All eyes on St. Thomas Volkswagen battery plant as tariffs take effect

Despite a trade war with the US, officials say that St. Thomas' Volkswagen battery plant is a 'big picture' project - CTV London's Bryan Bicknell reports.

With U.S. president Donald Trump’s tariffs now in effect, there are questions about the potential impact to the largest economic development project in the London region.

A 150 hectare property is being cleared to make way for Volkswagen’s PowerCo battery plant. The gigafactory will produce batteries for one million electric vehicles per year.

CEO of the St. Thomas Economic Development Corporation Sean Dyke says in spite of the economic uncertainty caused by Trump, it’s full steam ahead.

“PowerCo has been an unbelievable partner through all of this,” said Dyke. “They’ve continued to go strong. They’re hiring people regularly. They’re up over 150 people working in downtown St. Thomas now. Even with the unnecessary trade war that’s happening around them, the site’s ready to go. Procurement is ongoing for their site here in St. Thomas,” he explained.

“This is a wise decision, to punt the final decision on whether I stay in St. Thomas or not,” said Andreas Schotter, a professor of international business at Ivey Business School. “There’s not much we can do about, from Canada, right? You can try to pressure them to commit, but this is too big of a decision.

Schotter says he expects Volkswagen to take a ‘wait and see approach’ with the St. Thomas plant.

“The problem is, if the product is not competitive in your largest market, which is nine times as big as Canada overall, then - you know - this becomes a very easy decision. If you cannot afford an SUV built in the United States with a Canadian battery, because this tariff is too high, or for whatever reason,” explained Schotter.

Volkswagen has said the factory will create up to 3,000 direct jobs, and tens of thousands of indirect. Construction activity will be ongoing for several years, according to Mike Carter, executive director of the London District Construction Association.

“A project that size will actually bring in the workforce in from across Canada. You know that’s the Red Seal Trade advantage is that you can bring in electricians, boilermakers, ironworkers, whatever you need from across Canada. It is that big of a dedicated project - and it will consume labour as it goes through very high, intense levels,” said Carter.

CTV News also reached out to PowerCo. In response the company re-released a previous statement, saying it is “too early to speculate on the impact the newly announced tariffs could have on the automotive industry.”

Meanwhile, Sean Dyke suggests the fact that the plant hasn’t been built yet is the one thing it has going for it.

“PowerCo isn’t intending to start production until 2027, so these short-term impact of trade wars maybe don’t have the same impact on them as it would to existing companies,” he explained.