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While the union representing thousands of General Motors workers vows to fight for the survival of the Oshawa Assembly plant, industry analysts and government leaders concede there is little that can be done to prevent the closure of the facility.
GM announced Monday it will halt production at its Oshawa, Ont. plant and four other North American factories, cutting thousands of jobs as part of a global restructuring plan and increased focus on electric vehicles.
Production will wind down at the Oshawa facility before ending in December 2019, leaving nearly 3,000 workers without jobs. The plant is one of five GM listed as “unallocated”, meaning the facilities will close unless a new vehicle program is assigned to the plant.
The cuts are part of a significant restructuring plan that will see GM halt production three assembly plants – including Oshawa, Detroit, Mich. and Warren, Ohio – and two propulsions factories also in the United States. GM will also cut 15 per cent of its salaried and contract salaried workforce. The strategy is expected to save the automaker $6 billion.
“They told me straight up there is nothing we can do.”
– Ontario Premier Doug Ford
The Oshawa Assembly plant currently produces the Chevrolet Impala and Cadillac XTS, and its second line was recently repurposed as part of a $500 million investment to begin finishing production of its popular GMC Sierra and Chevrolet Silverado trucks.
Oshawa had ‘hardest future ahead’
GM said the Oshawa Assembly plant had been “running well below full capacity for several years.” The company also said that with consumers shifting more towards SUVs and trucks “there are no available new vehicle programs” to fill the gap at the plant that will be left when production stops next year.
“GM either needed to make major reinvestments – which they may do – or they had to close some plants,” said Kristin Dziczek, vice president of economics at the Center of Automotive Research (CAR). She added that Oshawa likely has the toughest path ahead in terms of trying to secure future production.
“Of the three assembly plants on the list, Oshawa is the oldest and it is on the side of the border that is not advantaged with Trump’s trade policy …. it has the hardest future ahead of it.”
That is a sentiment that Ontario Premier Doug Ford echoed on Monday. Ford said he spoke to GM officials on Sunday and asked whether there was anything that the province could do to ensure the plant could stay open.
“They’re gone, they’re done,” he said during Question Period on Monday.
“They told me straight up there is nothing we can do.”
Union will ‘vigorously fight’ decision
Jerry Dias, the president of Unifor, the union representing about 2,500 workers at the Oshawa plant, said it will “not accept the closure of the plant as a foregone conclusion” and demanded that GM allocate a new vehicle program to ensure it stays open past 2019.
“They are not closing our damn plant without one hell of a fight,” Dias told a crowd of workers in Oshawa on Monday.
Shell-shocked workers were sent home by the union on Monday amid word that the plant would be closing next year. Word of the pending closure began swirling Sunday night, blindsiding workers and civic officials alike. Oshawa’s mayor said he had no inkling of what will be the latest blow to the city 50 kilometres east of Toronto.
Unifor is scheduled to meet with GM officials on Monday afternoon.
“They’re not closing our plant,” Greg Moffat, the chair of Unifor Local 222, told workers on Monday.
‘Impact will fall squarely on Ontario:’ BMO
According to a report released Monday afternoon by Bank of Montreal Capital Markets, the Oshawa Assembly closure would impact Canada’s GDP by 0.1 per cent to 0.2 per cent over a full year.
“From a regional perspective, the impact will fall squarely on Ontario, as the auto sector plays a significant role in the province’s economy,” the report said. While the auto sector has been declining in Ontario since peaking in 2005, the analysts expect “full-year growth impact from the shutdown could be in the 0.3 to 0.5 percentage point range for the province.”
Both federal and provincial leaders vowed to help the nearly 3,000 people that may lose their jobs by the end of next year. Prime Minister Justin Trudeau said on Twitter that he spoke with GM’s chief executive Mary Barra to express his “deep disappointed” at the closure.
Ford said in a statement the government is exploring measures to help workers, businesses and communities that will be affected by GM’s decision. Ford also said he has authorized Employment Ontario to deploy its Rapid Re-Employment and Training Services program to help impacted workers.
In recent years, GM has been adjusting its production capacity to meet increased consumer demand for SUVs and trucks, while also ramping up its electric and autonomous vehicle programs.
“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” GM’s chief executive CEO Mary Barra said in a statement. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”
Dennis Desrosiers, president of DesRosiers Automotive Consultants, said in a note to clients that production at the Oshawa facility has been declining for more than a decade.
“The writing has been on the wall for quite some time so it was a matter of when, not whether they would make this move,” Desrosiers wrote.
“Can it be saved? Probably not. But it is still worth the fight to get something out of this. We might not be able to save these jobs, but GM is a very large company with a lot of economic clout and having a backbone on this issue might help us in the future.”
With files from the Canadian Press