JFE Shoji Power Canada calls for greater investments in electrical transformer manufacturing

Ron Harper needs you to know how important electrical transformers are.

The President and CEO of JFE Shoji Power Canada is at the helm of a transformation in Ont., trying to elicit support from industry and government in increasing the size of our electrical grid.

With the Federal government promoting the electrical vehicle manufacturing supply chain, and the increased investments in the number of electric vehicle chargers, the need for a stronger power grid also increases.

“We buy coiled electrical steel. Of which, there are two types, grain-oriented, and non-oriented electrical steel. Grain-oriented goes towards electrical transformer equipment. Non-oriented goes into motors and generators.”

Ron Harper broke down the key business of what JFE Shoji Power does at its manufacturing plant in Burlington, Ont.

“We take grain-oriented steel and make transformer cores. These cores form the primary component of the transformer which provides power to our buildings, homes and vehicles.”

What the transformer manufacturing leader wants you to know, however, is how critical the industry is as a whole for Canada’s growing electric vehicle supply chain.

“There’s not enough of this material, there’s only one producer in North America. With our shift to a net-zero economy, there’s going to be a severe shortage shortly unless we do something to support the electric grid,” says Ron Harper.

“There are two main issues that exist today in electrical transformer manufacturing. There’s more than 50M in our current grid, 70% are past their due date and need to be replaced. Because of the expanded use of electricity, we need to double the electrical energy available. In the next 10-15 years, we will need to replace equipment and double its capacity to support Canada’s decarbonization efforts,” he says.

Ron posits that there’s a massive shortage of electrical transformers across North America. The data supports this. The Conference Board of Canada’s report on electric transformer manufacturing shows that a huge shortage is on the horizon and more domestic manufacturing is needed.

Canadian Manufacturing sat down with the JFE Shoji Power Canada leader to hear about the need for more electrical transformer manufacturing, and take a walkthrough of the plant’s manufacturing operations.

Ron Harper says that over 70% of electrical steel raw material is made in China, Korea, and Japan. There’s one producer in Brazil, and one in USA, and if North America wants to support its growing electrification efforts, they will need massive quantities closer to home, enabling stronger supply chains and more local transformer manufacturing.

On top of this, Ron Harper says it would take only 3-5 years to set up more electrical transformer manufacturing operations in North America. This is what the JFE Shoji Canada leader believes is the solution.

“I think we need new production. If we need to build out our electrical grid in North America and Europe, it would make sense to rely on electrical transformers in North America and Europe as well.”

Supply chain challenges with these materials and the capacity to produce this equipment in North America are still currently a challenge. A CBC story from 2022 shows that power generation in Canada is far behind what the nation needs to meet its net-zero goals.

JFE Shoji Canada is trying to raise awareness at all levels of government to expand manufacturing capacity.

“Our government’s been focused on the battery supply chain, which is just a part of the solution. We need to focus on supporting the grid through more transformer manufacturing as well,” Ron says.

Currently, the CEO is lobbying the federal government to include electrical transformer manufacturing operations as part of the government’s clean investments tax credit. This kind of tax credit could potentially attract more manufacturing to Canada.

When asked if these kinds of incentives and investments in transformer manufacturing would bring more competition to JFE Shoji Canada’s business, Ron was forthcoming.

“There’s going to be more competition anyways. The demand for electrical power is going to be significant. All of our customers today want to double their production over the next few years. And yes, that will mean foreign investment and more competition from other companies. But the supply chain needs to expand, and it’s not just going to happen through one or two companies.”

This is a significant focus for Ron Harper and JFE Shoji Canada, and as Canada heads towards a net-zero economy and invests in clean technologies, manufacturers are saying that our grid needs more support.