Automotive News Canada - March 2022 - 24

24
* MARCH 2022
Whatever land Toronto has left is expensive
CONTINUED FROM PAGE 1
zation, based at Western University in
London, advocates for advanced manufacturing
in the province.
Of 169 Ontario plants that shut their
doors during the past 15 years, only 18 per
cent are wholly used today for manufacturing,
according to the December report.
With much of Canada's economic might
centred along Ontario's Highway 401 corridor,
manufacturing faces fierce competition
for land. Sectors such as e-commerce,
finance, technology and government are
all vying for space, unlike in the United
States, where industries are better confined
to their separate regional pockets,
said Sweeney.
" Jammed up in our manufacturing
heartland is our Midwest, also our New
York and our Washington, D.C., and our
Boston, " he said.
Without more insightful planning
and protection for factories, land uses of
" less economic value " will likely continue
elbowing out manufacturers, Sweeney
said.
Access to labour, highways and other
infrastructure, he said, are key requirements
for goods producers. That means
developers or redevelopers of other types
of projects are often hunting for the same
sites.
LAND SCARCE, EXPENSIVE
Victor Cotic, executive vice-president
of national investment services at the real
estate firm Colliers International Inc., said
the boom in warehousing, combined with
the Greater Toronto Area's slow pace of
construction on new projects, has given
the region's industrial real estate market
the lowest availability of any major region
in North America.
A healthy market has an availability
rate of five or six per cent, Cotic
said, while the Greater Toronto
Area sits below one per cent and
has for more than three years.
" When it broke that one-percent-availability-rate
mark, we
started to see a big uptick on
rents because there's now more
competition from tenants and
buyers for space, " Cotic said. " So
we've been seeing rental-rate
growth in excess of 20 per cent
year over year, and there's no
real end in sight. "
Compared with 2016 rents of $5
to $6 per square foot, industrial
real estate in the Greater Toronto
Area now ranges between $13
and $15 per square foot. This is
pushing manufacturers and other
companies looking for space to
smaller markets throughout
Ontario, contributing to higher
demand and costs across the
province.
This cascade of rising costs has
not yet created a " mass exodus "
of industrial companies from
the province, but Cotic said he is
hearing about companies inquiring
about relocating to more
affordable jurisdictions.
AUTOS DRIVE ECONOMY
ness, Sweeney said. He estimates
they have between five and six
times more local benefit than
warehouses, which typically handle
goods produced outside the
province with relatively few workers.
Cotic:
No
major region of
North America
has a lower
availability of
industrial real
estate than
the Greater
Toronto Area.
PHOTO:
LINKEDIN:
Despite this, Ontario does little
to differentiate between land zoned
for manufacturing and land dedicated
to other industrial uses such
as warehousing. For instance,
the most recent Provincial Policy
Statement, which guides city planning,
sets numerous guidelines for
protecting industrial and manufacturing
land but does not distinguish
between the two.
For automakers that must stay
close to the rest of the supply
chain, relocating typically means
south of the border - and those
moves translate into major economic losses
for Ontario, said the Trillium Network's
Sweeney.
Between offering higher-than-average
wages to plant workers and buying from
other local goods producers and service
providers, automakers have among the
highest economic footprints of any busiFedeli:
" We
need to have
the sites ready
[for companies
seeking land].
That can't be
the piece that
is holding us
back. "
FILE PHOTO
Municipalities typically follow
suit. Citing Mississauga, Cotic
noted that the city zones land for
several types of employment but
does not differentiate most manufacturing
from distribution.
All other things being equal, he
said, a landlord leasing space is
also more likely to favour a warehousing
client over a manufacturer.
" Warehousing
operations are
fairly consistent between how they
use buildings, " Cotic said. This
means an owner can " build that
mousetrap " for a succession of clients.
Manufacturers,
on the other
hand, often require their facility to
be at least partially purpose-built,
and a different set of upgrades would likely
be required when that lessee vacates.
PLANT PROTECTION POLICIES
To preserve Ontario's manufacturing
plants and attract new ones, Sweeney
urged the province and municipalities to
support retrofits as well as rethink how
they zone land for employment. Potentially,
that would add tax breaks for businesses
that deliver higher economic value.
While warehousing is the gravest threat
to manufacturing sites along much of the
Highway 401 corridor, within Toronto's
city limits, residential or mixed-use redevelopments
are the leading cause of
lost factories, according to the Trillium
Network report.
Given the province's tight housing supply,
Sweeney said, it can be tough to push
back against urban redevelopments. When
plants do need to be built, governments
should ensure that they can be relocated to
areas that are better suited to " a one-to-one
swap. " Creating a registry for manufacturing
land that would be similar to the one
protecting heritage properties should be
another consideration, he said.
