $7 billion plant and begins production.

Stellantis, LG and the letter to Trudeau

CBC News has obtained a copy of a letter, first reported on by the Toronto Star, that Stellantis CEO Carlos Tavares and LG CEO Young Soo Kwon sent to Trudeau last month.

In the letter, the CEOs said they appreciated the “swift assurances” the Liberal government gave them that the IRA would “not place this battery plant on an uncompetitive footing with plants in the U.S.”

“We have relied heavily on those assurances and have continued to move forward with the construction of the plant and the preparation of the machinery and equipment over the past several months while negotiating specific terms to implement IRA-equivalent benefits for this plant,” the letter says.

The letter says Tavares and Soo Kwon appreciate the five times the Liberal government has given the firms written confirmation to “match the production incentives” under the IRA.

The CEOs go on to say that the delay in signing a deal “is bringing significant risk to the project.”

“In the event our agreement is not promptly executed, we will be forced to make difficult decisions regarding this project and other respective investments in Canada in order to deliver on our commitments to bring new technology to the North American market,” the letter said.

CBC News reached out to Premier Ford’s office Tuesday for a response to Champagne’s comments and was told the premier’s position had not changed since Monday.

Speaking to reporters in Mississauga on Monday, Ford said the federal government needs to support Stellantis in the same way it did Volkswagen. The current state of the deal, he said, “really worries me.”

He said the federal government has been “great partners” on the Stellantis project and now it needs to follow through.

“They need to continue supporting the people of Windsor, which they promised they were going to do. We want to work hand in hand with the feds on future deals as well,” Ford said.

Ontario Economic Development Minister Vic Fedeli told CBC News Tuesday that it would treat the Stellantis deal the same way it is treating the Volkswagen deal.

“We’ve made an agreement with Stellantis in the past, which is identical to the agreement we made with Volkswagen and we’re honouring both of those and we think the feds should honour their commitment to Stellantis as well,” Fedeli said.

NDP MPP for Windsor West Lisa Gretzky called on the Ford government Monday to do “everything in its power” to secure the Windsor auto jobs.

“He can’t continue to pass the buck to the federal government,” Gretzky said. “I am calling on him to show some leadership and step up to the plate before it’s too late.”