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Ivison: Industry Minister Champagne ‘saves’ the Canadian auto sector

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John Ivison talks to Industry Minister Francois-Philippe Champagne, who is now in Europe to sell Canada to executives at Volkswagen and Mercedes-Benz

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In this week’s episode, John Ivison talks to Canada’s industry minister, Francois-Philippe Champagne, who has just jetted off to Europe to sell Canada to senior executives at automakers Volkswagen and Mercedes-Benz.

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Canada signed agreements with both companies last summer to collaborate on electric vehicles and battery supply chains.

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Champagne tells Ivison that he is set to present before 400 Volkswagen managers on Thursday, with an eye on the prize of a battery cell plant. German executives have been vocal that Europe is not cost-competitive when it comes to the price of electricity and gas for energy intensive manufacturing, even though Volkswagen has said it will build six battery cell plants on the continent. Champagne’s pitch is that Canada has the talent, existing battery infrastructure, critical minerals and cheap renewable energy the automaker needs.

“I know this is going to pay dividends,” he said. “I can’t say everything now or you’re not going to follow me the day of the announcement. I have to have a bit of surprise. But Germans being Germans, they rarely invite you to their board meetings just to chat. It is about building long-term strategic partnerships and I want to be the green supplier of choice.”

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The irrepressible industry minister has gone a long way to fulfilling the mandate letter given to him by the prime minister in building a “mines to mobility” strategy in the EV market. Since taking on the portfolio in January last year, he has made 10 announcements for a total of $15 billion of new investment, including the multi-billion plan by Stellantis (formed from the merger of Fiat-Chrysler and Peugeot) to build electric vehicles at its plants in Windsor and Brampton. Other automakers with plants in Canada – Honda, Toyota, GM and Ford – have also committed to building EVs and hybrids at their existing facilities. “We have saved it,” Champagne said, referring to the Canadian auto industry.

Critics like the Wall Street Journal contend that the global bidding war to win EV and battery plants is the greatest corporate welfare program in history”, and that the retreat behind subsidy walls like the U.S. Inflation Reduction Act are modern mercantilism, using subsidies and tariffs to maximize exports and minimize imports.

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But Champagne is unapologetic. “I never win on the money. There are some folks who have more money than we can put on the table,” he said.

If we didn’t put up the subsidies, would we lose? “I don’t think we could even consider that. Governments have to be part of the equation to level the playing field,” he said. “Honestly, if you look at the return on investment, for example from the LG Stellantis plan (to invest $5 billion in a battery manufacturing plant in Windsor), that’s thousands of jobs for decades to come, hundreds of millions of dollars of operation costs per year. We need to be judicious but also to keep up our relative proportion of the auto sector in Canada.”

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Having helped to establish a battery ecosystem in Canada, Champagne’s next goal is to attract a semiconductor fabrication plant. “That’s my dream. Canada does not have a fab, the only country in the G7 that does not. It’s within Canada’s ambit to have a ‘legacy’ (less advanced) semiconductor plant for the auto sector That’s the sweet spot for Canada,” he said.

Champagne downplayed the prospect that he might decamp federal politics and seek out the vacant leadership of the Quebec Liberal Party. “Not for now,” he said. I love what I do and the flame is still there. The 21st century is our moment to shine – we have everything the world wants and needs and it’s for us to make the case.”

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