Problems with "Green Energy" Projects
Massive New Subsidy for Volkswagen Battery Facility to be Built in St. Thomas, Ontario
On April 21, the federal government announced that it is giving Volkswagen $700 million dollars up front and then up to $13.2 billion in subsidies over 10 years tied to production volumes, to build its first large scale electrical vehicle battery production plant (known as a gigafactory) in North America, in St. Thomas, Ontario. The facility is estimated to be the size of 391 football fields once constructed, which would make it the largest factory in Canada, and is said to cost $7 billion to build. Reports indicate that Volkswagen and the government are claiming it will employ "up to 3,000 people." The Ontario government has also committed $500 million in direct incentives to the company in addition to funds to support local infrastructure.
Frank Blome, the CEO of PowerCo, VW Group's battery and
production division, stated that the plant will have six
production lines and will make enough batteries for one
million cars per year. VW has plans to make 25 new electric
vehicle models in the coming decades, and most of their
batteries will come from St. Thomas.
Canadian officials have confirmed that the terms of the deal
match what VW would have received in subsidies from the U.S.
government should it have chosen the U.S. for this plant. This
reveals the way governments are catering to large auto
monopolies with pay-the-rich schemes. Electrek reports that
the deal is also proportional to the Inflation Reduction
Act in the U.S. "If the U.S. subsidies go away, so do
Volkswagen's in Canada. If they are reduced, Canada's will
too," Eletrek says. The Ontario government informs explicitly
that the incentives are meant to match the U.S. legislation
equaling USD$35 per kWh of energy storage produced. Canada
will provide its incentives "for what is produced and sold and
will phase out by 25 percentage points every year beginning in
2030 (after 2032, the credit would be eliminated)."
PSAC workers held a rally in St. Thomas, outside the venue where the announcement was made by Prime Minister Trudeau. Their chants asserting their rights made a mockery of Trudeau's Canada. "Canada has the advantage because of the workers themselves, people who know how to deliver exactly what the world wants," Trudeau said in St. Thomas at the announcement of the project. Public service workers also know how to deliver what the world wants, but they are not considered worthy of the billions the government is handing over to the German supranational Volkswagen. "This is more than a gigafactory. It's an understanding that the future is going to be strong and bring for the people here and the people across the country," Trudeau said.
"This deal is about workers," Trudeau continued. "It will be worth $200 billion to the Canadian economy over the coming decade. Cleaner environment, a stronger, healthier happier work force, partnerships with Indigenous peoples, that is how we build a strong economy of the future." He claimed the project will create up to 30,000 indirect or spinoff jobs.
Ontario's Minister of Economic Development, Job Creation and Trade Vic Fedeli said:
"This is the largest auto investment in the province's history. It's a complete turnaround of the auto sector in three years. We're back. Ontario is back,"
Andreas Schotter, Professor of international strategy at the Ivey School of Business at Western University and a former marketing sales controller for North America at Volkswagen, said:
"That [U.S.] Inflation Reduction Act has really pushed up the need to open the pockets wider for attracting investments in green technology and battery plants. Otherwise, the plant would have been put in the United States or Mexico, but likely the U.S."
According to Schotter, "We need to attract industry." "Volkswagen is a global player. Attracting this plant here, from a Canadian perspective, makes sense. Price tag? You pay the price and you get them."
Unifor National President Lana Payne said:
"The scale of the transition to electric vehicle production cannot be overstated, with fierce competition around the world for facilities and the long-term employment that comes with them. The federal government's latest investment shows that Canada is willing to put money and vision into a bold industrial strategy. Securing the VW battery plant is a historic win but it's vital that workers share in this investment with good paying union jobs."
She added, "Unifor has long advocated that government investments must be conditional on continued production, but the company's obligations shouldn't end there," she said "VW is a new addition to the Canadian auto footprint and we fully expect the company to uphold our work standards and to respect their workers' right to organize."
(With files from CBC, CTV, Unifor)
This article was published in
Volume 53 Number 4 - April 2023
Article Link:
https://cpcml.ca/Tmlm2023/Articles/M530044.HTM
Website: www.cpcml.ca Email: editor@cpcml.ca