Is Ontario destined to become a relic of the auto industry?

I am aware of two companies in Cambridge, Ontario who supply parts and services to Tesla Motors, directly related to the Model S. I don't want to call them out in case there are any confidentiality issues, but at least there is some activity here in the province.

I wonder when those "incentives" (tax breaks, really, I suspect) are expected to show their return. That is, at what point will the $2B given to FCA return more than $2B to the public coffers? If it's more than ten years from now, I'm not sure the money will ever be made back because in ten years I think the car landscape will look significantly different and I'm not convinced that FCA will adapt based on prior behavior.

Ktowntslafan said:

More subsidies supporting Big Oil courtesy of Ontario/Canadian taxpayers. Can we not direct these funds specifically toward EV development in Ontario? If you believe EV's are the future, does anyone feel like we're backing the wrong horses at the moment?

If the tipping point to EV is near, Ontario is in trouble. Time to change course...quickly!

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What support should we give to EVs, specifically? Makes sense to me to be supporting manufacturers with plants already here, which in turn support the many Ontario suppliers who can and do build parts for EVs just as easily as they can for ICEs.

The Ontario government is concerned about the loss of all manufacturing jobs and the fact that Ontario is losing automotive jobs in particular to places like Mexico. As much as they may be interested in EVs and advanced technologies, I think they'd be happy to see even traditional ICE manufacturing stay here too. Toyota announced that they were moving Corolla production from Cambridge to Mexico which had a lot of folks worried, but they've recently announced that they will bring RAV4 production (including hybrid models) to the Cambridge plant.

Ktowntslafan said:

If EV's are the future, and we all know they are, we should be supporting manufacturers who are investing in that space. What we are doing now is corporate welfare. We are buying jobs with tax dollars, which is ridiculous and unsustainable. So, let's sit down with the five manufacturers above, tell them that we are ready to invest heavily in the future, but no longer in the past. RAV4 hybrid is a good example. But we shouldn't stop there, we need to be talking to Tesla, Apple and all new entrants to the EV space.

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And this is essentially because government works on the trailing edge of the curve. If they want to be sustainable, they need to be on the leading edge, investing in what the soothsayers see coming in the future, instead of wondering who turned out the lights. And the fortune tellers don't even have to be that good... anyone can make the leap in thinking to EV's and a necessary move away from a carbon-based economy.

They should be talking to Tesla and Nissan and anyone with EV aspirations about doing a Nevada-style Giga-factory deal. Heck, even a Mega-factory or Kilo-factory would be a step in the right direction... :wink: With supply next door, re-tooling to build EV's would be more feasible, especially if the labour force is skilled (more skilled than the 2nd and 3rd world at least).

Ktowntslafan said:

So, let's sit down with the five manufacturers above, tell them that we are ready to invest heavily in the future, but no longer in the past. RAV4 hybrid is a good example. But we shouldn't stop there, we need to be talking to Tesla, Apple and all new entrants to the EV space.

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Okay, I can see what you're saying. Investing in the future is obviously what we want to do. But it's a tricky business, because all jurisdictions want auto manufacturing jobs and are willing to make concessions to get them. Giving OEMs an ultimatum like that is unlikely to go well for Ontario. They'll happily move production to Mexico.

Ontario plants produced 2.4 million vehicles in 2014. Then there is the network of suppliers. Without them the province won't have much revenue to invest in the future.

Breezy said:

Okay, I can see what you're saying. Investing in the future is obviously what we want to do. But it's a tricky business, because all jurisdictions want auto manufacturing jobs and are willing to make concessions to get them. Giving OEMs an ultimatum like that is unlikely to go well for Ontario. They'll happily move production to Mexico.

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Ktowntslafan said:

Tough love. If OEM's value cheap labour over innovation and Mexico wants to subsidize declining ICE manufacturing, I say let them go. Progressive manufacturers will see value in Ontario's brain power and will invest here and thrive.

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I can tell you that in some informal conversations I've had with Ministry staffers, this "ultimatum" is not likely to happen. While encouraging the "green economy" is something they definitely want to do, they are not going to throw the baby out with the bath water and take actions that will harm general auto manufacturing (and associated jobs) in Ontario. Yes, Ontario could be an innovation center, but so could a lot of other jurisdictions... many with lower labor, tax and energy costs than we have here in Ontario. (an artifact of cleaning Ontario's electricity systems is that we now have some of the highest rates in North America). There is competition for this kind of thing all over the place.

mknox said:

I can tell you that in some informal conversations I've had with Ministry staffers, this "ultimatum" is not likely to happen. While encouraging the "green economy" is something they definitely want to do, they are not going to throw the baby out with the bath water and take actions that will harm general auto manufacturing (and associated jobs) in Ontario. Yes, Ontario could be an innovation center, but so could a lot of other jurisdictions... many with lower labor, tax and energy costs than we have here in Ontario. (an artifact of cleaning Ontario's electricity systems is that we now have some of the highest rates in North America). There is competition for this kind of thing all over the place.

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The problem boils down to not really knowing what the future green world order will look like... where new jobs will exist is unclear. What IS clear, is that many of the jobs we know today will disappear or be reduced substantially in number.

So the question for government should be: Are we better off dragging our feet or getting out ahead of the changes?

Watching the news last night, there was an item about energy production and consumption in Canada. Obviously, non-green energy production is a BIG piece of our economy. It won't be there forever though, whether we want to accept that or not. So the first step in the process is admitting we have a problem... Alberta is certainly about to come to terms with that realization now that the oil sands are not overly profitable.

There needs to be a well-considered economic PLAN to follow as we transition away from fossil fuels and on to green sources. If our strategy is simply to REACT to changes, or follow others, we're really screwed. Both PLANning and REACTing represent significant economic upheaval - I'm not burying my head in the sand on that. But having a real plan in place is going to make the ride smoother. Not smooth... just smooth-ER.

beeeerock said:

TSo the question for government should be: Are we better off dragging our feet or getting out ahead of the changes?

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While I don't disagree with the sentiment, that comes with HUGE risk. What if you bet on the wrong horse? What if it turns out some other jurisdiction is better suited or more competitive? Governments need revenues to run all of the programs they run for us, and if a policy decision ends up chasing out a big piece of the province's economy, jobs will be lost and gov't revenues will fall. Not sure what the answer is, but until it becomes clear, I thing we have to keep diversified.

Ktowntslafan said:

We are not diversified at present...that's the whole point of the article.

So lets create policy that GETS us diversified.

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Fair enough. I was thinking of your earlier "tough love" comment about letting manufacturers who don't want to play ball go. An "all or nothing" approach may leave us with them all gone and potentially no industry to fill the void.