The Ontario government has not yet
moved in this exact direction but has designated
31 " provincially significant employment
zones " in and around Toronto. While
properties in the zones are not safeguarded
from being repurposed for another employment
use, the province would need to sign
off on redevelopments for housing.
Ontario is closely watching the wider
industrial land use issue, said Vic Fedeli,
economic development minister. Sufficient
land exists for both industrial and housing
uses, he said, but ensuring the land is
investment- and development-ready is a
barrier the government has been working
to address over the past three years.
The province currently has several site
readiness programs to help municipalities
and landowners prepare land for industrial
companies looking to expand or locate new
plants in Ontario.
" There's fierce competition to secure
that investment, " Fedeli said, " and that
means we need to have the sites ready.
That can't be the piece that is holding us
back. " - ANC
Honda's investment covers six years and goes beyond CR-V
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to announce the big-ticket retrofit
that will make Plant 2 the lead
plant for the 2023 CR-V Hybrid.
It will also continue to build the
gasoline-only CR-V.
Leclerc said the investment
is a " milestone " for Honda in
Canada.
" This investment not only
ensures our product and manufacturing
competitiveness within
Ontario, Canada and abroad,
but also significantly bolsters our
ongoing efforts to reduce greenhouse-gas
emissions. "
Honda of Canada
Manufacturing (HCM) has built
the traditional CR-V at the plant
since 2012. The automaker also
produces the Civic sedan and
four-cylinder engines for both
vehicles at the Alliston campus's
two other plants.
HYBRID CIVIC?
The CR-V Hybrid is the first
stage of the complex's shift into
electrified vehicles. The $1.4-billion
investment will also cover
upgrades to the neighbouring
engine plant and Plant 1. Leclerc
would not confirm the arrival of
a hybrid Civic was imminent, citing
his inability to comment on
future product, but Honda said
the six-year spending program
encompasses the retooling of
" both assembly lines " at HCM.
The fresh investment will keep
staffing levels at the three facilities
at about 4,200.
The federal and provincial
governments pledged matching
contributions of $131.6 million
to back the investment from the
Japanese automaker.
" Building hybrid-electrics will
support thousands of good jobs
here in Alliston and grow the
economy, all while cutting pollution, "
Trudeau said, adding
the spending will help deliver on
Ottawa's commitments to a cleaner
economy.
KEY MISSION
The CR-V will become the
fourth hybrid model built in
Ontario, joining the Chrysler
Pacifica, produced in Windsor
since late 2016, the Toyota RAV4,
built in Cambridge since 2019,
and the Lexus RX Hybrid, built in
Cambridge since 2014.
Securing hybrid or fully electric
production mandates for
its assembly plants has been a
key mission for the provincial
government as adoption rates
for electric vehicles accelerate
through the 2020s.
Ford said the new spending is
" more proof that there is no better
place " for auto manufacturing
than Ontario.
" We are home to the most
Honda expects CR-V production (current model shown) at its
Alliston, Ont., plant will eventually be divided evenly between
gasoline and hybrid versions. SUPPLIED PHOTO
skilled workers anywhere in the
world, we have all the necessary
natural resources, and we have
created the best environment for
jobs to grow and businesses to
flourish. "
In addition to the retooling
at Alliston, which began at the
end of 2021, General Motors will
start work to transform its CAMI
Assembly Plant in Ingersoll,
Ont., to produce electric delivery
vans starting in April. Other
planned electrification projects
include overhauls at the Windsor
Assembly Plant and Ford Motor
Co.'s Oakville Assembly.
UPPING THE ANTE
While Honda has produced
the CR-V Hybrid at its plant in
Greensburg, Ind., since 2019, the
hybrid crossover has not previously
been available in Canada.
That will change for the 2023
model year.
Honda said upping the ante
on CR-V Hybrid production is a
response to higher demand for
electrified models. The automaker
has been slower than many
competitors to come top market
with EVs but plans to have shifted
its entire North American
lineup to battery-electric or fuelcell
electric by 2040.
In Canada, however, that transition
will need to happen more
quickly. The federal government
aims to require all new vehicles
sold in Canada be zero-emissions
by 2035, though it has not yet legislated
this target.
Honda expects production over
the next few years to be divided
evenly between gasoline and
hybrid versions of the CR-V.
The plant has capacity to produce
more than 200,000 of the
crossovers each year. In pre-pandemic
2019, workers at Plant 2
assembled 211,195 CR-Vs, according
to the Automotive News
Research & Data Center in
Detroit. That figure had dropped
to 150,211 last year, largely due to
the ongoing microchip shortage.
With an improving outlook
for chips, the automaker expects
greater production to return in
2023.
The tentative date for the first
2023 CR-V to roll off the retooled
line in Alliston is this summer,
with the hybrid version of the
crossover following shortly after.
- ANC
Automotive News Canada - March 2022

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