Canada May Sue Stellantis Over Jeep Production Shift
Ottawa Threatens Legal Action After Automaker Moves Manufacturing to Illinois
Key Takeaways:
- Canada threatened legal action against Stellantis after the automaker canceled plans to build the Jeep Compass in Brampton, Ontario, shifting production to Illinois amid new U.S. tariffs.
- Industry Minister Melanie Joly said the move breaches legally binding commitments tied to government funding and demanded Stellantis propose new mandates to preserve Canadian jobs and suppliers.
- Stellantis pledged $13 billion in U.S. investments to offset tariff costs while saying it will discuss Brampton’s future with Ottawa and expand production at its Windsor plant.
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Canada threatened legal action against Stellantis NV after the carmaker announced it’s canceling plans to make the Jeep Compass SUV in Brampton, Ontario, and moving that production to Illinois instead.
Industry Minister Melanie Joly said she would consider Stellantis in “default” in light of government support extended to the automaker, following an agreement to “maintain its full Canadian footprint, including Brampton.” Joly’s comments were contained in a letter she sent to CEO Antonio Filosa that was seen by Bloomberg News.
Joly called the plan to move Jeep manufacturing south of the border “unacceptable” and demanded that Stellantis come up with “new mandates” for the factory, which is in the Toronto region, and to keep its contracts with Canadian suppliers.
Canada helped bail out General Motors and Chrysler when both companies fell into financial distress during the global financial crisis. “We were there for the company in 2009 to pull it back from the brink of bankruptcy, and now we expect you to be there for Canadians,” Joly wrote.
The federal and Ontario governments have also provided financial aid over the years to help automakers retool their assembly plants in southern Ontario, where factories are highly integrated with parts makers in the U.S. and Canada. Stellantis and a partner are also behind NextStar Energy, a venture that’s building an electric vehicle battery plant that’s in line to receive huge government subsidies from Canada.
But the industry’s cross-border business model is under threat from Donald Trump’s tariffs on foreign autos, which apply to Canadian and Mexican cars and light trucks despite the provisions of the U.S.-Mexico-Canada Agreement that the president signed in his first term.
Stellantis vowed this week to invest $13 billion in the U.S. over the next four years, partly to mitigate tariff costs. The move — billed as the single largest investment in its history — will boost annual finished vehicle production by 50% over current levels.
Shares of Stellantis rose 2% in U.S. trading Oct. 15.
In the letter, Joly said Stellantis has made legally binding commitments to its Canadian operations by accepting past government support via programs such as the government’s Strategic Innovation Fund.
“It is imperative that you extend the workers’ transition program, agreed to with Unifor, until at least 2027,” Joly added, referring to the union that represents about 3,000 workers at the Brampton plant.
A Stellantis representative confirmed the company had received the letter.
The carmaker is moving one model from Canada to the U.S., but it has “plans for Brampton and will share them upon further discussions with the Canadian government,” the spokesperson previously said by email in response to questions.
The company is also adding a third shift to its Windsor, Ontario plant, to support increased demand for the Chrysler Pacifica and Dodge Charger.
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