Stellantis' $2.8 billion investment secures future for Brampton, Windsor plants
The maker of Chrysler, Dodge, Jeep and Ram vehicles on Monday said it will invest $2.8 billion (3.6 billion Canadian dollars) into its Canadian operations for its electric transition, preserving the futures of both Windsor and Brampton assembly plants and creating its first battery lab in North America.
The amount is more than double the commitment Fiat Chrysler Automobiles NV made in 2020 contract talks with Canadian autoworkers union Unifor prior to merging with French automaker Groupe PSA to create Stellantis NV last year. The transatlantic automaker has pledged to become a sustainable mobility tech company, investing $35.5 billion into electrification and software by 2025 to offer 25 all-electric models in North America by 2030.
“We hope today’s announcement," Mark Stewart, Stellantis’ chief operating officer of North America, said during a news conference in Windsor, "really helps bring assurance to our families, to our employees and the local community that we are committed to Canada in the long run and for the next 100 years.”
A new, flexible architecture that will support all-electric and hybrid vehicles will go to Brampton Assembly Plant outside of Toronto. Industry forecasters had predicted the plant employing more than 3,000 people on two shifts could be without product by 2024 if the company moves production of the aging Dodge muscle cars to Belvidere, Illinois, when they are electrified. In addition to the Challenger and Charger, Brampton builds the Chrysler 300 sedan. With the new plan, Brampton will be retooled starting in 2024 with production resuming in 2025.
"Our plant is providing the necessary profits for the company to push forward in its transition to electrification," Danny Price, Unifor Local 1285 president, said during the news conference. "We proved our commitment to quality, cost savings, and did everything we could as workers to maximize profits for Stellantis and position ourselves to be recognized for this investment."
Windsor Assembly Plant also will support production of battery-electric and hybrid models on a new architecture for multiple models, according to a news release. Retooling is planned to begin in 2023, though the automaker declined to provide a time for completion. The plant will be able to adjust production volumes as needed to meet changing demand over the next decade, the company said.
Stellantis said it will make product announcements for the sites in the future, but the plans will return both plants to three-shift operations. The company declined to provide a breakdown of the investment per facility and projections for how many jobs would be created at or supported by the assembly plants.
“We are really excited about the lineup that is going to be an expanded to help maintain any cyclicity,” Stewart said, “so that we have multi-energy vehicles, full-on battery electric vehicles, and we can be sustainable for the future with our Stellantis families in the market."
The news comes after the automaker on Thursday said it was extending the 1,800-person second-shift at Windsor Assembly Plant through the end of the year. The company had been set to cut the shift at the Chrysler Pacifica plant at the end of June because of a global semiconductor shortage. In the first quarter, Stellantis sold more than 26,000 Pacificas in the United States, down 23% year-over-year.
"Windsor has made really strong improvements over an already good, good performance, and so they are getting the allocation of chips in a land of precious few chips to be able to do that," Stewart said. "Those plants have shown they can be competitive, and our customers are aching for those products."
Additionally, by the end of 2023, Stellantis will add 100,000 square feet to its Automotive Research and Development Centre in Windsor for the creation of a battery lab for the development and validation of all-electric and hybrid cells, modules and battery packs. The expansion to the 230,000-square-foot facility will support 650 new engineering jobs to support electrified propulsion systems, power electronics, electric machines, motor controls, energy management and embedded software.
The investments are another victory for the province of Ontario, which has made strides to improve its ability to attract business and has allocated hundreds of millions of dollars in incentives to do so. The mobility sector has been a focus to preserve its automotive industry, which could've been in jeopardy with the transition to electric vehicles. Meanwhile, suppliers even across the Detroit River stand to benefit from continued investment in the region.
“Ontario and Michigan, our industries are completely interconnected, just separated by a river and bridges,” said Glenn Stevens, executive director of MICHauto, the mobility arm of the Detroit Regional Chamber. "The health of one is important for another. There are many suppliers that supply the Tier 1s or the assembly plants throughout Ontario. When a major assembly plant like Brampton gets a new lease on life, certainly the Ontario suppliers are feeling good, and many Michigan suppliers that supply that assembly plant are as well.”
He recalled attending a gathering in 2016 in Windsor with a number of industry stakeholders that felt like a “town hall crisis meeting” after the region had seen manufacturing move to the southeast United States and Mexico.
“They put together a strategy to put a tremendous amount of investment in the knowledge part of the economy,” Stevens said. “It is a really strong message or reminder to us here in Michigan how important investment into high-tech talent is. They have been doubling and tripling down on it.”
Ontario is supporting Stellantis' projects with up to $397 million (513 million Canadian dollars), which breaks down to $222 million (287 million Canadian dollars) for Windsor, $102 million (132 million Canadian dollars) for Brampton, and $73 million (94 million Canadian dollars) for the ARDC. Canada's federal government is providing an additional $410 million (529 million Canadian dollars) in incentives.
"Investing in this multi-billion-dollar project is because it’ll deliver," Canadian Prime Minister Justin Trudeau said during the news conference. "It’ll deliver for workers, it’ll deliver for communities, it’ll deliver for our economy, and it’ll deliver for the environment. Not only are we growing a world-leading auto industry, creating hundreds of jobs and securing thousands more, we’re keeping our air clean by building and driving more EVs here at home."
Over the past 18 months, the automotive sector in Ontario has seen almost $11 billion (14 billion Canadian dollars) in investments for new vehicle and battery manufacturing. Government officials last month joined Stellantis leaders and executives from Korean battery manufacturer LG Energy Solution to announce plans for a $4.1 billion gigafactory to make batteries for electric vehicles manufactured in North America.
The plant is expected to create 2,500 jobs and open in the first quarter of 2024. The city of Windsor is in the process of expropriating a home that is a part of the property needed for the facility before the companies break ground later this year.
"Our government has a plan," Premier Doug Ford said during Monday's presentation. "It's a plan to attract more investment in our auto and manufacturing sectors. While we connect resources, industries and workers in Ontario to the future of clean steel and electric vehicles. It will be a plan that sees Ontario take its position as North America’s leader in automotive manufacturing as it was for over 100 years."
Brampton Assembly was built in 1986, making it one of the newer plants in Stellantis' footprints, said Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions LLC.
"It had a lot going for it between the age of the plant and the number of workers there, who have 35 years of experience working in that plant alone," he said. "Then, add in the regional access to a battery plant going into Windsor, it makes sense to put something in there.
"Stellantis had a few underutilized plants that have product earmarked for them going forward, so that leaves Brampton potentially with a white-space product for a space they are not covering at the moment or not adequately covering at the moment."
With the gigafactory in Windsor, it also makes sense to have a nearby center to test batteries and conduct diagnostics, said Sam Abuelsamid, principal e-mobility analyst for market research firm Guidehouse Inc. Stellanits has announced a battery lab in Turin, Italy, but having one in North America can be advantageous as well.
"They may be using different chemistries for different markets and different types of vehicles they are selling," he said.
Under the 2020 Unifor contract, FCA had committed to investing $1.13 billion for Windsor Assembly Plant by 2024 for a new platform that supports electrified vehicles. At the time, the former Unifor President Jerry Dias said employment would grow by more than 2,000 starting in 2023 with a 38-week ramp-up of the new platform.
The contract also included derivatives of the Chrysler 300, Dodge Challenger and Dodge Charger at Brampton and new products for Etobicoke Casting Plant, both in Ontario.
“It lays the groundwork for a happy contract next year when the Unifor contract comes up again next year,” Fiorani said of Stellantis' announcement. “But because the UAW and Unifor bargain at the same time now, they may be itching for a fight with the U.S. union.”