Industry Minister Melanie Joly says Ottawa will seek reimbursement for government aid if Stellantis doesn’t build another vehicle at the factory in Brampton, Ont.Nathan Denette/The Canadian Press
The federal government has launched a dispute settlement proceeding against Stellantis NV STLA-N over the automaker’s move to shift planned production of the Jeep Compass to Illinois from Brampton, Ont.
The federal government has launched a dispute settlement proceeding against Stellantis NV over the automaker’s move to shift planned production of the Jeep Compass to Illinois from Brampton, Ont.
Industry Minister Melanie Joly said she has notified the automaker in a letter sent on Monday that the government will seek reimbursement of federal aid if the automaker does not commit to building another vehicle at the factory northwest of Toronto.
The government says Stellantis’s shift put it in breach of funding agreements tied to auto plants in Windsor and Brampton, and the Stellantis joint venture NextStar battery plant in Windsor.
“Stellantis made a commitment – a promise – to invest in that plant, to invest in Canadian workers. And our government expects them to honour that promise. Full stop,” Ms. Joly told politicians on the Standing Committee on Industry and Technology on Monday.
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Stellantis, maker of Chrysler, Fiat and other brands, said in October it would invest heavily in its U.S. operations, expanding production and boosting employment in a move seen as an attempt to avoid U.S. tariffs.
The Brampton plant has been closed for almost two years awaiting retooling for the Jeep Compass, with about 3,000 workers on layoff.
Bureaucrats told the committee hearing on Monday that Stellantis informed the government of its plan to move Jeep production the same day it announced the U.S. expansion.
What money has the government promised to Stellantis?
The federal government has funding agreements with Stellantis that cover three of the company’s projects in Ontario: Assembly plants in Brampton and Windsor and the NextStar battery plant, a joint venture with LG Energy.
The contracts are confidential but are believed to contain Stellantis employment commitments that are linked among the three projects. The government has repeatedly declined to release the agreements or provide certain details.
From press releases and government statements, it is known that Ottawa and the province of Ontario committed a total of $1-billion in 2022 to retool the plants in Windsor and Brampton. About $100-million of this has flowed to the company.
Additionally, taxpayers have committed up to $15-billion to the NextStar electric-car battery plant, two-thirds of which is from Ottawa and rest from the province of Ontario. The aid, in capital cost subsidies and tax breaks, is linked to production.
To date, Ottawa has given $42-million to the NextStar plant, which is producing battery modules but has yet to produce batteries, said Charles Vincent, senior assistant deputy minister of Innovation, Science and Economic Development Canada.
How will the dispute resolution process work?
“The government will take the next step under the contracts to recover Canadian taxpayers’ money,” Ms. Joly said.
“This means that we will start the 30-day period of the formal dispute resolution process in order to bring back production at the Stellantis Brampton facility. This is the start of the dispute resolution process.”
Philip Jennings, deputy minister of Innovation, Science and Economic Development Canada, told the committee the process launched on Monday will establish talks with Stellantis to find a way to get the automaker to live up to the commitments it made on production and jobs in Brampton.
“We think there’s potential grounds that’s leading up to a breach,” he said, “but there’s a resolution process that we have to follow.”
Stellantis faces penalties if it is found in breach of the covenants, but those sanctions are confidential, Mr. Jennings said.