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The federal and Ontario governments will try to advance the greening of Canada's auto industry by putting new money into research and development and production of parts for environmentally-friendly vehicles.

The federal government will invest approximately $11-million to help create the McMaster Automotive Resource Centre at McMaster University in Hamilton, Ont., which will focus on research and development of hybrid and electric vehicles. The centre is expected to employ about 120 to 150 workers from the private, public and academic sectors and will provide training opportunities for manufacturing employees.

In a separate announcement, the Ontario government will spend about $2-million and parts maker Dana Holding Corp. another $40-million to create about 50 jobs at a Dana plant in Cambridge, Ont., that will assemble heat exchangers to be used on batteries in electric vehicles.

The announcements, both of which will happen today, will boost Canada's share of the mushrooming investment by auto makers and their suppliers to develop hybrid and battery-powered vehicles and the parts that go in them. Auto makers are spending billions of dollars to meet new fuel economy mandates put in place by the U.S. federal government that require them to effectively double fuel economy to 54.5 miles per gallon by 2025.

Global auto makers are developing more than 400 hybrid or electric vehicles, said Bill Pochiluk, president of auto consulting firm AutomotiveCompass LLC, but there is only enough projected sales volume for 40 of the vehicles to be successful.

The Ontario government in particular is determined to make sure the province gets its fair share of the spending boom as the auto makers develop greener vehicles. Michigan, which ranks second to Ontario among auto making states and provinces, is also focusing intensely on attracting investment by battery makers, makers of electric-vehicle parts, and auto makers themselves.

Ottawa has also jumped in to bolster Ontario, combining with the province to provide about $140-million to Toyota Motor Manufacturing Canada Inc., which will assemble the electric version of its RAV4 crossover in Woodstock, Ont.

The new McMaster project builds on that university's existing expertise in lightweight materials and auto manufacturing innovation.

"The industry players are very excited about it," said one federal source familiar with the announcement.

Dana, which makes such parts as axles, driveshafts, heat management equipment and fuel cell components, operates six facilities in Canada. The company's research and development centre for battery cooling systems is located in Oakville, Ont.

The Ontario government is also scheduled to make another announcement Wednesday to bolster another company in the province's manufacturing sector, which is still recovering from the recession and is also battling the rise in the value of the Canadian dollar against the U.S. currency.

Centra Industries Inc., which makes parts for airplane manufacturers will spend about $25-million and receive $3-million from Ontario to create about 100 jobs, also in Cambridge.

With a file from Shawn McCarthy

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