Canada's Linamar to 'immediately' break ground on new EV supply plant

Canadian auto supplier Linamar Corp. plans to break ground “immediately” on a new plant in Welland, Ont., that will house three giga-casting presses capable of producing very large aluminum structural parts for electric vehicles. 

The Guelph, Ont.-based parts supplier announced the new site in the city south of Niagara Falls as it reported its first-quarter earnings on Wednesday.

Company CEO Linda Hasenfratz said the state-of-the-art plant will be a “flagship location” for the company’s structural castings business.

"As the first supplier to invest in this equipment in North America, Linamar will naturally take a market leadership position in this technology,” she told analysts on a conference call Wednesday.

Pioneered by Tesla, giga-presses are used to produce large structural vehicle components, replacing parts that previously required numerous welds with a single aluminum piece.  

Linamar COO Jim Jarrell said the investment is the next step in the company’s high-pressure die casting strategy, and follows an “increasing trend” for cast aluminum in vehicle architecture. 

"The Welland Giga casting facility will have capabilities few companies in the world possess. … Structural aluminum castings offer an alternative to traditional steel stamping and weldments, creating a less complex and more lightweight solution for OEMs."

Linamar said the new plant will house three 6,100-ton high-pressure die cast machines,

“To date, this size tonnage from a parts supplier only exists in Asia, and shipping from Asia for a part this size is just not going to happen,” Hasenfratz said on the earnings call.

The first of the three giga presses is set to be installed in January 2024.

“Production on our first contract [will be] starting about a year after that,” Hasenfratz added. She did not name the initial customer, but said the company is seeing “significant interest” from automakers.

Linamar did not disclose the precise value of the investment in Welland, but Hasenfratz said the company’s capital expenditures will be “significantly up” from the C$411 million ($305 million USD) it spent across its global operations last year, and that the Welland facility accounts for a “big chunk of it.” The company spent C$162.7 million in capex in the first quarter of 2023.

The new plant will be built at 59 Canal Bank St., according to the City of Welland, a brownfield site that once housed a portion of Union Carbide's electrode production plant that closed in 1999, and the Page Hersey pipe mill, which later passed through succession of owners, including steelmaker Stelco. It was most recently known as Energex Tube before its closure in 2014. 

"Linamar’s presence in our community signals the next wave of investment in our local economy and is a testament to the progressive steps Welland is taking,” the city's Mayor Frank Campion said in a release. 

The plant will cover about 300,000 square feet and will employ about 200 workers, the city said.

Construction will start in Welland immediately, and parts production will begin in February 2025, Linamar said. 

In its Q1 earnings report, the supplier said sales increased 29 percent to C$2.29 billion, a new record for a quarter. Linamar said earnings before interest, taxes, depreciation and amortization were C$297.1 million, up 41 percent over the C$210.8 million for the same quarter a year ago.

Future work continued to trend toward EVs. Nearly 80 percent of the contracts Linamar secured during the quarter were for EV or propulsion-agnostic components. The company forecasts the segment will make up half its business by 2027.