| | Mar. 1, 2005. 06:38 AM GM plans $2.5 billion investment
Money will go to upgrade auto maker's Ontario plants
Federal and provincial governments ante up $400 million
TONY VAN ALPHEN AND ROBERT BENZIE
STAFF REPORTERS
General Motors of Canada Ltd. will reveal tomorrow a $2.5 billion investment for its Canadian operations, including about $400 million in aid from the federal and provincial governments.
Industry sources confirmed yesterday that GM, the country's biggest auto maker, will announce plans for a massive upgrade of its Oshawa operations and other locations, plus a major innovation project with five universities.
GM president Michael Grimaldi will join Ontario Premier Dalton McGuinty and federal Citizenship and Immigration Minister Joe Volpe in announcing the investments under the company's "Beacon Project" at a news conference and ceremony in Oshawa.
"We've finally got it done," said a source close to the negotiations with Ottawa.
A GM spokesperson could not be reached for comment, but industry sources say the company will spend the money for significant retooling, a new paint shop, environmental improvements, energy-related projects and training at its three Oshawa assembly plants and joint CAMI venture with Suzuki in Ingersoll.
GM will also invest in enhancing its engineering capabilities in Oshawa and upgrading parts operations in St. Catharines and Windsor, according to the sources.
The investment in additional engineering will allow GM to become the first auto maker in Canada to design, engineer and build a vehicle without any assistance from staff in other countries.
GM is expected to disclose that it will help establish a national partnership for the promotion of innovation through McMaster University, the University of Windsor, the University of British Columbia, the Ontario Institute of Technology in Oshawa and the University of Sherbrooke.
The $2.5 billion investment during the next five years will secure existing employment for thousands of workers at GM plants and independent parts producers in southern Ontario. GM has also indicated that the investments could potentially create another 500 jobs.
GM, which built more than 923,000 cars and trucks in Oshawa alone last year, has been negotiating an aid package with the federal and provincial governments for months.
Last year, the two governments set up or revised programs so Ontario had a better chance of competing against U.S. states that are spending hundreds of millions of dollars to attract new auto assembly plants.
Ontario surpassed Michigan as the top producing auto jurisdiction for the first time in 2004. The province's 12 auto plants assembled 2.67 million vehicles last year.
"We will be there for as much or more than the federal government," said an Ontario official last night about the province's pending contribution.
"The province has been actively leading the way to secure high paying jobs and improve the training of Ontario's auto workers."
Last October, Ford Motor Co. of Canada Ltd. announced a $1 billion assembly plant and research centre for Oakville. The federal and Ontario governments contributed $200 million to the project.
Ford's flexible manufacturing plant will open late next year with the capability of producing several models on the same line.
Ottawa contributed $100 million in a "conditionally repayable" interest-free loan, while Ontario added another $100 million aid package.
However, Ford faces "clawbacks" on the aid packages if it does not meet certain criteria including maintaining the company's manufacturing workforce of 11,700 in Canada.
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