Prime Minister Mark Carney has hailed the impending arrival of Chinese-made electric vehicles as a way to bring affordable cars to the country and as a way “to protect and create new auto manufacturing careers for Canadian workers.” But many within the auto sector fear the opposite, that Chinese EV makers will build scaled-down plants that displace existing auto manufacturing and erase thousands of jobs . Among the biggest fears, voiced by everyone from labour union officials to Ontario Premier Doug Ford , is that Chinese companies could send “knock-down kits,” sometimes referred to as CKDs (Complete Knock Downs). In the worst-case scenario, these vehicles would be entirely manufactured in China , but shipped to Canada as a kit for final reassembly, creating a void for the network of auto-parts companies in Ontario that sell components and services to the assembly plants located there. “The general public doesn’t understand the difference between knock-down kits and full assembly,” Flavio Volpe, president of the Auto Parts Manufacturers’ Association of Canada, said. “When you buy furniture from Ikea, you bring it home and you put it together. That’s not you manufacturing a sofa and that’s what a CKD kit is from China.” Earlier this month, Unifor, the largest labour union representing auto workers, said Stellantis NV is considering a plan to reopen its Brampton, Ont., plant using CKD kits. Stellantis has neither confirmed nor denied if that’s its plan. “We are in active discussions with government officials and key stakeholders to ensure that the conditions for success are in place to support continued investment in Canada,” the company said. “We have nothing to announce.” Federal Industry Minister Mélanie Joly has also voiced opposition to the plan to ship cars in kits to Ontario, but the federal government has revealed little about how its plan for China to ship 49,000 electric vehicles to Canada at a 6.1 per cent duty rate will work, including who will choose which models are sent. There have been reports that Chinese EV maker BYD Co. Ltd. is interested in setting up a dealership network in Canada, although some industry sources have said that makes little sense given the number of vehicles being allowed to enter the country. Other Chinese brands are also reportedly interested in selling in Canada. Like other automakers operating in Canada, Stellantis has a joint-venture partnership with a Chinese EV maker, although it has not said it plans to operate such a partnership in Canada. But last year, Stellantis hit pause on a multi-year renovation of its Brampton assembly plant. Against this backdrop, some in the sector have asked whether reopening a closed plant with CKDs is better than keeping it closed. Volpe provided back-of-the-envelope math to show why he believes a CKD plant would erase billions of dollars in economic activity and eliminate thousands of jobs. His numbers were then cross-checked against public data to ensure they were fair. First, he assumed a vehicle assembly plant in Canada produces around 150,000 vehicles each year, each costing about $50,000 to build. That would amount to $7.5 billion in economic activity per plant. However, only 30 per cent to 40 per cent of the parts in any car are made in Canada, according to Volpe and other sources in the sector, so the output is closer to about $2.65 billion. Secondly, assembly plants employ thousands of people who receive wages that are mostly spent in Canada. Stellantis employs more than 4,000 people at its Windsor, Ont., plant, but that is high by industry standards, so Volpe used 2,000 people as a more accurate proxy for employment in a plant. The average auto worker in an assembly plant earned $45.83 per hour in 2024, according to Statistics Canada. The sector also is known for giving workers generous benefits, and when these are accounted for, the average hourly compensation in 2024 increased to $68.93 per hour. Assuming a 2,080-hour work year — based on a 40-hour workweek, but not including any overtime — the average worker would make an annual average salary of $143,374, and the collective salary of 2,000 workers at a plant would reach $286.7 million in a year. That raises the total economic output of a plant to $2.9 billion. The auto sector is also known for creating spin-off jobs, between four and 4.5 jobs per auto-plant worker, according to a 2022 report by the Trillium Network for Advanced Manufacturing at Western University. Using that ratio, an assembly plant that employs 2,000 people would create 8,000 spin-off jobs. This would include people driving trucks to transport vehicles and people making parts outside the assembly plant. The average wage in 2024, including benefits, for interior trim workers was $54.60 per hour, according to Statistics Canada. That amounts to $113,568 per year, thereby injecting an additional $908.5 million into the economy and raising the total economic output of an assembly plant to around $3.84 billion. Canadian-made vehicles are mostly exported to the United States, which influences the value of the Canadian currency and could be viewed as an additional benefit. There are also difficult-to-measure benefits, such as innovation, that occur as a result of manufacturing. But Volpe’s analysis captures the basics — the value of the materials used in vehicles and the wages paid out to workers building them — and the fear is that a knock-down assembly kit plant might employ just a few hundred workers and the spin-off jobs would be negligible because all the parts would come from China. Volpe estimated such a plant could employ 300 workers, each paid $50,000 per year, creating about $15 million in economic output. Of course, China has not built any CKD plants in Canada, so any comparison is speculative and Volpe’s math assumes any such autos do not contain any local content. Historically, the Canadian government has always been conscientious of crafting policies that require or encourage auto companies operating here to use domestically produced content, Dimitry Anastakis, a professor of history at the University of Toronto, said. There is also a historical example of a knock-down plant operating in Canada. From 1963 to 1998, Volvo Car AB — a once Swedish company that is now owned by China’s Zhejiang Geely Holding Group Co. Ltd. — operated a partial knock-down (PKD) plant in Nova Scotia that imported most, though not all, parts from Sweden. Volvo promised “booming employment and increased industrial development,” Anastakis, who studied that plant, said in a paper. “But that promise never materialized. Volvo never employed more than 200 people directly in the plant; its partial-knock-down system resulted in few secondary jobs in either parts or assembly.” The amount of Canadian content in vehicles produced at the plant declined over the years even as production increased from a few thousand vehicles to 10,000, though it rarely produced even that many, making it a fraction of the size of other plants in that era, according to his paper. But Anastakis said that workers were bitter when the plant closed in 1998 because it had created high-quality jobs in a region that needed such jobs. In an interview, he said it’s difficult, however, to use the Volvo plant as an exact proxy for what to expect from Chinese EV makers given how much has changed in the sector. Anastakis also said Toyota Motor Corp. also once ran a knock-down plant in the Maritimes, albeit briefly, and it’s now the largest auto manufacturer in Canada. “These companies use this as a way to test the waters, see what kind of reception their products are going to get,” he said. “It allows them to get a beachhead in the market. This is just kind of the lowest form of assembly.” • Email: gfriedman@postmedia.com Canadian auto production fell in 2025 as tariffs and other uncertainty took a biteMeet the Canadian e-bike maker who is redefining the factory floor