September 4, 2008 / 4:03 AM / 9 years ago

Canada to invest up to C$80 million in Ford facilities

TORONTO (Reuters) - Canada will offer Ford Canada up to C$80 million ($75 million) over five years to help build facilities that could "create or sustain" some 750 jobs in Windsor, Ontario, Industry Minister Jim Prentice said on Wednesday.

The funding will help Ford carry through plans to reconfigure its Essex engine plant in Windsor into a new flexible engine assembly plant.

The factory currently assembles V8 engines for pickup trucks and SUVs -- vehicles facing slumping sales as North American consumers shift to smaller, more fuel efficient cars because of higher gasoline prices.

Under the new deal, Ford will also set up a center to research engine efficiency and fuel technologies, looking at gasoline, hybrid and alternative fuel powertrains.

"It will also become a key North American in-house center for the advanced testing and R&D in some of the most complex and value-added production added elements in the automotive industry," said Prentice, who announced the plan days before the expected announcement of an October 14 federal election.

Ford had been due to close its current Windsor powertrain engineering research and development center next year, as the equipment has become obsolete.

Buzz Hargrove, president of the Canadian Auto Workers union, said the government's announcement was long overdue.

"It's no secret that we've been frustrated by the lack of action, especially from the federal level, as the crisis in the industry got worse and worse -- as we lost tens of thousands of high-productivity jobs and as we lost tens of billions of dollars of exports," Hargrove said.

The leader of the opposition Liberal Party chided the government for resisting earlier calls to help the struggling auto sector.

"We know that (Prime Minister Stephen Harper) has not been hit by conviction, but only because there's an election," Stephane Dion said, speaking to reporters in Winnipeg, Manitoba.

The Canadian auto industry has been hard hit by the U.S. economic slowdown and the stronger Canadian dollar, which makes Canadian goods more expensive abroad.

Prentice said the government was also prepared to invest in a future expansion of the Essex engine plant, if market circumstances warrant.

The expansion part of the project is contingent on Ford's approval of additional production by the end of 2010.

Prentice said he expected the project to create or sustain up to 548 jobs, with the potential for as many as 757 jobs.

Ottawa's contribution will come from its automotive innovation fund announced in the last budget.

The total cost of the project could reach C$730 million, Prentice's office said.

($1=$1.06 Canadian)

Reporting by John McCrank and Roberta Rampton in Winnipeg, Manitoba; editing by Janet Guttsman

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