3 days Ago By Robert Libman, Special to Montreal Gazette
Article content Quebec has always been fortunate to have premiers with considerable substance and intelligence. Since 1960, 14 accomplished individuals have led Quebec, including nine lawyers, one neurosurgeon and several with strong economic credentials. François Legault is no exception.
As an accountant and business executive, he co-founded Air Transat in 1986, which became one of the largest airline companies in Canada. Legault was drafted into politics by the Parti Québécois in 1998, subsequently holding key portfolios in successive administrations. He left in 2009 and two years later co-founded the Coalition Avenir Québec, offering a “third way” — a break from Quebec’s traditional political party dichotomy of separatism (PQ) versus federalism (Liberal) — and abandoning any sovereignty referendum notion, to instead focus on Quebec’s economic autonomy within Canada.
In 2013 he published his ambitious economic vision of a Quebec “Silicon Valley” with a series of technopark/living environments running along the St. Lawrence River, which would create a valley of innovation and attract hundreds of new companies with thousands of high-tech jobs. It’s therefore not surprising that Legault lunged at the opportunity to invest heavily in the electric car battery sector, a transition to future green technology.
His government, with the feds, quickly committed billions to induce the Swedish battery manufacturer Northvolt to build a $7-billion mega-factory in Quebec . Legault called it the largest private manufacturing investment in the province’s history , saying it would transform Quebec into a global player in the electric vehicle supply chain. Legault’s big gamble on Northvolt, however, is now teetering on the verge of disaster.
The company has been struggling to meet production targets, hampered by delays that led to cancellations of major contracts. They’ve slashed their workforce, cutting back production while growth and demand for electric vehicles slows down. On Thursday, the company announced it had filed for Chapter 11 bankruptcy protection in the U.
S. There was talk that Goldman Sachs might bail out Northvolt, but would require Quebec to cede its financial guarantees to them. Or will Quebec pump in more money to help the Swedish company? Both scenarios are impossible for Legault politically, having no choice but to categorically say no when asked in the National Assembly .
With the experience and economic background Legault brings to the table, the collapse of this project would be a huge blow to his credibility. Obviously, the failure of some economic gambles is beyond one’s control, sometimes due to unexpected changes in the market or circumstances of mismanagement. And few politicians would likely have resisted the sex appeal of a green venture that appeared so promising.
However, Legault often allows politics to temper his business acumen. For any major investment gamble in the private sector, you would roll up your sleeves and do your due diligence with rigorous risk assessment analyses; one wonders if that was done here. Northvolt was founded in 2015 by two former Tesla employees.
The first battery was assembled in December 2021, with the first customer cell deliveries in 2022, barely a year before the Quebec announcement. Northvolt is essentially a startup without any extensive track record. Did attractive political optics outweigh due diligence? Legault paid a heavy political price for abandoning the promised “third link” tunnel project connecting Lévis to Quebec City, which also may have lacked proper analysis as to its feasibility.
In 2022, the Legault government twice doled out so-called anti-inflation cheques to most Quebecers, seemingly to curry favour in an election year, despite warnings by economists that it would backfire. The $6.7 billion in handouts inevitably contributed to the largest budget deficit in Quebec’s history this year.
Thursday’s economic update showed we are still drowning in red ink. Legault’s attack on English universities via tuition hikes was also hastily improvised and destined to induce negative economic spinoffs. François Legault is very capable.
Quebec would be better served, however, if he prioritized his economic instincts over political impulse. Robert Libman is an architect and planning consultant who has served as Equality Party leader and MNA, mayor of Côte-St-Luc and a member of the Montreal executive committee. x.
com/robertlibman.
