Ottawa to Serve Stellantis with a Notice of Default Over Production Shift to the U.S.

• Stellantis moved the planned production of the next Jeep Compass from Brampton, Ontario, to Belvidere, Illinois, in October.

• This breaches agreements between the automaker and the government, which required Stellantis to keep its full Canadian footprint.

• Since the company still hasn’t announced new plans for its Brampton facility, Ottawa is serving a notice of default.

Since the automaker still hasn’t announced future plans for its Brampton factory and the workers it employs, the Canadian government will serve Stellantis with a notice of default.

Industry Minister Mélanie Joly told the International Trade Committee in Ottawa yesterday that “[The government] will stand firm for the sake of our workers, our industries and our nation because defending these jobs means defending Canada’s economic backbone and the livelihoods of countless families”.

This comes over a month after the automaker announced it wouldn’t manufacture the next generation of the Jeep Compass in Brampton, Ontario, as it originally planned, but instead in Belvidere, Illinois.

This decision was motivated by the threat of tariffs imposed by the Trump administration in the United States, with the president also having repeatedly said he doesn’t want cars manufactured in Canada to be sold in the U.S.

While Stellantis is getting most of the backlash in Canada, General Motors also stopped production at its CAMI factory in Ingersoll, Ontario, last month.

GM says its decision is unrelated to the Canada-U.S. trade relationship and based solely on the lacklustre sales of the electric delivery vans that were manufactured there.

Back to Stellantis’ case, the Canadian government indicated last month that it would pursue actions against the automaker if it didn’t come up with a plan to reopen the Brampton plant within two weeks.

That deadline went by without updates from the company, which also operates a factory in Windsor Ontario.

Now, Ottawa is serving Stellantis with a notice of default on contracts the automaker had agreed to in order to receive federal funding over the last few years.

Indeed, Stellantis benefited from $222 million from the Canadian government over the last three years to help modernize and retool its two factories to allow the production of both combustion-powered and electric vehicles.

The government had also agreed to supply the automaker with up to $500 million for a new battery plant in Windsor, which recently started production of lithium cells used in energy storage units. This facility, operated by NextStar Energy, a joint venture between Stellantis and LG Energy Solutions, is expected to also manufacture automotive high voltage batteries at a later date.

Stellantis’ Absence at Parliamentary Committee Prompts Political Backlash

In return, Ottawa stipulated that the automaker had to maintain its full manufacturing footprint in Canada, which includes the Brampton factory and its 3,000 employees.

Pressed by Conservative MP Adam Chambers about whether the contracts included a job guarantee for 100% of Stellantis employees in Brampton, Mélanie Joly said “what I can tell you is there’s a job guarantee”.

According to the Minister, the automaker is considered in default because it has failed to fulfill the obligations it had agreed to in order to receive public funds.

Source: Automotive News Canada