GM Oshawa plant closures would have sweeping economic impact: Unifor

It feels a bit like Canada’s auto industry is circling the drain.

With General Motors of Canada shuttering one of its Oshawa plants next year and the future of the other up in the air with no new vehicles in the pipeline and production of vehicles – like the Chevrolet Camaro – headed to Lansing, Michigan, Canada stands to lose big, according to an economic impact study released by Unifor – the union which represents Canadian autoworkers.

The closures would wipe out 30,000 jobs, strip the federal and provincial government of $1 billion in revenue a year and erode the province’s GDP by $5 billion in 2016 alone, says the report.

“Clearly Canada is getting beat by far more aggressive competitors south of the border,” says Pete Mateja, co-director of the Office of Automotive and Vehicle Research at University of Windsor’s Odette School of Business. “We’ve got a highly-educated work force and good work ethic but the cost of doing business, it’s expensive here, and when you throw in some of the other related costs that go with running a facility it really does add up.”

While 4,100 are employed between the plants and GM’s head office in Canada, the report found an additional 25,000 to 29,000 spillover jobs tethered to the auto sector – like nearby services and suppliers – would fade. Annual wages in the province would decline by $350 by 2018, says the study.

“Automotive jobs just pay a lot more than other jobs, it changes the way people live,” says Majeta. “If you have an auto plant there it’s going to draw businesses into the area – this is one of the reasons why places like the southern states and Mexico are vying desperately to get automotive assembly jobs.”

The report also found the permanent shutdown of GM’s Oshawa plants would reduce Canada Pension plan contributions by $130-million to $140-million just in the year of the closing. But the Oshawa plans are canaries in the otherwise struggling auto sector.

Canada’s automotive trade deficit hit $10-billion last year as automakers pumped money into Mexico to take advantage of the country’s low wages and extensive list of free trade agreements with 45 countries.

“From Mexico you can ship to South America, you can ship to North America you can ship to Europe and there’s incentives,” says Mateja. “When we were booming we had a weaker Canadian dollar, when it’s at par that definitely hurts.”

But it’ll take more than Canada’s dwindling dollar to save the automotive sector says Majeta.

“Having incentives and having variable union contracts helps as well,” he adds.