A new Volkswagen automotive manufacturing plant in St. Thomas may bring supplier plants and industries with it, creating an additional 5,000 jobs, the president of the Automotive Parts Manufacturing Association says.
The German automaker’s investment in an electric vehicle battery maker is expected to employ 2,000 to 3,000 when it opens in 2027, said officials with knowledge of the plant that was announced Monday by the company.
But that just may be the start, Flavio Volpe, president of the Automotive Parts Manufacturing Association, said.
“The investment by VW helps to bolster the business case for suppliers to locate and invest in the region,” he said Tuesday. “I expect the new business will create approximately 5,000 new jobs in the supply chain in the region.”
Those suppliers will likely be Tier 1, meaning they will supply the assembly plant directly, with Tier 2 suppliers producing parts and goods to larger suppliers that will sell to Volkswagen.
Existing established suppliers, such as Magna that has two plants in St. Thomas, may also land work supplying the automaker or some of its suppliers.
“London and St. Thomas are well positioned to secure the bulk of the new capacity. The ability and availability of the local workforce was of particular interest to VW,” Volpe said.
PowerCo SE, the battery division of VW, is expected to begin electric vehicle battery production at its newest “gigafactory” in St. Thomas in 2027. The plant will be built on a section of a 600-hectare (1,500-acre) plot of land assembled in St. Thomas for large manufacturing investment.
VW and municipal officials did not release details on the value of the investment or the scale of the plant.
“What we can confidently say is that a battery plant needs components supplied like an assembly plant,” Volpe said. “These are large, high volume parts like tray and thermal management systems. They will all follow just-in-time principles, so sourcing would bias closer capacity.”
EV manufacturers will create a new supply chain, offering work that cannot be done solely by existing traditional suppliers, he said.
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Since Windsor landed the 2,500-job NextStar Energy EV battery plant – a partnership between Stellantis and LG Energy Solution Ltd. – about a year ago, it already has attracted one 300-job supplier plant and another is in the approval process, said Jelena Payne, commissioner of economic development and innovation with the city of Windsor.
“We field inquiries from the supply chain on a weekly basis. We are definitely seeing a lot of suppliers coming in, we are having a lot of conversations,” she said.
The one approved supplier makes casing for batteries.
“It is a whole new supply chain network, but there are opportunities for some existing suppliers to grow.”
St. Thomas Mayor Joe Preston said the size of the plant will be revealed at a later date, but he and the federal Minister of Innovation, Science and Industry described the VW plant as historic.
“This will be the largest automotive facility in Canada, ever,” said Preston. “This is about as good as it gets. We have secured the future of St. Thomas, it does not have to look back again. This is a day we will remember.”
He agreed the supply chain will grow, to feed the VW investment.
“Feeder plants will certainly come here or near here.”
VW chose St. Thomas over 40 competing sites in the U.S. because it had a large land parcel ready for building, is close to mineral supplies such as cobalt and lithium in northern Ontario and has a clean energy supply and manufacturing workforce.
The federal government also offers incentives for battery investment.
In August, VW and Mercedes Benz signed a memorandum of agreement, referred to as a “battery material co-operation agreement” with Canada for access to lithium, nickel and cobalt, minerals critical for battery production.
Volkswagen has a target to build six large battery cell factories in Europe by 2030 with a capacity of around 240 gigawatt-hours, in addition to the St. Thomas site.
The land in St. Thomas is already being cleared and prepared for construction, including demolishing buildings.
“These will be good jobs, high-paying jobs, tech jobs. It means quality of life in St. Thomas,” Preston said.
“There will be two to three million people coming to Ontario during the next 10 years and we will get the fair share of them.”
VW said its St. Thomas plant will have initial capacity of 20 gigawatt hours.
The plant will be located on a site bounded by Highbury Avenue, Ron McNeil Line, Yarmouth Centre Road and the railway line north of Talbot Street in east St. Thomas.