Hitachi announces $479M plan to build transformer insulation factory in London, Ont.

Hitachi Energy and the federal and Ontario governments have announced a $479-million plan to build a new transformer insulation factory to help meet skyrocketing demand from data centres, green energy and industrial development.

“All those investments are creating more demand for components, and transformers are a major element in the customer energy chain,” Bruno Melles, chief executive of Hitachi’s transformers business unit, said in an interview ahead of Friday’s announcement in London, Ont.

“Because in every place where there is power generation and in every place where there is a connection, there is a transformer.”

The 21,000-square-metre facility would be the first in Canada to produce pressboard — a material made from paper pulp that’s key to keeping transformers cool — and the first Hitachi would establish in the Americas. Currently in Canada that material sourced from Europe, Melles said.

Construction is set to be complete by the end of 2028 and the project is expected to create 100 permanent skilled jobs.

Hitachi is shouldering the bulk of the investment, with the federal and Ontario governments collectively contributing $50 million.

Of that, $20 million is through the federal strategic response fund, $10 million is from Natural Resources Canada and up to $20 million is through the Invest Ontario Fund.

The power industry has been dealing with supply chain challenges as electricity demand booms. The factory aims to ease at least one of the big pinch points.

“Today we are in a situation where the industry for transformer manufacturing is going at a very high speed, but not all the industrial parts are going at the same speed,” Melles, who is based in Zurich, said.

“This is why we want to give a strong message to the market and say, ‘We want to be an integral part of the supply chain resilience and we are going to invest in order to ensure that the market is not going to have any shortage.'”

In May, Prime Minister Mark Carney announced Canada’s new electricity strategy, which aims to double the country’s electricity grid by 2050.

“Electricity demand in Canada is growing at an unprecedented pace, something we’ve never seen before,” said Carla Vicente, managing director of Hitachi Energy’s Canadian division, in an interview.

“By ensuring that we have this factory operational by the end of 2028, we will be able to respond to the higher needs and demand for the transformers that are an essential part of anything that we want to do to be able to electrify.”

Building new infrastructure has been a key focus for Carney’s government, and several power and transmission projects have been referred to the major projects office for a streamlined review.

“By investing in the critical infrastructure needed to power our future, we are supporting economic growth, creating good-paying jobs and strengthening Canada’s economic security,” Industry Minister Mélanie Joly said in a news release.

Vic Fedeli, Ontario’s minister for economic development, job creation and trade, said in a news release that the Hitachi investment will help position the province as a central hub for advanced manufacturing projects.

“In the face of global economic uncertainty, our government continues to foster the competitive conditions needed for global companies to confidently expand their presence in Ontario and invest in long-term projects.”

Melles said the site for the new factory in London was not chosen “as a coincidence.”

He said it will be a good fit with another operation Hitachi has in the southwestern Ontario city. In June, it announced the acquisition of Canduct, a manufacturer of insulation kits and components.

“To have a location that is very, very close to Canduct will allow a simplification of the supply in the value chain, a dramatic reduction of the risks connected to logistics, and then of course we can count on having access to fresh and clean water that is an integral element for the production of insulation material.”