Photo: Nissan
By John LeBlanc for MSN Autos
It’s been five years since a new automobile plant opened
in Canada. And the news this week that Nissan’s North American production
expansion plans do not include our country makes us wonder: Will we ever see
a new car plant be built in Canada again?
Since the Great Recession of 2008, global automakers have been shying away from Canada
when it comes to so-called “greenfield” manufacturing commitments. Honda's new engine plant in Alliston, Ontario and Toyota's RAV4 assembly plant in Woodstock, Ontario in
2008 are the most recent, while Toyota has announced that it will add a new assembly line
to its existing Cambridge, Ontario facility to start building Lexus RX 450 gas-electric hybrid
crossovers next year. But the idea of an automaker building an all-new
automaking facility in Canada seems as ancient an idea as the 1960s’ Auto Pact.
Bing: What is the Auto Pact?
For example, take Nissan’s North American expansion plans. The
Japanese automaker currently builds vehicles in the U.S. and Mexico. But as
part of a global effort to expand its Infiniti luxury brand, and in addition to
producing the Infiniti JX crossover alongside its Nissan Pathfinder
platform-mate in a Nissan pant in Tennessee, Nissan says it is considering
adding a second production site in North America. But even after federal
Industry Minister Christian Parades traveled to Japan to try and persuade
Nissan to built the new Infiniti plant in Canada, Nissan Americas Chairman
Colin Dodge told Automotive News that Canada is not on the list.
Now, Nissan hasn’t disclosed why its removed Canada from the
list. In the past, the high cost of Canadian auto worker salaries and benefits (relative
to some of their American and Mexican counterparts) and the lack of
taxpayer-funded incentives to entice automakers here, have been cited as the two
main reasons why a new auto plant in Canada is simply not going to happen any
time soon.
A good example of what Canada is competing against comes from
an announcement this week from Toyota. The Kentucky Economic Development Finance
Authority has approved a $146.5 million U.S. tax incentive package to lure
Toyota into expanding its Georgetown, Kentucky factory to start building its
Lexus ES sedan there. Since it opened in 1988, the Kentucky pant has been the
main production site for Toyota Camry sedans. With Toyota kicking in $531.2
million, the plant expansion could add up to 750 jobs on top of the 6,600 current
workers.
Compared to the Kentucky, Toyota’s recent arrangement with
the federal and Ontario governments for the new RX 450 hybrid expansion looks
less attractive. Instead of outright tax breaks, Toyota is receiving $34
million Cdn. in “repayable contributions” after investing $125 million of its
own money.
So what do you think? Do you feel Canadian governments should use taxpayer
money to offer more subsidies to automakers to lure them to Canada? Should
the autoworkers take lower salaries? Or are these sacrifices too high for the
benefits of more manufacturing jobs?
Source: Automotive News