Canadian Government Grants for Automotive Industry

Unifor, Canada’s largest automotive workers’ union, recently approved new 4-year labour deals with General Motors and Chrysler-Fiat Automobiles. The agreements, which also prevented a potential October 10 strike, will secure slight increases to wages and pensions of workers.

However, the real gains made through these negotiations come from securing new investments into Canadian production facilities.

Negotiations are now underway with Ford Motor Company, who is the final of the big-three Detroit automakers with investments north of the border. While it’s expected that Ford will follow the adjustments laid out through the previous two Unifor deals, slight modifications may be needed before approval.

Through these negotiations, business investment took a centre stage. Unifor understands that for automotive companies to remain competitive, they must invest in innovative, productivity-enhancing equipment. These are investments that will lead to job security and prosperity in Canada, and ultimately make the automakers more competitive.

How Negotiating Investments Secures Long-Term Competitiveness

Unifor used this round of negotiations to secure substantial investments from the big automakers. The union negotiated General Motors’ investment of $554 million into local plants over the 4-year deal. As opposed to negotiating purely over worker compensation, this can lead to long-term collaboration and success.

Automotive investments promote technology adoption and greater productivity; both will help Canadian automotive manufacturing become more sustainable in the long-term.

New technologies, which are redefining how vehicles are designed and built, will help Canadian producers lead the way when it comes to connected, autonomous vehicles. As vehicles become increasingly complex, technology investments will ensure Canadian-made vehicles are innovative, intelligent, and demanded worldwide.

Likewise, technology supports greater vehicle production efficiency. Although automakers in Canada must pay workers more than in nations with lower wage rates, technology and automated manufacturing can help decrease costs. Although automation reduces the amount of low-value manufacturing jobs required, it provides more room for workers to receive training and contribute to specialized high-value labour.

Government of Canada Invests in the Automotive Industry

Automotive manufacturers have shown more flexibility negotiating facility investments than other bargaining concessions. Although there are many reasons behind this, the primary decision to invest in Canadian operations comes from the range of government grants and loans automotive manufacturers may pursue to offset project costs.

The Government of Canada has been working hard to secure additional investments in the automotive sector. Last year, the Canadian Automotive Partnership Council (CAPC) announced the formation of a sub-committee that would focus on investment partnerships between the governments and five leading automakers. Now more than a year later, we’ve begun seeing governments making automotive funding more accessible. Likewise, it appears that the big automakers are more likely to invest with supports in place.

“[W]orking in close collaboration with the industry, the Government of Canada and the Government of Ontario are taking clear, proactive action to strengthen the future of Canada’s auto sector as the destination for auto investment.”
– James Moore, former Minister of Industry

One of the major changes in automotive funding over the last year has been the transitioning of the Automotive Innovation Fund (AIF) from repayable funding to a Canadian government grant. Although the program had some success as a loan, the government discovered that it wasn’t doing enough to encourage investment. By transitioning the program to a grant, or non-repayable funding, the country’s big automakers are showing much more interest.

While some may question this move, suggesting that the federal and provincial governments in Canada are handing out money to large corporations, the investment of these will help develop lasting operations in Canada. Even in the form of grants, these government funding programs ensure businesses are investing in technologies and processes which boost competitiveness and make Canada a more competitive, profitable country.

Canadian Government Funding for Automotive Investments

There are a range of Canadian government funding programs in support of the automotive industry. Grants and loans may be awarded for several types of investments, including capital adoption, research and development, hiring and training, as well as business expansion. Some of the most popular programs designed specifically for automotive manufacturers are:

The Automotive Innovation Fund (AIF) provides Canadian government grants for large-scale technology development and commercialization projects. Building more innovative, environmentally-friendly vehicles and vehicle components is the primary focus of AIF, which provides 10-15% of eligible costs for investments of at least $75 million.

The Automotive Supplier Innovation Program (ASIP) is a Canadian government grant providing up to 50% of eligible project costs to a maximum $10 million. This funding supports the development of innovative, new products and processes that increase the competitiveness of Canadian automakers. These innovations could be process improvements leading to greater efficiency, or new technologies resulting in superior vehicles.

Automotive Supplier Competitiveness Improvement Program (ASCIP) is a new Ontario government grant positioned towards auto manufacturers who are reducing greenhouse gas emissions while increasing or sustaining current productivity levels. The program reimburses up to 50% of project expenses to a maximum $100,000 grant, covering hardware, software, and training costs. Applicants must not be participating in the Government of Ontario’s Cap and Trade program.

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Jeff holds an Honours Bachelor of Business Administration at the University of Guelph. He is passionate about Canadian business, economics, and politics. As Marketing Coordinator for Mentor Works, Jeff educates business leaders about proactive funding strategies.

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