Sale and Closure of Stellantis Brampton Plant not a Done Deal

The biggest single consequence from Donald Trump’s trade war against Canada so far is unfolding in Brampton, Ontario. A vehicle assembly plant there, owned by Stellantis, is up for sale by the company, which shifted (at Trump’s behest) production of a future new model from Brampton to Illinois. Stellantis wants to sell the plant to Roshel, a company that makes low-volume military vehicles, and has made no commitments to production or employment levels, or to hiring any of the existing staff at the plant.

Centre for Future Work Director Jim Stanford appeared on CTV News Channel to discuss the implications of the sale of the facility to Roshel, and the thousands of direct and indirect job losses if the facility ends mass vehicle assembly. He stressed that the sale of the plant to Roshel has not been executed, and called on the federal government to exercise its influence to cancel that proposal, and re-engage with Stellantis around possible plans for vehicle assembly in the future.

Contrary to claims by Roshel’s CEO, this plant is not a decrepit empty shell. It has been closed for retooling, to install hundreds of millions of dollars of state-of-the-art equipment. It is one of the most modern, efficient auto plants on the continent. If it were not for Stellantis’ move to appease Trump last year by shifting one future model to the U.S., the plant could be producing next-generation vehicles now.

There are many levers the federal government could pull to stop the sale, and force Stellantis back to the drawing board to consider future possibilities for mass market vehicle assembly:
1.      Investment Canada act
2.      Enforcing the terms of the 2022 subsidy deal (including extending it to any new owner)
3.      Tweaking tariff remission to more painfully punish any automaker who violates production commitments
4.      Working with Brampton on zoning to sustain auto production
5.      National security powers related to military procurement
6.      Simply telling Roshel it won’t buy armoured vehicles made in that plant

The last of these options alone would lead to cancellation of the deal, since Roshel has stated its purchase of the facility is fully contingent on confirmed contracts to sell armoured vehicles to the federal government. Roshel can build those vehicles elsewhere, and there are other suppliers who could be approached instead (including General Motors, which has a currently idled plant in Ingersoll, Ontario, which it is keeping in working order for future vehicle assembly – unlike Stellantis’ plan to sell the Brampton plant).

Ottawa’s mixed messages on this whole saga, including fanning false hopes that low-volume military production or low volume kit car assembly could somehow replace a full-scale auto assembly plant (with an enormous supply chain behind it), have heightened the risks here. But it is not too late for Ottawa to take a clear stand.

The most painful irony of this crisis: Donald Trump’s devastating election loss last week confirms that his tariffs will not last for long. There’s a light at the end of the tunnel for Canada’s auto industry – but pulling the plug on this plant now could start a cascade that would turn that light off. Even idling this plant until the tariff war ends is much better than closing it forever.

One historical tidbit: after helping with the restructuring and rescue of Chrysler after the 2008-09 global financial crisis, the federal and Ontario governments owned a small equity share in the company. But they sold that off interest too quickly (in 2011). Public equity in strategic firms can help a lot at moments of crisis, and this is a lesson that could apply to other situations (such as the crisis at the Stelco steel plant in Hamilton).