Feds, Ontario to invest $200M in Ford

The federal and Ontario governments are each spending more than $100 million to help Canada’s auto sector — an old-school engine of economic growth — and speed the dawn of the driverless, eco-friendly, Internet-connected car.

Prime Minister Justin Trudeau and Ontario Premier Kathleen Wynne announced conditional grants of up to $102.4 million each during an event Thursday at a Ford Canada engine plant in Windsor, Ont., the cradle of Canada’s auto industry.

The money is meant to support a $1.2-billion partnership with Ford Canada to create 300 jobs and maintain 500 more in Ontario, and help create an advanced manufacturing program in Windsor and a research and engineering centre in Ottawa.

The latter project is focused on developing connected car technology, including research and development on features like infotainment, in-vehicle modems, gateway modules, driver-assist features and autonomous vehicles.

Trudeau later elaborated on the high-tech theme during a visit to auto parts pioneer Magna International Inc. (TSX:MG), where he highlighted Ottawa’s five-year, $125-million investments in artificial intelligence — what he called a “platform” technology.

“In the same way that electricity revolutionized manufacturing, and the microprocessor reinvented how we gather, analyze and communicate information, artificial intelligence will cut across nearly every industry in Canada,” Trudeau said in Brampton, Ont.

“It will shape the world that our kids and grandkids grow up in, and we can either be a part of that, help steer its direction and take advantage of the good, middle-class jobs it will create, or we can watch other countries step in.”

Critics, however, denounced the auto-sector money as an archaic, horse-and-buggy approach to fostering economic growth that does nothing but drain government coffers and line corporate pockets.

“It is ludicrous to suggest that Ford ‘needed’ a $200-million handout from Ontario and Canadian taxpayers, as the company earned a global pre-tax profit of more than US$10 billion in 2015,” the Canadian Taxpayers Federation said in a statement.

“Corporate welfare is an unsustainable, wasteful and unfair approach to economic development that creates perverse incentives and teaches businesses that the key to success is to cosy up to governments for free taxpayer money.”

The $125 million in AI funding, announced in last week’s federal budget, is aimed at supporting existing AI institutes in Toronto, Edmonton and Montreal, establishing so-called “deep learning” research chairs at universities across the country, setting up a national training program and fostering collaborations with industry, he added.

Also Thursday, Finance Minister Bill Morneau paid a visit to the Vector Institute, a burgeoning facility in Toronto that’s widely pegged as the new international hub for AI innovation.

Trudeau was asked about how Canada’s social safety net might need to change in order to support workers as they make the shift from the traditional workforce to high-tech, high-demand jobs.

His answer — get more younger kids learning to write code; push university students towards degrees in deep learning and AI; provide incentives for workers to go back to school and encourage companies to innovate and invest in technology — implied the shift would not be easy.

“There are going to be challenges,” Trudeau said.

“The choice we have to make as a country is: Do we resist it and try to hide from it, or do we engage in it? … I have tremendous confidence in Canadians — hard-working, value-driven, innovative, well-educated, excited — and our capacity to give them the tools to be successful (that) they’re asking for.”

In recent months, the federal and Ontario governments have actively discussed major investments in the big automakers. Last December, one auto union leader estimated the combined public investments could reach hundreds of millions of dollars.

After the conclusion of labour negotiations last year, the auto companies launched talks with Ontario and Ottawa about investing in an industry critical to both economies. The automotive sector employs about 125,000 people in assembly and parts production.

Last week’s federal budget proposed to consolidate several “business innovation” programs, including the Automotive Innovation Fund and the Automotive Supplier Innovation program. Both offer “non-repayable contributions” for the auto sector.

Earlier this year, Ottawa made changes to its Automotive Innovation Fund that enabled the government to provide grants to car companies. Before the changes, the program offered loans.

In its budget, the feds proposed to roll the two auto programs under a new, broader umbrella called the Strategic Innovation Fund, which will allocate $1.26 billion over five years.

Federal Economic Development Minister Navdeep Bains, who also attended the Windsor announcement, has said the feds are open to helping the automakers expand their footprints in Canada.

He has indicated a particular interest in investments that would support the more technologically advanced and research-focused areas of the auto industry.

Bains, in charge of overseeing Ottawa’s “innovation agenda,” has also said the government wants to make sure Canada is on the “cutting edge of the car of the future.”

Last year, the three largest North American automakers committed to pump more than $1 billion combined into their Canadian operations following contract talks with their unionized workers.

Ford has said it would invest about $700 million at its Ontario facilities.

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