• Mon. May 20th, 2024

Honda’s $15B Ontario auto investment ‘huge opportunity’ for Windsor

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Honda Motor Company announced Thursday it’s investing $15 billion to expand its Ontario footprint to build electric vehicles and create a supporting supply chain.

And that huge commitment by the Japanese carmaker will trigger big economic spinoff benefits for the Windsor-Essex area, auto sector experts say.

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The investment will require four new plants in Ontario, including a new production facility and a 36-gigawatt hour battery plant to be located at Honda’s Canadian headquarters in Alliston. The latter two plants will create 1,000 new jobs.

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“Honda will establish a battery integrated and complete EV battery supply chain in Canada,” said Honda’s global CEO Toshihiro Mibe.

“This will involve all parts of production — from raw materials to finished products. Canada is rich in natural resources and in clean energy.

“It helps Honda pursue our three targets of net zero by 2050, use of 100 per cent green energy and 100 per cent sustainable materials in production.

“Canada has a very attractive business environment for carmakers.”

The investment is the largest in Canadian automotive history, more than double the value of the Volkswagen complex being built in St. Thomas and triple the announced price tag of Windsor’s NextStar Energy battery plant.

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Workers are shown on the vehicle assembly line on Thursday, April 25, 2024, shortly before it was shut down for an event at the Honda of Canada Manufacturing Plant 2 in Alliston, Ont. Photo by PETER POWER /AFP via Getty Images

Honda will partner with Korean battery materials company POSCO Future M Co. to build the cathode plant. It will partner with Japanese chemical firm Asahi Kasei Corp. to build a separator facility.

The automaker said it would announce the location of the cathode plant and separator plants in the next six months.

Southwestern Ontario is expected to be in line for at least one of those plants. The Star has confirmed Honda officials and their partner companies have already visited Essex County to inspect a potential site.

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“It’s a great show of confidence in the auto industry in Ontario,” said Laval International president Jonathan Azzopardi, whose firm is located in Maidstone in Lakeshore.

“All of us who have invested in the industry should feel more confident about making those investments, especially right now with EV facing some headwinds.

“When auto plants come in, the Tier One’s and Two’s follow. I believe Ontario is one of the only jurisdictions that can produce everything a plant needs.

“This is a huge opportunity.”

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Ontario Premier Doug Ford speaks as Prime Minister Justin Trudeau looks on during Thursday’s announcement in Alliston, Ont., that Honda is making the single-biggest investment ever in Canada’s automotive sector. Photo by PETER POWER /AFP via Getty Images

Azzopardi said his main worry about the rapid rebirth of Ontario’s auto sector, which has seen over $43 billion of new investments announced in the past three years, is the workforce.

“My one concern as an owner is the shrinking workforce,” Azzopardi said. “We’re not seeing anything come to the table to solve that.

“It’s not just skilled trades we need, it’s just good labour in general.”

The Windsor area is already home to several companies supplying Honda, including at least three that will be supplying EV and battery-related components.

Joe Goncalves, vice-president of investment attraction and strategic initiatives with Invest WindsorEssex, said Honda’s investment announcement on Thursday only makes the region more attractive to companies looking at locating here.

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“This stimulation to automotive in Ontario turns us into an EV powerhouse,” Goncalves said. “There will be spinoffs to the supply chain companies.

“It’s a great opportunity for local companies to expand their relationship with Honda and it’s a great opportunity for companies coming here to supply Honda both in Alliston and the U.S.

“They can do that from here.”

The fact that Honda is also building cathode and separator plants in Ontario is a huge win. Goncalves added.

“Having cathodes and anodes, battery and EV assembly plants brings us to the next level in North America as a leader in the EV sector,” Goncalves said.

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Canadian Prime Minister Justin Trudeau, alongside head of Honda Global, Toshihiro Mibe and Ontario Premier Doug Ford, tours the manufacturing line at the Honda of Canada Manufacturing Plant 2 in Alliston, Ont. on April 25, 2024. Photo by PETER POWER /AFP via Getty Images

Trillium Network for Advance Manufacturing managing director Brendan Sweeney expects Windsor firms to benefit in ways beyond just being suppliers to Honda.

As home to Canada’s first automotive battery plant to become operational when NextStar Energy launches in 2025, any local companies that were involved in the NextStar launch will have unique experience to offer.

“Being the first movers in the sector is going to be a big advantage for Windsor companies,” Sweeney said. “Whether it was making something for NextStar, automation or engineering services, that experience is something Honda will be interested in.”

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Sweeney added the Honda announcement further secures Canada’s place at the table as a major player in the future of EVs.

It also signals a further shifting of the industry’s composition in Ontario, which now counts six automakers who will be manufacturing EVs in the province.

“It really signals the U.S. automakers, though they’re still important, they’re not leading anymore,” Sweeney said.

“With Honda, Toyota, Volkswagen and (Europe-headquartered) Stellantis, though they have Detroit connections, we’re getting a lot more international and a lot less American.”

The significance of Thursday’s announcement was illustrated by the presence of Prime Minister Justin Trudeau, Ontario Premier Doug Ford and key federal and provincial cabinet ministers in attendance in Alliston.

“This is a historic day,” Trudeau said.

“This announcement is creating in Canada a comprehensive electric vehicle supply chain from start to finish.”

Trudeau and Ford confirmed that each level of government would be offering financial support and tax credits in the range of $2.5 billion.

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Honda’s Mire expects full production to begin at the new plants in 2028 with the capacity to build 240,000 electric vehicles annually.

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Workers are shown along the vehicle assembly line at the Honda of Canada Manufacturing Plant 2 in Alliston, Ont., on Thursday shortly before the Japanese automaker’s major automotive investment announcement for Ontario. Photo by PETER POWER /AFP via Getty Images

Auto analyst firm AutoForecast Solutions has said the automaker will build a small electric crossover carrying the Honda badge and an electric Acura crossover at the new plant.

To help cement the deal with Honda, the two levels of government are offering a package of tax credits and infrastructure supports.

The provincial supports will be focused on the capital side to help provide the infrastructure required.

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The federal government has shifted its focus from support based on production, such as for the LG/Stellantis and Volkswagen battery plants, to tax credits for the building of plants by supply chain companies.

Last week’s budget included a new 10-per-cent tax credit to support EV supply chain investment.

Honda will also be able to access the Clean Technology Investment tax credit. That offers companies a 30-per-cent credit for the cost of machinery and equipment required to manufacture electric vehicles.

“This deal outlines what you can expect when two governments work together to rebuild the economy, create jobs and bigger paycheques,” Ford said.

“Today’s announcement is a game changer for the industry.”

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Honda chief executive Toshihiro Mibe shakes hands with Canadian Prime Minister Justin Trudeau as Ontario Premier Doug Ford looks on after the automaker’s announcement of $15 billion in new Ontario investments. Photo by PETER POWER /AFP via Getty Images
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Thursday was a day of great news announcements for Premier Doug Ford and Prime Minister Justin Trudeau. Photo by PETER POWER /AFP via Getty Images

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