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Toyota to receive government cash

Two Toyota plants in Ontario will receive a $545-million injection fromthe Japanese automaker and Canadian governments to give the facilitiesa green makeover and ensure the survival of thousands of jobs in theprovince.

Two Toyota plants in Ontario will receive a $545-million injection from
the Japanese automaker and Canadian governments to give the facilities
a green makeover and ensure the survival of thousands of jobs in the

The Ontario government will provide a $70.8 million grant and the
federal government will provide repayable loan for the same amount to
Toyota Motor Manufacturing Canada Inc. for plant upgrades in Cambridge
and Woodstock.

The round of upgrades will support the production of more
fuel-efficient vehicles. The automaker will use part of the money to
upgrade the paint shop at its Cambridge North plant, where it plans to
convert its base-coat paints from a solvent-based system to a
water-based system to reduce emissions.

Toyota will also make other plant upgrades, including new machinery and
equipment, employee training, and projects to increase efficiency and
reduce waste.

"(This money) is very important because it allows us to give these
initiatives priority and helps to secure our production footprint in
Canada," said Ray Tanguay, chairman of Toyota Motor Manufacturing

The province said the plan dubbed "Project Green Light" will help
secure 6,500 jobs at the two plants. The federal government said the
upgrades will create jobs, though it did not specify how many.

The investment will be the biggest provincial handout to the auto
sector since it helped to bail out two of the world's largest
automakers — General Motors and Chrysler — from bankruptcy in the
depths of the 2009 recession.

Since then, the industry has seen a turnaround that has helped to
support some 400,000 jobs across Ontario. But the Canadian automotive
sector still faces headwinds such as the impact of the rising loonie on
export-oriented businesses.

The heads of some large U.S. automakers have hinted that it could be
difficult to keep jobs and production in Canada without government
assistance as the loonie inflates labour costs.

Ontario finance minister Dwight Duncan said it was important to pour
nearly $71 million of taxpayer money into Toyota's operation in Ontario
because the province has to fight aggressively to keep auto jobs.

"Taxpayers are doing it everywhere else in the world. And if we don't do it, we're going to lose," Duncan said.

Duncan noted that the province doesn't have the hidden subsidies found
in many U.S. states, nor the low wages paid in countries like Mexico.

"So it is important and every jurisdiction does this. They compete not
only for the initial investment, but these plants have to compete for
new product mandates as mandates expire. So this is our way of
participating in that," he said.

The announcement was made at the company's plant in Cambridge by Gary
Goodyear, federal minister of state for science and technology.

"The presence of Toyota Motor Manufacturing Canada has been a
tremendous boost to not only the local economies of Cambridge and
Woodstock but also to Ontario and Canada," Goodyear said in a statement.

He was joined by John Milloy, Ontario's minister of training, colleges and universities.

"I was really heartened to hear Ray Tanguay say his priority is
creating jobs," Milloy said in an interview after the announcement.

"The auto sector is such a huge part of our economy ... we've got to make sure we keep our winners like Toyota."

Ken Lewenza, national president of the Canadian Auto Workers union said
Toyota's commitment to upgrades in Ontario is an example of why
government support is important to the auto industry.

"It's a great day for the automotive industry in Ontario," he said.

However, Lewenza was skeptical that the investment would create new
jobs because upgrades to equipment and infrastructure produce
efficiencies, requiring less labour. He said the investment should be
enough to ensure that all of the current employees keep their jobs.

Duncan said he wasn't "necessarily" concerned that the investment meant
the government would be on the hook to help out other automakers
operating in the province.

"(But) we certainly have in the past, depending on what the proposal
is; whether it's creating new jobs, protecting existing jobs. There
would be a thorough analysis done ..."

The plant in Cambridge assembles the Toyota Corolla and the Lexus RX350
crossover utility vehicle, while the nearby plant in Woodstock
assembles the RAV4 crossover.

In 2009, Toyota announced it would hire 800 more people at its newly
opened Woodstock plant, bringing the company's total Canadian employees
to 6,500. The Cambridge plant had 600 when it started up in 1988.

Toyota's Cambridge South plant recently earned the 2011 J.D. Power and
Associates Platinum Plant Quality Award, deeming it the highest ranked
global automotive manufacturing facility.

The funding announcement comes as Toyota struggles to get its plants —
including the two in Ontario — back to full production following supply
chain disruptions caused by Japan's earthquake and tsunami in March.

Toyota Canada's June sales fell nearly 28 per cent, largely due to the
fallout from Japan's disaster, which crippled auto production and has
resulted in shortages of some models.

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