Ford Motor Company is spending $700 million to retool its assembly plant in Oakville, Ont., in order to expand and improve its manufacturing capability to meet the rising global demand for the company's vehicles, the automaker said Thursday.
"Today's announcement is about solidifying jobs and becoming more competitive than ever before right here in Canada," Joe Hinrichs, Ford's executive vice-president for the Americas, said at a news conference at the plant.
The funding will allow the plant to produce several new Ford models that will be sold in North America and around the world, Hinrichs said.
The Oakville plant currently makes the Ford Edge, Ford Flex, Lincoln MKX and Lincoln MKT.
The federal government will pitch in $71.6 million, and Ontario will contribute $70.9 million to upgrade the plant.
Ottawa's contribution is part of the $250-million Automotive Innovation Fund that the government renewed earlier this year.
Ford also said it will increase its annual spending on Canadian-made auto parts by $200 million to a total of $4 billion a year.
2,800 jobs 'secured'
The investment will "secure" 2,800 jobs at the plant, the company said, but both the company and the union representing workers stressed the effect on employment will go beyond that because of the many jobs that are indirectly created as a result of the plant's operations.
"Every job in this plant supports another six, seven jobs," said Jerry Dias, president of Unifor, the newly formed union created with the merger of the Canadian Auto Workers and the Communications, Energy and Paperworkers.
Dias said the investment solidifies the future of the plant for "well over a decade" and is the result of hard-fought labour negotiations with the company.
"We won this investment; we earned this investment; we absolutely fought for this investment," he said at the Oakville news conference Thursday morning.
Dias said the investment is good news for workers but will also be a welcome boost to the economy and the automotive sector.
"It's not just about the new jobs; it's about the global platform, the increase in content. The auto industry in Canada is finally on the move," Dias said.
Move to global manufacturing
The "global platform" is a term used to describe auto manufacturers' shift toward more standardization of their products across international markets.
Car companies have cut down on customization and increasingly produce vehicles in much greater volumes for several markets at once with little adaptation and using fewer production facilities, said Darren Slind, regional automotive practice leader for Canada and Latin America for the market research firm J.D. Power.
"A Ford Fiesta is a Ford Fiesta is a Ford Fiesta no matter whether it's sold in Brazil, Mexico, Canada, the United States or Germany," Slind said. "Not that many years ago, many of the manufacturers had huge variation in their product lineup across the world. So, you had huge engineering design and production costs related to maintaining all of these different variations, these different platforms."
Ford and other manufacturers such as GM and Toyota have led the way in trying to reduce that variability and produce in much greater quantities across each of their platforms, Slind said.
Ford said in a news release Thursday that only nine production platforms produce 85 per cent of its vehicles and that the global style of manufacturing will be a major focus of the planned changes at the Oakville plant.
"The global platform idea will give Ford more flexibility to adjust production volumes and, potentially, production mix of models based on how demand evolves over the coming years, and you don’t get that huge pause and the costs involved in switching over the old technology way of producing," Slind said.
Quick response to consumer demand
More flexible methods of manufacturing that allow plants to quickly respond to changing demands in the automotive market and switch from one vehicle model to another without having to shut down production for long periods are becoming the norm, Slind said. And if Oakville makes the transition to these production methods successfully and the automotive market remains strong, it could potentially mean the creation of new jobs at the plant — and not just the retention of existing jobs.
'Investing in advanced manufacturing is exactly what we need to do to keep our economy growing and cooking.' — Ontario Premier Kathleen Wynne
Upgrading the Oakville plant's technology so it can be more flexible and efficient, and more quickly respond to consumer demand will "help keep Oakville Assembly on the cutting edge of the developments of the global marketplace," said Dianne Craig, president and CEO of Ford of Canada.
The company said it will use the $840 million not only to make the plant more efficient but to research ways of makings its vehicles more fuel efficient.
"Those that anticipate, that innovate, will be the most successful," said Craig.
Ontario Premier Kathleen Wynne, who also spoke at the news conference, agreed that modernizing production methods at plants such as the one in Oakville is what will keep manufacturing alive in the province.
"This kind of investment plays to Ontario's strengths, and investing in advanced manufacturing is exactly what we need to do to keep our economy growing and cooking," she said.
The auto industry is the cornerstone of Ontario's economy, the premier said.
"When your industry does well, our province does well," she told the Ford workers and executives gathered at the Oakville Assembly Complex.
Auto market strong and growing
Slind sees Ford's investment as a recognition of the quality of manufacturing coming out of the Oakville plant over the 60 years that it has been producing Ford vehicles and a reinforcement of the company's commitment to its Canadian customers, who have made Ford the bestselling vehicle brand in the country.
But it's also an acknowledgment on Ford's part of where the market is headed.
"They're looking long term, and they're seeing growth in the global market," Slind said. "The global automotive market is projected to grow."
The co-called BRICS countries (Brazil, Russia, India, China and South Africa), in particular, will drive demand in the coming years, Slind said.
"The continuing emergence of the middle class [in the region] is going to drive continued growth in terms of global demand," he said.