TORONTO: The Canadian government has told Stellantis NV it’s in default on its taxpayer-backed financial aid after it moved auto production to a US plant, Industry Minister Melanie Joly says.
Joly first threatened to take legal action in October, shortly after Stellantis announced it was cancelling plans to make the Jeep Compass sport utility vehicle in Brampton, Ontario, and moving that vehicle to Illinois.
The automaker said it would invest US$13bil in the United States over four years, partly to mitigate tariff costs.
Governments in Canada pledged more than C$500mil (US$358mil) to Stellantis to help pay for capital costs in its two assembly plants in the country.
“On Dec 4, I’m formally announcing that we’re serving Stellantis with a notice of default under the contracts,” Joly told a parliamentary committee.
“When it comes to protecting auto jobs, we’ll not let these industries down,” Joly said, adding that she is defending “Canada‘s economic backbone and the livelihoods of countless families”.
The move also comes a month after Joly announced a 30-day dispute resolution process with Stellantis aimed at bringing production back to the Brampton plant.
There are about 3,000 unionised workers on layoff from the factory, and many more in the region whose jobs depend on supplying it with parts.
“Stellantis continues to engage with the government in the dispute resolution process under the agreement,” said LouAnn Gosselin, a spokesperson for the company.
“We are working towards our shared objective of securing a long-term, sustainable future for automotive manufacturing in Canada, including in Brampton. The process is confidential and so we cannot comment further.”
At a separate parliamentary hearing, Stellantis executive Teresa Piruzza defended the company’s investments in Canada. Lawmakers on the committee have been examining the conditions on the financial aid Stellantis has received.
“Stellantis has been in Canada for over a 100 years now, and we remain committed to Canada,” Piruzza told the committee, pointing out the increased production at the company’s assembly plant in Windsor, just north of Detroit. — Bloomberg
