Car Building in Ontario Could Die, and They Probably Can't Save It

Ontario’s debt is swelling and as home to eight manufacturing plants — the largest complex in North America — automakers may have a tough time keeping plants open in Canada’s most-populous province.

According to a story by the Financial Post, Ontario is moving forward with an ambitious plan to revamp roads and mass transit systems despite its debt being downgraded by Standard & Poor’s bond index. The broad public spending plan also extends to other sectors, despite high unemployment numbers and slumping manufacturing jobs.

Automakers such as Fiat Chrysler Automobiles have called on the provincial government to cut back on public programs and reduce costs on utilities in an effort to keep car building in the province profitable. This year, Chevrolet will shift production of its Camaro to Michigan. On the whole, Oshawa GM production has a dark cloud lingering overhead until the company decides what to do with the facility in 2016.

Ontario’s debt is twice that of California’s with only half the population, the Financial Post reported.

Last month the province reported that 5,200 manufacturing jobs left the region, which prompted local business leaders to sign a petition asking the government to reconsider its proposed pension plan that FCA CEO Sergio Marchionne said this month could hamper growth.

“We’re fully aware of the fact that this proposal on pensions and cap and trade and all this stuff … these are all things that add cost to the running of operations, they don’t come for free,” Marchionne said, according to the Toronto Sun.

Already, automakers such as Volvo and Land Rover have turned down Ontario in favor of operations in the United States and it’s unclear if swelling debt and rising costs of operation will cost the province more jobs in the future.

Other automakers that already have facilities in Ontario are making changes. Honda and Ford are both positioning their plants to manufacture vehicles for export markets. Toyota, on the other hand, will end Corolla production in Ontario in favor of Mexico. The company stated it will “switch from producing Corollas to mid-sized, higher-value vehicles” at their Canadian plant. The replacement product has not yet been announced.