Competitive R&D Ecosystems, Quality Workforce Draw Auto Companies to Ontario
Companies like Toyota have been choosing Ontario for new investments for a variety of compelling reasons, including the quality of the workforce and a very favorable tax treatment of R&D activities.
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Toyota Motor Manufacturing Canada Inc. recently announced plans to invest $1.4 billion in Ontario, Canada, at its Cambridge and Woodstock assembly plants. This investment is expected to create 450 direct new jobs and an additional 1,000 spinoff positions. This venture supports the already more than 8,000 jobs in Southwestern Ontario.
In support of Toyota’s investment, the provincial and federal government have committed $110 million to assist with the upgrade of the north plant in Cambridge and the west plant in Woodstock, further supporting the production of the next generation of RAV4s, including new hybrids, as well as research and development over the next decade.
The automotive sector is a significant part of Ontario’s economy and is the country’s largest export industry. Automotive production accounts for more than 500,000 jobs and contributes $18 billion annually to the economy. Ontario’s commitment to supporting further advancement in this sector is evidenced in the various endeavors that support the growth and innovation of the automotive industry.
“There’s been a lot of talk about Canada’s auto sector in recent years, and it’s no secret the industry has gone through a great deal of change,” said Prime Minister Justin Trudeau. “Agreements like this one are key to creating good, well-paying jobs for the middle class and for people working hard to join it.”
Once upgrades are complete, the Cambridge plant will join the Woodstock facility in producing the RAV4, one of Toyota’s best-selling vehicles. The company sold more than 450,000 in North America in the past year.
The $1.4 billion investment is on top of the company’s previous investment of about $1 billion over the past three years, said Fred Volf, president of Toyota Motor Manufacturing Canada. The company will spend about $200 million of this newest investment on research and development over 10 years and will include everything from basic research to cutting-edge technology and high-quality product advancement.
Companies like Toyota have been choosing Ontario for new investments for a variety of compelling reasons. Among the motivating factors are the quality of Ontario’s workforce and a very favorable tax treatment of R&D activities. Ontario provides one of the most competitive R&D ecosystems in North America. For quite some time, Ontario has offered some of the most generous R&D tax credits in the industrialized world. The combined Ontario and Canada R&D tax credits can drive down R&D costs by as much as 40–50 percent. These programs have no caps and can be carried back or forward to reduce companies’ corporate tax positions.
Ontario’s 44 colleges and universities have fostered a workforce that is highly educated and committed to upgrading their skills. The result of Ontario’s education system is a highly trained, well-educated workforce that is adept at problem-solving and managing complexity. Compared to its North American counterparts, 67 percent of Ontario’s workforce has a postsecondary education, compared to 45 percent in the United States and 16 percent in Mexico.
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