Industry Minister François-Philippe Champagne has committed billions of federal taxpayer dollars to a project Field of dreams strategy for electric vehicles: if we build it, they will come.
Where actor Kevin Costner’s movie character built a baseball diamond in the middle of his Iowa cornfields, federal and state politicians have invested big money in creating a vehicle ecosystem electric, based on the theory that automakers would invest much more in factories and people.
In former farmland on the outskirts of Ingersoll, Ontario, Mr. Champagne’s faith is rewarded. A year after the federal minister and Ontario Premier Doug Ford each pledged $259 million to retool General Motors Co. factories for electric vehicles, the Detroit-based company is expanding its operations and takes the quasi-shortage approach to an extreme level.
GM, like most North American manufacturers, is trying to shorten global supply chains that the pandemic and Russia’s invasion of Ukraine have revealed as too vulnerable to disruption. The automaker’s recent experience in southwestern Ontario offers a case study in these vulnerabilities.
In 2021, GM announced plans to invest $1 billion to build electric delivery trucks – branded BrightDrop – at its CAMI plant in Ingersoll. The following year, the federal and provincial governments invested money in the project, as well as a retooled plant in Oshawa, Ontario. Last December, Mr. Ford and Prime Minister Justin Trudeau were on hand to see the first BrightDrop vans roll off the assembly lines.
The assembly lines did not operate for long. In July, GM had to temporarily shut down its nearly new CAMI facility due to a lack of batteries. The bottleneck reflects startup problems at a plant in Lordstown, Ohio, a joint venture between the automaker and South Korean company LG Chem Ltd.
The battery plant opened in August 2022 and Mary Barra, GM’s chief executive, told the Reuters news service that production had been hampered because “our automation equipment supplier is struggling with delivery problems. Until the robots are operational, she said GM and LG are forced to build battery modules by hand, on manual assembly lines.
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In recent weeks, GM made two announcements regarding its plans for the Ingersoll plant, announcing a change in strategy that justified the politician’s confidence.
First, the automaker announced that in October the BrightDrop factory would be idled. Vehicle production is not expected to resume until spring 2024. When GM has to mothball a billion-dollar facility less than 11 months after opening due to a parts shortage, there is clearly a problem with supply chain.
Second, GM decided to permanently eliminate its bottleneck in Ohio by building a new plant in Ontario. Batteries that previously made a five-hour trip from Lordstown to Ingersoll will now make a five-minute trip from one side of the CAMI plant to the other.
GM’s new facility will take small battery cells — imagine a mix of metals in a small box — seal them, stack them in modules, wrap them in insulation, add cooling and wiring hardware, then move the product completed on BrightDrop assembly lines. The plant is expected to open in the spring, creating 300 additional jobs in Ingersoll, a town previously known for its cheese.
When announcing the plant expansion – without any government funding – GM Canada President Marissa West said: “Our CAMI plant plays a critical role in accelerating GM’s all-electric future . » Under Ms. West’s leadership, GM has also made significant investments in electric vehicles at plants in St. Catharines, Ontario, and Bécancour, Quebec.
The public has every reason to question the price of federal and provincial support for automakers – up to $13 billion in subsidies for Volkswagen’s battery plant in St. Thomas, Ont., and $15 billion dollars for a joint venture Stellantis NV and LG. in Windsor. These are massive investments of taxpayer dollars that deserve scrutiny.
But GM’s experience in Ingersoll shows that once governments commit to an electric vehicle strategy, automakers succeed.
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