In St. Thomas, optimism high that suppliers will soon arrive along with VW

After two days of talks with automotive suppliers, Sean Dyke is quietly confident St. Thomas will gain several new manufacturers before the new Volkswagen plant starts production.

Article content

Dyke, economic development chief executive with the City of St. Thomas, was in Toronto for PowerCo Supplier Days meetings last week. More than 300 attended a conference to learn what’s needed to supply VW’s $7-billion electric vehicle battery plant going up in St. Thomas.

Article content

“They were impressed by the availability of land at the plant. They like the location, that it’s central between Toronto and Detroit. There’s excitement from most of the suppliers,” said Dyke.

The next step is for Volkswagen to name the manufacturers chosen to supply the plant, run by its PowerCo subsidiary and set to open in 2027. Once they do, work will begin in earnest to locate perhaps a half-dozen suppliers that need to build near the PowerCo plant.

Article content

On the conference’s second day, Dyke and St. Thomas economic development officials had a display that included information about land available in St. Thomas, London and the surrounding area.

“I’m confident we will land suppliers,” Dyke said. “Several. . . need to be close to the plant. Reducing gaps in the supply chain was a key thread throughout the conference and locating nearby eliminates those risks.”

St. Thomas has assembled about 600 hectares (1,500 acres) of land, 150 hectares for the VW plant and the rest for a supplier industrial park, meaning there’s a lot of room available.

There’s provincial support available, too, manufacturers heard. Invest Ontario officials were on hand to discuss advantages of locating a plant in the province and possible incentives.

Article content

“What they said resonated with people here,” Dyke said. “What provincial support that is available will be decided on an individual basis, but there are a lot of programs available.”

The Invest Ontario presentation at the conference included:

• Ontario has a skilled workforce, with 71 per cent of adults possessing a post-secondary education, higher than other developed nations.
• Ontario has 65,100 STEM (science, technology, engineering, math) graduates a year.
• High immigration levels ensure workers will be available. Thirty per cent of Ontario’s 15 million people are foreign-born.
• The Global Skills Strategy program can offer work permits to highly skilled labor in 10 days.
• Ontario’s corporate tax rate is 25 per cent; only Indiana’s and Ohio’s are lower.
• A combined federal and provincial corporate tax rate of 26.5 per cent, less than one per cent higher than US and other G7 nations.
• Electricity supply is stable, and at 9.2 cents a megawatt hour, cheaper than in New York, Pennsylvania, Wisconsin, Indiana, Illinois and Michigan. The energy supply also emits less carbon dioxide than those states.
• Ontario’s auto manufacturers have consistently won JD Power awards for manufacturing quality.

Article content

Mining of critical minerals is also important to supplying the electric vehicle battery market. According to Invest Ontario, provincial mineral production totaled $13.5 billion in 2022.

Ontario is also home to more than 700 parts suppliers and in the EV sector alone, has seen $25 billion in investment from nine automakers.

In addition, Invest Ontario laid out financial grants and incentives available to suppliers, including various and extensive tax credits for investments and research and development. Funding also is available for hiring and training workers.

“I’m excited, it will be great,” Dyke said of the interest from suppliers. “Ontario is building a whole ecosystem for the battery market and it is exciting to be part of it.”

[email protected]

Article content