Volkswagen has taken a page from Amazon’s HQ2 book.
When Amazon announced its search for a second headquarters site in 2017, cities across North America rolled out the red carpet with attention-grabbing tech-friendly policies.
While it’s only been two weeks since German automaker, Volkswagen, launched its Canadian gigafactory-site search, officials from Welland, Ont., and the province’s Durham Region have been quick to advertise that they’re shovel-ready.
None of them would disclose to The Logic whether they were already in talks with VW—but all said they’d be open to it.
“Our economic development, planning and permitting teams would all line up behind an investment like this to support it. … An investment of this size would be at the top of the pile,” said Simon Gill, director of economic development and tourism at Invest Durham.
VW has been open about what got Canada on its shortlist, though it has said it still has other yet-to-be-named options in North America and there are “intensive negotiations” to come in the site search. Volkswagen Canada CEO Pierre Boutin told The Logic in September that Canada’s renewable energy and critical minerals like cobalt were the key attractions, above and beyond government subsidies.
Speaking from Germany earlier this month, Innovation Minister François-Philippe Champagne said he was “seeing significant interest for both Ontario and Quebec” and he believed a successful site would have five factors: Access to talent and reskilling support (benefitting from Canada’s immigration policies), an existing automotive ecosystem, proximity to larger markets (the U.S.), critical minerals and clean energy.
Behind the scenes, things get more granular: Gill said Durham would pounce on electrical-line extensions, water and natural-gas connections, and public consultations, if talks got underway. But Durham can see itself aligning with Champagne’s criteria, with proximity to the Greater Toronto Area talent pool and rail and air hubs, a supply chain that already feeds General Motors R&D in Oshawa with facilities like the ACE climate-testing tunnel, and access to Canada’s first grid-scale small modular reactor.
Lina DeChellis, Welland’s manager of economic development, and Steve Zorbas, its chief administrative officer, emphasized the Southwestern Ontario region’s canal system, affordable cost of living, municipally owned utility network, and quick permit approval for industrial sites.
Shelley Hirstwood, director of business development at Kingston Economic Development Corporation, pointed to the region’s metallurgy and chemical-engineering history, its relationships with battery businesses like the recycler Li-Cycle and Volkswagen supplier Umicore and its early action on climate change as a few potential selling points.
Windsor successfully clinched a battery-plant commitment from LG and Stellantis earlier this year. The commercial real estate firm, CBRE, attributed much of Windsor’s brisk business this year to electrification, and said the industrial availability rate hit an all-time low of 1.2 per cent in the second quarter.
CBRE’s Brook Handysides and Brad Collins have been working on Windsor’s industrial real estate portfolio, including the site next to the new battery plant. They said that as companies like Amazon snap up commercial properties for warehouses near bigger city centres like Toronto, affordable real estate and logistical hub expansions like the Gordie Howe International Bridge have been key for industrial clients in the battery supply chain.
“Folks at Invest WindsorEssex and the city of Windsor are actively in South Korea, trying to lure these companies to our community and offer those incentives,” Handysides told The Logic. “I think that we will see some significant activity in terms of deal creation next year.”
In the first half of the year, Windsor had 62 commercial real estate transactions worth $328 million, with industrial properties making up 20 of those deals.
Even before the VW announcement, other communities like St. Thomas, Ont., had already begun betting on the EV business to revitalize their local economies, putting aside “mega-sites” of land for potential investors.
Despite the economic potential, Durham Region’s Gill said he’d still be happy to see a gigafactory go to another location in Ontario or even across the country.
“Above all else, it’s important that we ensure that Canada puts their best foot forward for major strategic investments such as this,” Gill said.
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