Interesting article from the Windsor Star, suggests that Canada was simply used to leverage bigger incentives from Mexico for the engine plant.
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Ford investment never destined for Windsor, says government source
Grace Macaluso
Oct 24, 2014Ford Motor Co., was never serious about investing at least $1.5 billion in a new engine program in Windsor, a government source suggested Friday.
Instead, Ford’s may have been using negotiations with Ottawa and Ontario to secure better terms from Mexico, which had been earmarked for the investment, the source said.
“They said, ‘Mexico has put a great deal on the table, but hey, Ontario, do you want a kick at the can?'” the source said. “We always knew we were the underdog here, but we did our best to make sure our commitment would be in the best interests of taxpayers.”
Over the last several weeks, Ford had been in talks with the two levels of government to invest at least $1.5 billion in its Windsor engine plants for global production of 1.5- and 1.6-litre engines that would go into such vehicles as the next-generation Ford Fiesta subcompact sedan. Ford has never confirmed it was in discussions with the two levels of government. However, Unifor, which represents 1,300 hourly workers at the Windsor and Essex Engine plants, has said the investment would have created up to 1,000 new direct jobs and secured the long-term future of the Windsor operations. It also would have meant the recall of more than 400 Ford workers on layoff.
Ford’s original proposal for Windsor’s engine plants “made the investment attractive: lots of jobs, research and development, establishing an Ontario supply chain,” the source said.
Although Ford’s funding request “was unprecedented,” the two levels of government were willing to work with the automaker because “the terms we started with represented a strong return on investment for taxpayers,” the source said. Ottawa and Ontario have traditionally contributed about 20 per cent of an automaker’s investment, and the source said Ford’s “ask was significantly above that level.”
As negotiations progressed, Ford officials kept changing the terms of their original proposal and dramatically reduced their commitments, the source said. For example, the number of net new jobs originally promised plunged by about 75 per cent, the source said. “The numbers really changed in terms of jobs, supply chain, research and development. There was a significant claw back in each area.”
The size of Ford’s funding request, however, did not change, the source said.
Michelle Lee-Gracey, a spokeswoman for the carmaker, refused comment, saying only, “We meet with government on a regular basis to discuss a variety of issues. We consider these discussions to be confidential.”
However, Bob Shanks, Ford Motor Co.’s chief financial officer, told Bloomberg Television Friday that the company was not taking investment away from Windsor.
“We can’t pull out something that was never going,” Shanks said. “So no, that’s not the case.”
Both union officials and Windsor Mayor Eddie Francis expressed disappointment, but insisted all parties did everything they could to bring the investment to the city.
Francis, who received confirmation of the bad news Friday, said the municipality offered $8.5 million in tax savings to Ford under its Community Improvement Plan. “From our city’s perspective, this is devastating news because those 1,000 jobs are not only good paying jobs, those are significant jobs, and certainly held a significant level of promise for the future.”
Jerry Dias, Unifor national president, said Ford came late to the table in Canada.
“The reality is this project was originally earmarked for Mexico and we were doing everything we could to bring it to Canada, but we couldn’t bring it over the finish line,” he said.
A disheartened Chris Taylor, president of Unifor Local 200, which represents local Ford workers, called the news “very, very devastating for our members and our community.”
Taylor said he had heard rumblings earlier this week that talks had gone awry, but received confirmation from his national union and Ford officials Thursday.
“As of right now, it’s not coming to Windsor,” he said. “The value to us was a future with a good product, jobs for the people on layoff and a bright light for a community that sorely needs good news.”
“As a local, we’re not going to bury our heads in the sand,” he added. “We have to have some discussion with the government to find out where this went sideways and decide how we progress going forward.”
Car companies have long been pressing Ontario and Ottawa to up their game in the global competition for automotive investment or continue watching vehicle assembly plants and jobs move to Mexico and the U.S. south. Some jurisdictions typically fund at least 60 per cent of a carmaker’s investment, while Ontario and Ottawa have covered a total of about 20 per cent through a combination of grants and low-cost loans.
Dias said Ford’s decision was a “done deal.” But, the Windsor-Essex Regional Chamber of Commerce urged all sides to return to the table.
“We’re urging all parties to give this one more chance and make it happen in Ontario,” said Matt Marchand, president and CEO of the Windsor-Essex Regional Chamber of Commerce.
“We have called for an automotive strategy for this very reason,” Marchand added. “Other jurisdictions have one, they have top talent executing them. And we need to adapt to the hyper-aggressive marketplace. The status quo is not working. Investment is flowing out of Ontario, and we need to reverse that.”
That concern was echoed by Ford of Canada president Dianne Craig Thursday at the Ontario Economic Summit in Niagara-on-the-Lake. According to Marchand, who was attending the summit, Craig said she was worried about Canada’s shrinking manufacturing sector. In the U.S., there has been a strategic decision to have auto investment, she said. “The supply base goes with the manufacturing base.”
But, both Ontario and the federal governments stressed Friday that financial incentives would have to meet their standards.
“Our government is committed to partnering with business in a fiscally responsible way, but we will not invest taxpayer dollars in any partnership that doesn’t provide a strong return for Ontarians,” Duguid said in a statement. “This includes creating good jobs, anchoring key facilities, building an industry supply chain, fostering research and development, and leveraging a larger investment from the private sector.”
Jake Enright, a spokesman for federal Industry Minister James Moore, said “after weeks of discussions, it was determined the terms laid out in Ford’s proposal was not in the best interests of Canadian taxpayers.”
gmacaluso@windsorstar.com
