Cars move along the assembly line at Honda’s manufacturing plant in Alliston, Ont.Fred Thornhill
Honda Motor Co. Ltd. will invest more than $408-million to upgrade its Alliston, Ont., assembly plant, backed by grants from the federal and Ontario governments that will bring total spending on the plant to about $492-million.
The auto maker will upgrade the factory's paint shop to reduce greenhouse gas emissions by 44 per cent and do research and development to support the production of future vehicle models, company and government officials said in a statement. The announcement was made Monday afternoon at the Alliston plant.
The Honda plan brings the total of investments committed by vehicle manufacturers in Canada to more than $2-billion in the past four months – a shot in the arm for the industry and an indication that auto makers believe sales in North America will remain robust for the next few years.
The two governments will spend about $41.8-million each, the statement said.
The federal grant represents a key shift in how Ottawa offers financial support to existing auto makers and how it is changing its strategy to attract new investment.
The money for Honda will come from the Automotive Innovation Fund, which the federal government has changed so that it now offers companies grants, instead of repayable loans.
That change was made after heavy criticism from the industry that the loan program was actually punitive because Canada Revenue Agency treated the loans as income and taxed them.
The federal government did not participate in Honda's $857-million redevelopment of the plant in 2014 to build the next generation Civic compact. Ontario provided an $87.5-million grant to the auto maker.
Background documents distributed at an Ontario government kiosk at the North American International Auto Show in Detroit show that the federal fund now has $1-billion available to offer auto makers to upgrade existing factories or open new facilities in Canada.
The documents show that Ontario's Jobs and Prosperity Fund has $2.7-billion available.
That combined figure "is enough to get people's attention," said a senior industry source.
Honda Canada Mfg. in Alliston assembles Honda Civic compact cars and the CR-V crossover, the No. 1 and No. 2 sellers in Honda's lineup in Canada.
"Technology and innovation never stand still, so it's essential that Ontario's auto sector remains globally competitive," Brad Duguid, Ontario's Minister of Economic Development and Growth, said in the statement.
The federal government's support for clean technology in the auto sector is part of its "plan to drive economic growth through innovation," said Navdeep Bains, federal Minister of Innovation, Science and Economic Development.
During contract talks with Unifor last fall, the Detroit Three auto makers committed to investments of $1.6-billion in their Canadian operations, including assembly plants, engine factories and engine parts facilities.