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In August, the Swedish company Northvolt announced that its mega-battery factory project in McMasterville, Quebec, could face major delays. The company is experiencing financial difficulties that have led it to lay off almost a quarter of its staff in Sweden. With the Quebec and Ottawa governments funding the mega-plant project to the tune of $7.3 billion, its future couldn't be more uncertain.
The cuts at the young Swedish company come after rapid expansion of its operations in Sweden and internationally. This growth, judged too rapid in hindsight by the company's CEO, nonetheless benefited from substantial support in the form of public investment.
Private companies have also made soft loans to the Swedish group, including Volkswagen Luxembourg, which advanced 349 million euros.
The company's rapid growth came at the expense of worker safety. Indeed, in its first factory, three workers lost their lives in the last year. The Swedish police are investigating their deaths.
It was the announcement this summer by the multinational BMW to cancel a $3 billion contract with Northvolt that got the Swedish company into hot water. Its main shareholder, Volkswagen, is also experiencing financial difficulties.
Earlier this fall, the company announced budget cuts of up to $6 billion and terminated job security programs at its six German plants.
Volkswagen was planning to open an electric car plant in Ontario, which was to be supplied with batteries from the Northvolt plant in Montérégie. This plan will now need to be reassessed.
Meanwhile, François Legault is still defending his decision to invest up to $2.9 billion in public funds in the mega-plant project. He compared the CAQ's investments in the battery industry to those of Robert Bourassa's government in the James Bay hydroelectric project.
“I'm older, and I remember certain things… When Robert Bourassa announced [the James Bay] project, it was the same thing: journalists and opponents said it was a lot of money. Some thought it was crazy. What we realized was that it was a stroke of genius!
The James Bay project was a public investment in infrastructure that partly benefited Quebecers. Conversely, the public funds allocated to the Swedish company will benefit its shareholders first and foremost.
In a prime position is Volkswagen Luxembourg, Northvolt's largest shareholder since 2019. This branch of the German company was cited in 2014 in the LuxLeaks, an information leak that exposed the tax avoidance schemes of several multinationals through agreements with the country's Grand Duchy.
Volkswagen Luxembourg wholly or partly owns 45 other subsidiaries in 30 different countries, including Volkswagen Group Canada. Since 2014, the Luxembourg subsidiary has accumulated net profits of $22 billion, despite having just eight employees.