EV battery plant set for St. Thomas, Ont., brings promise of jobs for decades — but how much did it cost us?
Colin Butler | CBC News | Posted: March 17, 2023 9:00 AM | Last Updated: March 17, 2023
A former Volkswagen insider credits talent and subsidies for why VW chose St. Thomas
A former Volkswagen insider says Ontario's skilled labour pool and government subsidies likely played key roles in convincing the world's largest automaker to choose St. Thomas as the site for its first North American EV battery plant.
Governments are promising the plant in southwestern Ontario will bring jobs and prosperity for decades, but how much public money was paid in support to the automaker remains a closely guarded secret.
"Governments have to be part of the equation," federal Industry Minister François-Philippe Champagne told CBC's Power and Politics host David Cochrane on Monday when asked about what subsidies were given to VW to make the plant happen.
"We know other jurisdictions are willing to put more on the table. Where we win is around the talent."
The money, Champagne told Cochrane, would be disclosed "in due course," but until then it would remain a secret because it was too "commercially sensitive" to be released while federal officials are presumably courting other companies to set up shop in Canada.
Vic Fedeli, Ontario's minister of job creation, economic development and trade, gave Afternoon Drive host Allison Devereaux a similar answer on CBC Radio on Monday, saying the sum would have to come from the company itself.
Volkswagen won't release details
"Volkswagen will release the size of the plant, the dollar value, the employees — anything to do with numbers will be released by Volkswagen here, on the site, in St. Thomas in the very near future when the formal announcement is made," the minister said.
For its part, Volkswagen said it isn't ready to disclose the information.
"Unfortunately, we're not releasing any more details at this point," Nicole Mommsen, VW's head of global communications, told CBC News in an email Wednesday.
Senior government officials close to the deal told CBC News those details will likely come in April when the company, as well as the federal and provincial governments, make a formal on-site announcement about the new factory in St. Thomas.
Until then, analysts can only speculate, but former Volkswagen executive Andreas Schotter has a better idea than most. He was once a marketing and sales controller for the company as part of its North American division before he went into academia to teach international business strategy at the Richard Ivey School of Business at Western University in London, Ont.
St. Thomas likely chosen because of talent, subsidies
"They are under pressure right now," he said Thursday about the company. "They have to find other markets."
Schotter said Volkswagen is rapidly losing market share in China, the source of about 30 per cent of its revenue. Chinese automakers have become the world leaders in electric vehicles and are outperforming the company after it invested heavily in Asian markets and green technology in the wake of the diesel emissions scandal.
"They see that they need to balance off the China potential risk they have because they threw everything into the China basket at one time and were banking on a home market that would remain very strong."
Schotter said it's why VW needs North America. It's the biggest auto market on the planet, and in order to sell electric cars in the United States, the company must build them on the continent under President Joe Biden's America First policy.
Because of that policy, Schotter said, he was surprised the company chose St. Thomas, which is outside the company's traditional manufacturing base in the southern U.S.and Mexico — but an important region in terms of skilled labour and talent.
"There's a lot talent in the region that has some familiarity with automotive parts manufacturing," he said, noting that unlike other areas of North America, the labour pool is less likely to leave a region where there are already 100,000 auto-sector jobs.
"People who work in St. Thomas will stick to the job much more," he said. "I think the St. Thomas move is a great move for the region. It's also a move that is most likely going to give Volkswagen some subsidies."
What VW got from Canadian governments
While those subsidies will remain a closely guarded secret until Volkswagen is ready to reveal them, there are clues in terms of what the company got.
Many analysts have compared VW's St. Thomas battery plant in terms of size and scope to the battery factory being built in Windsor, Ont., by Stellantis. In that deal, the $5-billion factory received $500 million in federal support.
The provincial government also played a key role when it transferred hundreds of hectares of farmland from the neighbouring municipality of Central Elgin to the City of St. Thomas with a piece of legislation rushed through Queen's Park last month.
The province also said it courted the company for a year, wining and dining auto executives on both sides of the Atlantic.
"It really heated up when we went to Germany in October," Fedeli told CBC Radio on Monday. "Three weeks later, they came and they toured the site in St. Thomas by helicopter.
"They flew here from Germany four times and met here at Queen's Park at the premier's office as we refined the details, and I call it his charm offensive he put on and really showed them why you need to be here in Ontario."