BUSINESS

Quebec lassoes the Pony

MARY JANIGAN November 25 1985
BUSINESS

Quebec lassoes the Pony

MARY JANIGAN November 25 1985

Quebec lassoes the Pony

For the last 11 weeks South Korea’s Hyundai Motor Co. has sought suitable locations for an auto assembly plant in Quebec, Ontario and British Columbia. Then, late last week Quebec Premier Pierre Marc Johnson announced that his province had been selected for the $300-million plant. It will be built in the Eastern Townships community of Bromont, and the timing of the premier’s announcement appeared to be carefully chosen. Johnson is locked in a cliff-hanger election battle with former premier Robert Bourassa’s Liberals—and the plant unveiling took place only 17 days before voters go to the polls.. Since the winning package required $90 million in federal and provincial aid, many provincial Liberals viewed the accord as a signal that the federal Conservatives were supporting Johnson’s embattled Parti Québécois. “I have to underline the spirit of collaboration that prevailed throughout this issue between the federal and the Quebec governments,” Johnson noted with a broad grin. “But there is no way that you are going to get me to say that Mulroney is trying to give us a hand.”

Indeed, Prime Minister Brian Mulroney was under strong pressure from his own Quebec caucus to favor a Quebec location from the time that Industry Minister Sinclair Stevens signed an agreement for a Canadian plant with Hyundai president Chung Se Yung in Seoul, South Korea, in late August. For locating in Bromont, a community 75 km east of Montreal, Hyundai will receive $90 million in federal and provincial aid, plus a 400-acre site in an industrial park worth $1.5 million. Plant construction will begin next summer and the first cars will roll off the assembly line in September, 1988. When the plant reaches full production in 1990, it will produce 100,000 units annually of Hyundai’s Stellar and Excel models and provide 1,200 direct and 1,600 indirect jobs.

Hyundai officials preferred Quebec from the start, industry experts say, because it accounts for 40 per cent of its booming Canadian sales. Introduced in Canada only last year, the company quickly sold 25,123 of its lowpriced Pony model. Hyundai expects that sales will hit 60,000 by the end of 1985—including 25,000 in Quebec. One reason for Hyundai’s success is that because Korea is classified as a developing country, the company’s cars enter Canada without paying the 10-percent federal excise tax levied on Japanese imports.

Johnson because most of the $1.2 billion in auto investment planned in 1985 will take place in Ontario. But Johnson predicts that the Hyundai plant, the first car factory in Quebec since General Motors located in SteThérèse in 1965, will mark the start of a flourishing Quebec industry.

When Bourassa won the provincial Liberal leadership in October, 1983, Mulroney, then Progressive Conserva-

tive leader, called to say, “Next, we both aim for the top.” But even before the Hyundai announcement there was another well-publicized Ottawa-Quebec agreement in early November which settled a long-standing dispute on the province’s participation at next year’s 20-nation francophone summit. Together, the accords may indicate that Mulroney’s Tories want to keep Johnson at the top—and the Liberals out of power in Quebec.

MARY JANIGAN

ANTHONY WILSONSMITH