Canadians are used to hearing about manufacturers closing their doors and moving to the United States.
General Electric Co. is bucking the trend and coming north, announcing Wednesday that it has chosen Welland, Ont., as the site for a state-of-the-art gas-engine plant that’s being shifted from Wisconsin.
The U.S. industrial giant said last September that it was relocating the factory to Canada after the U.S. Congress cut off funding for the Export-Import Bank, the U.S. government’s export credit agency.
Congress later granted the Ex-Im Bank a partial reprieve until 2019, but only after GE had committed to moving the operation to Canada, where its global customers will now have access to credit from Export Development Canada (EDC), Ottawa’s export lending agency. GE is currently bidding on billions of dollars worth of projects that hinge on its customers getting export financing.
Gaining access to expanded EDC financing was crucial to GE’s decision to move the plant. Under the terms of the arrangement with EDC, GE’s global customers will be able to tap into $2-billion in federal export financing, regardless of whether their purchases are directly from Canadian plants; in essence, its expanded Canadian operations and supply chain allow GE to be treated as a Canadian company by EDC.
“The EDC model creates an incentive for global companies to create more jobs in Canada,” federal Trade Minister Chrystia Freeland said in an interview.
In a recent speech at New York University’s Stern School of Business, GE chief executive Jeffrey Immelt lamented the backlash against free trade and globalization in the U.S. presidential campaign and said countries with effective export banks such as Canada “will be be more attractive for investment.”
“Companies must control their own destiny globally, protecting against government dysfunction,” Mr. Immelt said. “We have positioned GE to capitalize on investment flows from new sources.”
The Welland plant, slated to open in early 2018, will initially employ 150 people – fewer than the 350 originally planned. The scaled-back first phase is due to the slowdown in the oil-and-gas sector, according to GE spokeswoman Kim Warburton. But she insisted the plan is to ramp up employment later as additional GE products are added to the highly flexible production line.
The company said it chose Welland because of its proximity to the U.S. border and access to skilled workers. It also cited Welland’s “aggressive” efforts to attract business. The city is located 26 kilometres southwest of Niagara Falls, Ont., and a half-hour’s drive from Buffalo, N.Y.
The company said it’s in discussions with the Ontario government about possible financial incentives.
“There are discussions, but nothing has been finalized,” Ms. Warburton said.
The plant is a major boost to Welland and the surrounding area, which has been decimated by a series of plant closures in the past decade, including farm equipment maker Deere & Co. (800 jobs) and auto parts company Dana Corp. (685 jobs).
GE is touting the plant as a multi-modal factory that will use “cutting-edge data science and analytics” to enhance efficiency and productivity.
It will initially produce large reciprocating gas engines and other power-generation equipment, largely for the oil-and-gas industry.
GE had initially estimated the cost of the plant at $265-million (U.S.). Ms. Warburton said the company won’t have final cost estimates for several months.
The company also announced last year that it is expanding a jet engine testing facility in Winnipeg.
The Canadian moves were among several announced by GE last year as Congress dithered over whether to fund the U.S. Ex-Im Bank. The company also shifted several other plants offshore.
Written by: BARRIE MCKENNA