Canada to Launch Dispute-Resolution Process to Stop Stellantis Production Move
The shift would harm the country’s automotive sector, said Industry Minister Melanie Joly
- Canada initiated dispute-resolution proceedings against Stellantis over its plan to move Jeep Compass production from Ontario to Illinois.
- The Canadian government and Ontario provided over C$1 billion to Stellantis in 2022, with conditions to maintain Brampton production.
- Stellantis’s decision to shift production is part of a $13 billion U.S. investment amid a 25% tariff on foreign-made vehicles.
OTTAWA—Canada on Monday took its first formal step to stop Stellantis’s plan to shift production of its Jeep Compass model from a Toronto-area factory to Illinois, arguing the future of the country’s auto sector is at stake.
Canadian Industry Minister Mélanie Joly said the government would serve Stellantis with a notice to start dispute-resolution proceedings. “This action is not symbolic,” she said, in an appearance before a committee of Canadian lawmakers. “We need to be clear and direct toward the company. When a commitment to the Canadian government is not respected, there are consequences.”
She added the fight with Stellantis represents a life-and-death moment for the country’s automotive sector, which accounts for about 120,000 jobs in the manufacturing sector. “When I think about what’s going on in the sector, and this Brampton-Stellantis problem, I know that if we don’t fight that battle, and if we don’t win it, the sector is at stake. I can’t be more clear about that.”
Joly has threatened to sue Stellantis for its decision last month to shift production of its Jeep Compass from a plant in Brampton, Ontario to Illinois. The decision was part of Stellantis’s announcement of a $13 billion investment to increase production in the U.S., amid President Trump’s 25% tariff on foreign-made vehicles. Stellantis employs about 3,000 workers at the Brampton operation.
A spokeswoman for Stellantis said Canada remains an integral part of the company’s North American operations, adding it has neither shut down the Brampton factory nor cut jobs at the plant. She added Stellantis would work with government officials and other parties to find solutions to maintain auto production in the country.
Generally, commercial contracts have a clause that allow for disputes between parties to be resolved through arbitration or dispute resolution.
The Canadian government, along with the province of Ontario, provided over 1 billion Canadian dollars, or the equivalent of U.S. $710 million, to Stellantis in 2022 to modernize its plants in Brampton and Windsor, Ontario, to accommodate production of electric vehicles. Over a year later, Canada sweetened its offer with up to C$15 billion in incentives to Stellantis to upgrade the Windsor facility. Stellantis promised to maintain its production mandate in Brampton as part of the deal.
Canadian officials said the financing was conditional on Stellantis maintaining production and employment at the Brampton factory.