After giving Stellantis close to $105 million to retool two Ontario plants, the federal government is now reviewing the contract to see if the automaker violated the deal by announcing it’s moving some production to the U.S.
Stellantis publicly revealed its plans last week to move its Jeep Compass production from Brampton, Ont., to Illinois.
Asked by CBC News if he wants to recover taxpayer money already given to Stellantis, Finance Minister François-Philippe Champagne suggested the government is taking action.
“We’re going to enforce our contractual rights, definitely,” said Champagne, who was involved in negotiating contracts with Stellantis.
“You just have to look at their circumstances, what was promised and what is being delivered.”
‘Going to enforce our contractual rights,’ says Champagne on Stellantis returning government money
Stellantis’s new American expansion plan has been called a major blow to Canada and was celebrated by the White House as a victory.
U.S. President Donald Trump has signalled he wants to dominate auto manufacturing. His commerce secretary Howard Lutnick told an audience in Toronto this month he wants to drain auto assembly from Canada.
The Canadian government has now confirmed to CBC News that it handed over more than $18.6 million to Stellantis in the 2023 fiscal year, and another $85.9 million in 2024’s fiscal year, to retool its Windsor and Brampton plants.
But that’s only one-fifth of the money Ottawa offered Stellantis.
In 2022, the federal government announced it would invest $529 million to help the automaker modernize those two plants to boost electric vehicle production in Canada.
The money came from the Strategic Innovation Fund to support jobs in Windsor and Brampton. It’s standard for this funding to be disbursed in phases once a company submits claims for costs incurred if certain commitments are met, the department responsible said.
“We made sure at the time that we had proper protection for workers,” Champagne said.
Industry Minister Mélanie Joly said on Tuesday the government is reviewing a series of confidential agreements with Stellantis to figure out if the automaker’s relocation announcement violated any conditions.
Ottawa threatens legal action against Stellantis
In a letter to the company’s CEO last week, Joly warned Stellantis it has “legally binding commitments” to keep its “full Canadian footprint, including Brampton, in exchange for financial support.”
The letter points to Stellantis’s commitments under the Strategic Innovation Fund and an agreement tied to the company’s NextStar Energy project.
As of March last year, Ottawa had given Stellantis $268 million for the NextStar project, according to the federal government’s public accounts.
The government has also been disbursing funding as the company produces battery modules and cells, but it won’t release those funding numbers, citing commercial confidentiality.
Even though Ottawa has given the automaker millions of dollars, it’s unclear how much ability it has to enforce the contracts or get the money back.
Asked if she had the power to recover the money, Joly didn’t say.
“We are confident that we are able to put a lot of pressure on the company, because when we sign contracts with companies to support them, everything is of course linked to job creation, Joly said in French on Tuesday.
Joly also said she’s speaking to other car companies.
“I had conversations again this weekend and Friday with Honda, with Ford, and I will continue to have conversations, of course, with GM,” she said.
Canada must ‘play hardball’ with Stellantis, says union | Power & Politics
The government has made deals and announced support to help these major auto manufacturers with Canada’s transition to electric vehicles.
After Stellantis announced it was moving some production to the U.S., Flavio Volpe said the government needed to send a message to other automakers that if they “cower” to the White House there will be “real consequences”.
“We’re not going to set the precedent here that you can say, ‘I don’t care about consequences in Canada,’” said Volpe, the president of the Automotive Parts Manufacturers’ Association.
The prime minister has said that the head of Stellantis promised him there would be a new production plan for Brampton. But Mark Carney revealed the decision is contingent on the finalization of the Canada-U.S.-Mexico Agreement (CUSMA) that is up for review next year.
The White House has been hitting Canada’s auto sector with 25 per cent tariffs on all finished vehicles that aren’t compliant with CUSMA. Canada fired back with a matching counter-tariff.
But since then, Trump signed an executive order hitting truck imports including from Canada with a 25 per cent tariff too.
Joly said on Tuesday she would release “more news” about Stellantis by the end of the day, but as of late afternoon had yet to make an announcement.
After the Conservatives pushed for it, a parliamentary committee voted to study the government’s confidential contracts with Stellantis to see if they included conditions to protect Canadian auto jobs.
