Queen’s Park and Ottawa are teaming up to hand over $100 million to a Guelph auto parts giant to create 1,200 jobs.

Premier Kathleen Wynne said Ontario would grant Linamar Corp. $50.25 million, while the federal government was lending the company an additional $50.7 million to develop the next generation of automotive transmissions.

“By partnering with companies like Linamar, we are positioning the province for growth now, and for years to come,” Wynne said Monday in Guelph.

Federal Transport Minister Lisa Raitt, whose Conservatives are headed to the polls later this year, said Ottawa was happy to lend Linamar a hand — and money.

“Canada has much to offer automakers and parts manufacturers: our automotive innovation fund, the new Windsor-Detroit bridge, support for automotive R&D, a stable economy, a low corporate income tax rate, a highly skilled and productive workforce, well-developed infrastructure and access to markets,” said Raitt.

Linda Hasenfratz, chief executive officer of Linamar, which employs 19,000 workers at 45 locations around the world, said the firm’s Ontario’s factories are its “most productive globally.” It has 6,870 workers in Ontario.

Hasenfratz said the grant and loan would ensure the company continues to innovate.

“It is critical for our governments to also create a competitive environment for companies to invest, and they certainly have done so today with this funding, in addition to a competitive tax rate and support for innovation and education unparalleled globally,” she said.

It was the second time in two months that the federal government has made a major announcement involving Canada’s manufacturing sector.

Ottawa announced in December it would provide $300 million in loans to aircraft engine maker Pratt & Whitney to support its plants in Mississauga and Longueil, Que.

The auto and aerospace sectors create some of the country’s best-paying jobs.

But automakers have been shifting long-term production plans to the southern United States and to Mexico in recent years, citing lower wages and a rising Canadian dollar.

Higher vehicles sales in North America have helped moderate the impact in the short term as Canadian assembly plants and parts suppliers reaped the benefits of rising demand, said Carlos Gomes, auto analyst with Scotiabank.

As well, a six-month plunge in world oil prices and a strengthening U.S. economy have combined to depress the value of the Canadian dollar, making the country’s manufacturing sector more competitive, Gomes said.

Sales by Canadian auto parts makers to the U.S. market rose 16 per cent in 2014, Gomes noted. The U.S. market accounts for 93 per cent of Canadian auto parts makers’ exports.

Even Mexico is buying more from Canadian auto parts makers, Gomes added, noting that shipments rose 26 per cent last year, albeit from a very small base.

As a result, hiring in Canadian auto parts plants was up 5 per cent in 2014, Gomes said, and employment had reached 70,000 by the end of October, up from a decade low of 60,000. That’s still below the 2003 peak of nearly 100,000, he said.

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With North American vehicle sales expected to set a new record in 2015, Gomes said, Canada’s parts sector will continue to benefit. Each vehicle made in North America contains about $1,600 in Canadian-made parts.

With files from Dana Flavelle

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