By Paul Vieira
OTTAWA--Canada estimates that officials will aim to recover "hundreds of millions of dollars" from Stellantis and General Motors after the companies scaled back production in the country, Industry Minister Melanie Joly said Tuesday.
Joly told reporters she would provide more details in the coming days. Seeking compensation of that scale is likely to escalate tension between Ottawa and North American auto makers, whose share of automobile production in Canada has declined steadily in the past decade.
Canadian officials and representatives from Stellantis have been in talks since at least November after the automaker said it would shift production of the Jeep Compass from a factory in Brampton, Ontario, to Illinois. Earlier this decade, Canada provided the equivalent of just over 1 billion Canadian dollars, or the equivalent of $731 million, to the automaker to reconfigure the Brampton plant and maintain production in Canada.
"A lot of our support was linked to production, and therefore if there was no production, obviously there was no funding," said Joly, prior to a cabinet meeting. She has previously threatened to sue Stellantis to get taxpayers' money back.
And last week, Joly told the Canadian Broadcasting Corp. that she would also seek money from GM after the Detroit-based company followed through last week on its plan to cancel a third shift at its factory in Oshawa, Ontario. Last October, GM also said it wouldn't resume production of an electric van at a factory in Ingersoll, Ontario, citing weak demand. At that time, Joly said she would seek repayment from GM on some of the C$260 million that Ottawa provided for the Ingersoll factory.
A spokeswoman for Stellantis didn't respond to a request for comment. Stellantis has previously said that it is working toward securing a sustainable manufacturing footprint in Canada, including Brampton. Furthermore, Stellantis said almost 240 employees from the Brampton factory accepted transfer offers to work at a company factory in Windsor, Ontario.
A spokeswoman for General Motors was not available for comment.
Toronto-based trade lawyer Mark Warner said he's skeptical the government can recover the funds disbursed to the North American automakers, in part because of the way the loans and payouts are structured. "Recovering funds from the companies can be seen as an aggressive response with an air of finality that governments traditionally want to avoid in order to preserve a chance for continuing investment," said Warner, who previously negotiated financing deals between the province of Ontario and auto companies.
Data from the Trillium Network for Advanced Manufacturing, a non-profit organization, indicate that the share of auto production in Canada from Stellantis, GM and Ford has declined to 23% last year from 56% in 2016. Conversely, Honda and Toyota account for 77% of auto production. Trillium Network, which is part of Western University in London, Ontario, said future government policy on encouraging auto production with financial incentives should shift its focus from the big U.S. car makers to Honda, Toyota and other foreign manufacturers.
U.S. car makers are under pressure from President Trump to relocate production from abroad to the U.S. Trump has repeatedly said the U.S. does not need cars imported from Canada.
Joly told the CBC last week that officials are looking to persuade Hyundai, Volkswagen and Chinese automakers to enter into the Canadian market. Last month, Prime Minister Mark Carney struck a deal with Chinese leader Xi Jinping in which Canada agreed to sharply lower tariffs on some China-made electric vehicles, with Carney adding there is a promise for increased investment from Chinese companies in the auto sector.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
02-03-26 1458ET
