Auto belt anxiety: Lessons from past upheavals in Southwestern Ontario

Article content

Billions of dollars in new investment have flowed into Ontario’s auto industry, much of it based in Southwestern Ontario, to build out a supply chain for electric vehicles. At the same time, GM Canada’s decision to suspend production at the Cami plant in Ingersoll has left 1,100 workers in limbo. Anxiety about the future – a mix of excitement and worry – is sweeping the region’s auto belt that runs from Guelph, Cambridge and Woodstock in the east to Windsor in the west, taking in four auto plants and dozens of parts makers along the Highway 401 corridor. As the industry grapples with the uncertainties of Canada’s trade tension with the United States and weaker-than-expected demand for electric vehicles, what lessons are to be learned from past upheavals – the good, the bad and the ugly? 

Article content

Article content

Recommended Videos

Article content

THE GOOD

St. Thomas is in for a radical transformation, with two plants worth more than $10 billion combined in the pipeline.

PowerCo, a subsidiary of Volkswagen, plans to open its electric-vehicle battery plant in St. Thomas in 2027. About 3,000 people are expected to work at the factory that will supply VW plants in South Carolina and Tennessee.

Vianode, a Norwegian company, plans to build a $3.2-billion factory to produce synthetic graphite for EV batteries. The plant could employ up to 1,000 people once fully operational.

The massive plants expected to open in the coming years in St. Thomas represent the largest capital outlays in the Southwestern Ontario auto sector since 2008, when Toyota Motor Manufacturing Canada Inc. opened its Woodstock plant.

Article content

Between Woodstock and two plants in Cambridge, Toyota employs more than 8,500 people.

Brad Hammond, Woodstock’s economic development officer, said the windfall for the city extended beyond the construction of the factory that makes RAV4s and the jobs that came with it. About a half dozen plants opened in Woodstock to supply Toyota, he said.

“There’s a lot of stuff that’s kind of below the water line that people don’t see as well . . . things like hotel rooms and catering, and trips to the local hardware store and stuff like that, and that can be a very substantial number as well,” Hammond said.

Other benefits include Toyota’s donations to the United Way and vehicle donations to the city’s police and fire departments, he said.

Article content

Woodstock Mayor Jerry Acchione estimates about 80 per cent of industrial jobs in the city are related to Japanese investment directly tied to Toyota. The assembly plant alone brings in approximately $7 million in property taxes a year, he said.

Nearly 20 years after the Toyota plant opened, Woodstock is still experiencing steady population growth fuelled by its largest employer, Acchione said.

He said he has told St. Thomas Mayor Joe Preston that the city must be prepared for “constant” growth as the opening of the massive PowerCo factory nears.

“They’re starting to see some of those (impacts) already with the awareness of how much power and water they could use, the strains put on a municipal system at the start of it all,” Acchione said.

Article content

Article content

THE BAD

Given the recent good news in St. Thomas, it’s easy to forget the pain when two auto plants employing about 2,800 workers closed in less than three years.

Heavy truck maker Sterling shuttered its St. Thomas plant in 2009, cutting 1,300 jobs. Two years later, about 1,500 workers lost their jobs when the Ford St. Thomas assembly plant closed, ending its 44-year run.

“In the last couple of years of operation at the Ford St. Thomas assembly plant, they knew a closure was coming,” said Preston, who was a Conservative MP representing the region at the time. “I remember it going down to one shift, so the writing was on the wall. It was like taking the Band-Aid off slowly.”

The hit was felt not only in St. Thomas, but across the wider region, Preston said. He estimates roughly a third of the workforce lived in the city, a third in London, and the rest within an hour’s drive.

Article content

Having a good workforce in place can help attract major players, Preston said. He noted other manufacturers in the city helped softened the blow of the closing of the Sterling and Ford plants, including Magna’s Formet and Presstran auto parts facilities and Element5, a mass-timber manufacturer that opened in 2020.

“There will be dark days in the next little bit, but the region will do well over the next couple of decades, for sure,” Preston said.

THE UGLY

The closure of the Navistar truck plant in Chatham in 2011 was a major blow to the region and an ordeal for 1,000 workers, who were laid off for two years before hopes of a return to work were dashed as the U.S. company shifted production to the United States and Mexico.

Article content

In its heyday in the 1990s, the Chatham plant – formerly run by International Harvester – had as many as 2,000 employees.

The population of Chatham-Kent declined after the plant closed, said Stuart McFadden, the municipality’s director of economic development and tourism, and the local economy suffered.

Diversification was the solution and a key takeaway from the loss of Navistar, he said, with remaining manufacturing facilities and feeder plants forced to retool for new products or find new customers.

“We’ve made a concerted effort to try to do that. My personal belief is I would rather have 10 companies with 100 people than one with 1,000 because if one goes down, you still have 900 people working,” McFadden said.

jmoulton@postmedia.com

Article content