Infiniti Exploring Canadian Assembly Plant
It’s no secret that Infiniti is looking to diversify its manufacturing footprint. As part of a broader Nissan strategy to localize production and escape the yoke of yen fluctuations, Infiniti will soon be setting up shop in China and at Nissan’s Sunderland facility in the UK. Next on the list is another North American site.
Right now, the Infiniti JX is the lone Infniti product built outside Japan, but that will have to change under Nissan’s new strategy. Infiniti President Johan de Nysschen told the Wall Street Journal that in addition to the United States and Mexico, Canada is also an option for the new plant.
Calling Canada a “compelling alternative”, de Nysschen said
“Canada also has the potential now with free-trade agreements and discussions to be a very viable source of production exports to Europe,”
Canadian Industry Minister Christian Paradis is expected to meet with de Nysschen in Hong Kong this week. A new factory is expected to cost around $2 billion, or about half of what expansion would cost at an existing facility, and would add 2,000 direct jobs. Some government investment would likely be provided in exchange for the plant. Toyota received $34 million from both the Ontario and Canadian federal governments to re-tool an existing plant to produce Lexus SUVs, and that sum was on the very low end of the scale for auto plant investment.
However, Canada offers some advantages compared to the other jurisdictions, namely a looming free trade agreement with the European Union. This arrangement has been cited in the past as a compelling reason for Audi to build Q3s and other vehicles in Mexico, especially those small premium crossovers, which are in demand on the continent.
“Canada also has the potential now with free-trade agreements and discussions to be a very viable source of production exports to Europe,” This is an interesting angle that really hasn't been discussed very much. The advantage however may only exist for a short time if the US moves forward with a European FTA as well. At that point, Nissan would probably be more comfortable expanding their operations in the US South.
According to the Wall Street Journal, someone in Yokohama has a different take. "Yet a Nissan representative in Yokohama, Japan, where the company is based, cautioned that a Canadian location might not be considered. "I have no expectations that we plan to produce or assemble in Canada at this time," the representative said." My money's on Mexico... Source: http://online.wsj.com/article/SB10001424127887324345804578422702383132078.html
A Canadian plant might be cheaper than $2 billion if one of the GM or Ford plants becomes available. There's still the problem of the exchange rate, if the bulk of production is sold in the US. A silver lining to the Great Recession and quantitative easing is that the dollar is cheaper and American labor costs are more competitive. If the US-Euroland FTA talks include Canada and Mexico as part of NAFTA, Mexico would be in play too.
Hate to say it, but I think labour costs will kill that plan's potential.