In yet another blow to Canadian auto manufacturing, General Motors has announced a further reduction in production out of Oshawa while investing $5.4 billion (about $6.5 billion Canadian) south of the border over the next three years.
All this on the heels of the Canadian government’s selling off its remaining interest in the company, following the $11 billion it paid to GM during the economic crisis of 2009 to help the company recover from bankruptcy and secure Canadian production.
Although the company didn’t fully disclose its spending details, it announced that about $800 million (just under $1 billion Canadian) would go into upgrading Michigan plants in Lansing (where the Buick Enclave, Chevrolet Traverse and GMC Acadia crossovers are produced), Pontiac (body panel stamping for Buick, Cadillac, Chevrolet and GMC models) and Warren (body shop and stamping for future models).
A company statement says “These investments are evidence of a company on the move, strategically investing in the people, tools and equipment to produce cars, trucks and crossovers that are built to win in the marketplace.”
Analysts say it’s GM’s way of paving the road towards contract negotiations with the UAW come fall.
The move is reported to create 650 new jobs in the United States, while the announced closing of a shift at the Oshawa plant will reportedly result in the loss of 1,000 jobs.
That does not bode well for contract negotiations with Unifor in Canada, and many say it is further proof that GM does not plan a future for production in Oshawa, in light of considerably cheaper labour costs in Mexico and a growing trend toward government incentives in some U.S. jurisdictions bent on attracting manufacturing and local jobs.
A March 2015 report from The Centre for Spatial Dynamics, prepared for Unifor, concluded the permanent closure of the Oshawa plants would take a decade or more for those thrown out of work to be reabsorbed into the workforce, but wages would be considerably lower than they would be with the plant remaining viable.
The report estimated an economic impact of about $1 billion annually to revenues for the provincial and federal governments combined (income tax as well as CPP contributions), and a significant reduction in consumer spending, mostly concentrated in Ontario.