Canada threatens to sue Stellantis, seek return of hundreds of millions after Brampton plant sale

TORONTO — The Canadian government has escalated its dispute with automaker Stellantis, serving the company with formal notice that it has breached its government funding agreement. The notice follows Stellantis's decision to sell its Brampton, Ontario, plant to Rochelle, a company that specializes in armoured vehicle manufacturing.

Industry Minister Mélanie Joly announced that the company has 30 days to correct the breaches. Otherwise, it could face a lawsuit seeking the return of hundreds of millions of dollars it received from the government.

The decision followed a meeting held Thursday in Toronto, attended by representatives of Stellantis, the union Unifor and the Ontario government, to discuss the future of the plant and the affected workers.

Canada gives Stellantis 30 days before legal action

Joly sent a formal letter to Trevor Longley, CEO of Stellantis Canada, identifying four breaches of the funding agreement signed in 2022.

The breaches include halting the Jeep Compass production project in Brampton, failing to identify a replacement model to build, and the stoppage of production and closure of the plant.

The minister said the company is required to demonstrate within the set period that it can remedy these breaches.

If it does not comply, the government can terminate the funding agreement and demand the return of the funds paid out, in whole or in part, with interest.

Joly said Ottawa is prepared to go to court after earlier talks failed to reach a solution that preserves production and jobs.

Hundreds of millions in public money at stake

The roots of the crisis go back to the 2022 agreement, in which the federal government pledged funding of up to C$529 million to support the modernization of Stellantis's plants in Brampton and Windsor.

The Ontario government also committed to provide provincial support of up to $513 million for industrial projects linked to the company.

The investments were meant to modernize the facilities and boost electric vehicle production while preserving industrial jobs in the province.

However, the decision to move Jeep Compass production to the U.S. state of Illinois sparked a dispute over whether Stellantis has met the agreed conditions.

The total amount of federal funds actually disbursed has not been disclosed, so the final amount that could be recovered remains unclear.

Stellantis offers to return $24 million

Stellantis responded by saying it is prepared to return C$24 million, which it said represents the federal support it received to carry out the original modernization plan for the Brampton plant.

But the amount offered is far below the funds the federal government is seeking to recover.

Joly said the company's offer does not address all the obligations in the funding agreement, adding that the dispute goes beyond money to the future of workers and industrial production.

The minister also intends to continue talks with Stellantis's global CEO, Antonio Filosa, to seek a settlement.

Sale of Brampton plant angers workers

On Monday, November 9, Stellantis announced an agreement to sell the Brampton plant to the Canadian company Rochelle, in a deal expected to close before the end of the year.

Rochelle plans to use the site to manufacture defence vehicles, with the possibility that about a quarter of the facility's space would be leased back to Stellantis for automotive-related activities.

But the deal does not include a guarantee that all former workers, who numbered more than 2,000, will be rehired.

Unifor president Lana Payne said the sale represents the worst-case scenario for the workers.

She said the union will continue to press for clear job guarantees, adding that a strike remains an option as a last resort.

Carney calls for comprehensive solution to plant crisis

For his part, Prime Minister Mark Carney said the sale of the plant to Rochelle is only a partial solution to the crisis.

He said during a visit to Ireland that the government's knowledge of some details of the negotiations does not mean it approves the deal or releases Stellantis from its obligations.

He stressed the need for a comprehensive solution that protects workers and addresses the future of the industrial facility.

The federal government, for its part, says that continued manufacturing in Canada is an economic priority, particularly amid trade tensions with the United States.

The next thirty weeks will be decisive in determining whether the crisis ends in a settlement or turns into a court battle over public funds and industrial commitments.