GM Canada to spend $2.5-billion

GREG KEENAN, From Tuesday's Globe and Mail

General Motors of Canada Ltd. will unveil a long-awaited $2.5-billion investment Wednesday at its Canadian assembly plants that includes a major boost to its research and development spending in Canada.

The auto maker has reached a deal with the Ontario and federal governments for more than $400-million in financial assistance that will bring flexible manufacturing to its two car assembly plants in Oshawa, Ont., a new product line to its St. Catharines, Ont., engine plant and investments in research and development at several Ontario universities.

The investment confirms information The Globe and Mail reported first last year.

The announcement, to be made at the auto maker's Canadian operations in Oshawa, is the second major boost to the auto assembly sector in Canada in the past six months.

Government and industry officials have watched with frustration in recent years as Alabama, Mississippi, Texas and other southern U.S. states won billions of dollars' worth of new investments and Canada was shut out.

But a $500-million fund established by Ontario to lure new investment has helped land the GM project, sources said.

Ottawa was also keen to help land a major auto investment and will chip in $200-million, mostly from corporate programs such as the controversial Technology Partnerships Canada (TPC). Immigration Minister Joe Volpe is expected to be at the announcement.

Ontario is expected to chip in at least as much as Ottawa.

The GM announcement comes on the heels of a $1-billion infusion by Ford Motor Co. of Canada Ltd. at that auto maker's operations in Oakville, Ont. The two governments kicked in about $200-million for the Ford project, which involves converting the Oakville Assembly Plant to a flexible manufacturing facility.

The GM project ensures a solid future for about 10,000 GM Canada employees and could lead to a third shift of workers at one of the plants. GM now operates one car and one truck plant in Oshawa on three shifts and another on two shifts.

Money will also be earmarked for the auto maker's joint venture assembly plant, Cami Automotive Inc. in Ingersoll, Ont.

GM's “Beacon Project” calls for an investment of about $135-million in research and development that will be conducted at various universities throughout the province. GM will also develop an automotive Centre of Excellence R&D facility in co-operation with a university, likely the Ontario Institute of Technology just east of Toronto.

GM Canada is the Canadian arm of the world's largest auto maker.

With files from reporter Simon Tuck in Ottawa