General Motors is shuttering its plant in Oshawa as part of a restructuring of its global operations to focus on autonomous and zero-emission vehicles, sources say.
Two sources, who were briefed on General Motors’ plan, said the Oshawa plant will be completely closed down. Those sources said Canada isn’t the only country affected by the auto giant’s move to shift its investment away from traditional vehicles.
The offices of Prime Minister Justin Trudeau and Ontario Premier Doug Ford were informed of the decision late Sunday before the official announcement on Monday. A federal official later told The Globe and Mail that the government will be examining the impact of the closing and what measures it might take to help laid off auto workers.
Last fall, GM laid out its strategy to expand its presence in the market for electric cars, saying it would introduce two new models within 18 months as part of a wider push toward a zero-emissions fleet. The company said it planned to launch 20 new electric vehicles by 2023, but did not set a date for an all-electric offering. At the time, the company said it did not expect jobs to be lost in the move to electric vehicles.
GM employees have been told to expect an announcement at 10 a.m. on Monday morning, but have not been given details.
Unifor said in a statement that GM has told it the plant is slated to be idle in a year.
“There is no product allocated to the Oshawa Assembly Plant past December 2019,” the union said, adding it believes the move violates a previous undertaking made by GM.
The GM plant, just east of Toronto, employs 2,500 unionized workers and assembles the Chevrolet Impala, Buick Regal, Cadillac XTS and Chevrolet Equinox. It also finishes Chevrolet Silverado and GMC Sierra trucks. Oshawa is the company’s Canadian headquarters and home to its technical centre, which works on chassis systems, alternative fuels and engineering support for vehicles.
“All I’ve been told is there’s an announcement at 10. They haven’t said too much other than there’s an announcement and [it] could affect the Oshawa facility,” said one person, who did not want to be identified because he is not authorized to speak to the media on the matter.
David Paterson, a GM spokesperson, said the company had nothing to announce on Sunday night and would not comment on “speculation.”
The plant was saved from imminent closing in 2016 by a GM plan to invest $400-million to upgrade an assembly line. The union representing the autoworkers, Unifor, said at the time the investment dispelled fears the factory would close in 2019.
However, automakers in Canada face higher costs of labour and other expenses than at factories in parts of the United States and Mexico.
The news comes shortly after the renegotiation of the North American free-trade agreement. Talks for the new three-way deal yielded increases in the North American content of tariff-free vehicles to 75 per cent from 62.5 per cent, in addition to requiring 40 per cent of a vehicle be made by workers earning US$16 an hour, a shift that favours Canadian and U.S. car plants over those in Mexico.
The proposed trade deal did not address tariffs U.S. President Donald Trump imposed on imported steel and aluminum of 25 per cent and 10 per cent, respectively. Ford Motor Co. said the metal tariff will cost it US$1-billion in profits.
Flavio Volpe, president of the Automotive Parts Manufacturer’s Association, said there has been a surge of investment in Mexican auto plants ahead of the recent free-trade talks. He noted GM’s Oshawa plant has, like other Canadian plants, elevated operating costs, even as it won industry awards for producing high-quality vehicles.
“General Motors in Oshawa has been the anchor in that region since 1908,” Mr. Volpe said by phone.
Departing Oshawa mayor John Henry said in an interview Sunday evening said he had only heard about the closings through media reports and that he had not been in touch with anyone at GM.
“I’m still shocked and hoping it’s a rumour,” Mr. Henry said.
Mr. Henry said he has family members who still work at GM. His father was a line worker and foreman at the plant, and his sister worked there while in university.
“It [the closing] will affect a lot of people. Not every auto worker that’s in the plant lives in Oshawa. It will affect a lot of communities, Port Hope, Cobourg, Peterborough, Lindsay, City of Kawartha Lakes and then all of Durham region,” he said.
Detroit-based GM, in June, warned the U.S. government that escalating tariffs on metals as well as imports from China and Europe would lead to higher auto prices, lower sales and fewer jobs.
“The correlation between a decline in vehicle sales in the United States and the negative impact on our workforce here, which, in turn threatens jobs in the supply base and surrounding communities, cannot be ignored,” GM said. “Alternatively, if prices are not increased and we opt to bear the burden of tariffs or plant moves, this could still lead to less investment, fewer jobs, and lower wages for our employees.”
In October, the Detroit News reported GM offered voluntary severance packages to 18,000 salaried employees in North America.
GM posted a profit of US$2.5-billion in the most recent quarter, although sales volumes fell by 15 per cent from the same period a year earlier.
OTTAWA BUREAU CHIEF
The Globe and Mail, November 25, 2018