Toronto company opening U.S. plant because of rising Ontario hydro rates

A Toronto-based manufacturer of fasteners says it is opening its new manufacturing facility in the United States because rising energy costs have made Ontario uncompetitive for investment.

Leland Industries employs about 220 people at its plants in Toronto and Waterloo, Ont., and founder and CEO Byron Nelson says those workers will be protected.

But Nelson says Leland’s business is increasing and expanding and Ontario’s high electricity costs make it hard for the company to compete on a global scale.

Nelson anticipates Ontario’s new cap-and-trade system, which comes into effect in January, will cause electricity and natural gas costs to rise even higher.

Nelson says Leland will not invest in Ontario any more because “the costs are just out of sight.”

And he says the company plans a major expansion in production capacity in Illinois.

“This is good news for our company, but bad news for Ontario,” Nelson said Tuesday.

“We’ve prided ourselves that a Canadian manufacturer with the right people, processes, and technologies, can compete with anyone in the world,” he said. “But, we can no longer compete with the escalating energy costs we are seeing here in Ontario.”

Jocelyn Williams Bamford – vice president of Automatic Coating Limited and spokeswoman for the Coalition of Concerned Manufacturers in Ontario – said Leland is one of many smaller and medium-sized Ontario-based manufacturers that are looking to grow and seriously considering investing outside of Ontario.

“Ontario’s energy costs are rising so quickly many manufacturers are reassessing whether it makes sense to expand production in this province,” she said Tuesday in a statement.

Bamford said manufacturers have become more competitive and have been able to reduce emissions at the same time because they have invested in new technologies.

“Higher energy costs leave us less money for investment. And, if manufacturers can’t invest in Ontario, it’s not good for the economy or for jobs in this province. Ultimately, it’s not good for the environment either,” she said.

Nelson said Ontario has already lost a lot of manufacturers and will lose more because those in government “just do not understand.”

Ontario Economic Development and Growth Minister Brad Duguid said in an email that the government recognizes that it has more work to do, “especially when it comes to controlling the costs related to upgrading our energy infrastructure.”

Duguid also noted that the government will be lowering electricity costs for small and medium sized businesses by eight per cent starting Jan. 1, but Bamford said that “won’t come close to offsetting the energy and transportation cost increases that lie in store for smaller manufacturers across Ontario.”