AIF Investment Announcement—Honda of Canada Manufacturing

Introduction

The Government of Canada is committed to creating jobs, growth and long-term prosperity and to keeping Canada's automotive manufacturing sector globally competitive and innovative.

To this end, on January 9, 2017, the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, announced an investment of $41.8 million over three years in Honda of Canada Manufacturing (HCM). In addition to retaining 4,000 jobs in Ontario, this funding will support advanced and clean technologies and position HCM's Alliston plants to be globally competitive for years to come.

About the project

HCM will use the funds to prepare the main assembly lines for the next generation of Civic and CR-V models and to complete a new state-of-the-art and energy-efficient paint shop. These enhancements are expected to further anchor Honda's presence in Canada.

About Honda of Canada Manufacturing

HCM operates as a wholly owned subsidiary of Honda Canada Inc., which reports to Honda Motor Co., Ltd., a global automotive industry leader, headquartered in Tokyo, Japan. HCM constructed its first facility in Canada in Alliston, Ontario, and started production in 1986. The facility now consists of four plants, including two vehicle production plants, one engine plant, and a stamping forming plant.

HCM employs 4,000 contracted and full-time staff and produces the Civic and CR-V models. The company produced approximately 385,000 vehicles and 221,000 engines in 2015.

About the Automotive Innovation Fund

In 2008 the federal government introduced the Automotive Innovation Fund (AIF), providing $250 million over five years to support strategic, large scale research and development projects in the automotive sector that support innovative, greener and more fuel efficient vehicles. In 2016, AIF was extended until March 2021, changes were made to provide both payable and non-repayable contributions, expanding the list of eligibility costs to include land and buildings, and increase the maximum amount of contribution from $250 million to $500 million for greenfield investments. 

 The objectives of the AIF are to:

  • build automotive research and development (R&D) capacity in Canada and secure knowledge-based jobs through the growth of a strong automotive industry;
  • enhance the government's inclusive innovation, science and technology (S&T) and environmental agendas;
  • support the development and/or implementation of innovative, fuel efficient technologies or processes;
  • promote long-term economic benefit to Canada including significant job creation/retention;
  • Serve as a catalyst for private sector investments to foster Canadian competitiveness, including investments in production equipment or processes and next-generation manufacturing technologies.

Very clear parameters have been established to define the kind of investment that would qualify for a non-repayable contribution. ‎A non-repayable contribution under the AIF must be strategically significant in nature. To be considered for non-repayable contributions, projects must meet one or more of these criteria:

  • Leveraging advanced technologies—Development, deployment or production of key industry technologies that are shaping the direction of the automotive industry and that build on Canada's technological strengths, helping position Canada as a global industry leader, including, but not limited to, lightweighting and other new material formulations or processing techniques; connected and autonomous vehicle technologies; and vehicle software, hardware and other future-oriented information technology innovations.
  • Investing in clean technologies—Significant development, adoption and/or production of clean vehicle technologies and other innovative products that promote Canada's climate change and environmental agenda, including, but not limited to, alternative powertrain systems (including fuel cell and fuel storage systems), vehicle electrification (including controls and/or performance optimization) and other zero-emission vehicle technologies.
  • Securing existing facilities into the future—Investments necessary to secure globally significant mandates (immediately or in the future) that will serve to anchor facilities over the longer term (10 or more years) and that will help attract and retain further investments (spillover benefits), including investments in significant productivity improvements, strategic partnerships, and deployment of head-office or R&D functions related directly to the implementation and operation of the project within Canada.
  • Growing Canada's automotive footprint—Establishment of greenfield or expanded manufacturing or R&D facilities that will significantly contribute to innovation, job creation and global value chain opportunities.

To date, the Government has committed close to $467 million through AIF, leveraging up to $3.13 billion in R&D and innovation investments in Canada's automotive sector and is contributing to:

  • the development and commercialization of new products;
  • advanced and expanded flexible manufacturing processes and facilities;
  • enhanced R&D capacity;
  • leading-edge engineering and design; and
  • made-in-Canada innovation.

The Government has supported the industry through the AIF as follows:

  • July 31, 2015—Toyota Motor Manufacturing Canada—up to $59 million to install new tooling and equipment for the production of the new Lexus RX 350 and 450h (hybrid) models and to add a new stamping line.
  • January 12, 2015—Linamar Corporation—up to $50.7 million to conduct R&D, to design, build and test prototypes, and to install equipment for the production and commercialization of powertrain components for all new next—generation transmissions for vehicles.
  • September 19, 2013—Ford Motor Company of Canada—up to $71.6 million to install a state-of-the-art global manufacturing platform at its Oakville Assembly Plant and to conduct fuel consumption and emissions R&D.
  • January 23, 2013—Toyota Motor Manufacturing Canada—up to $16.87 million to establish an assembly line for the new Lexus 450h (hybrid) model, supporting hybrid expertise in the Canadian supplier base, and to increase the capacity for the RX 350 model in Cambridge, Ontario.
  • February 17, 2012—Magna International—up to $21.79 million to develop energy—efficient components for vehicles and innovative powertrain components for next—generation vehicles.
  • July 5, 2011—Toyota Motor Manufacturing Canada—up to $70.84 million to maximize production efficiency, reduce emissions and upgrade equipment to enable the production of more fuel—efficient vehicles.
  • September 21, 2009—Linamar Corporation—up to $54.8 million to develop components and modules within three product areas: transmissions, engines and drivelines.
  • September 3, 2008—Ford Motor Company of Canada—up to $80 million to establish a flexible engine assembly plant and create an advanced powertrain research centre in Windsor, Ontario.

Canada's approach to creating a competitive automotive industry

Canada has much to offer the automotive manufacturing industry: the Automotive Innovation Fund and the Automotive Supplier Innovation Program, a large and sophisticated supply cluster, the new Gordie Howe bridge linking Windsor and Detroit by 2020, access to generous support for automotive R&D, a stable economy, low corporate taxes, a highly skilled and productive workforce, well-developed infrastructure, access to numerous markets due to our free trade agreements and a favourable environment for automotive success.

The AIF is part of the government's broader approach to create economic conditions that support a strong Canadian auto industry. The government's approach also includes a fiscal and economic framework that will keep the industry competitive, including:

  • a sound banking system;
  • the lowest overall tax rate on new business investment in the G7;
  • the lowest debt—to—GDP ratio in the G7;
  • a triple—A credit rating; and
  • investments in automotive R&D.
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