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Oshawa Plant Closure

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Retrain Employees

OSHAWA, Ont. — General Motors of Canada Co. is working to set up jobs and training programs for employees who will be put out of work when it closes the Oshawa Assembly plant next year even as Unifor promises an extended fights to keep the operation open.

The auto giant said Friday that several employers have identified about 2,000 jobs that will become open in Durham region in 2019 and 2020 — many of them related to the refurbishment of the Darlington nuclear power plant southeast of Oshawa.

General Motors has also identified 300 openings for auto technicians at GM dealerships in Ontario and 100 jobs that will be open at other GM facilities in Ontario.

In addition, GM estimates about half of the 3,000 unionized and salaried employees are eligible to retire under the company’s defined benefit pension plan — leaving about 1,500 who will want to transition to new occupations.

The city of Oshawa and surrounding areas east of Toronto were shocked last month when the highly rated Oshawa Assembly plant was included as one of five North American GM plants identified to close next year.

GM Canada vice-president David Paterson said the company is committed to spend millions of dollars to ensure its employees get the retraining they require, with an initial estimate of between $5 million and $10 million, but the exact amount will depend on what other employers provide.

“What we want to do is to assure employees that their training will be taken care of. We’ll make sure that there’s enough money to do that,” he said in an interview.

GM Canada says Durham College will also establish a confidential internet portal in the new year to help auto workers identify job openings and begin plans to take retraining courses offered by a consortium of colleges.

Unifor president Jerry Dias said in an interview that the training commitment is just a distraction from the company’s lack of commitment to Canada.

“All of these announcements that General Motors is making about retraining, they’re trying to hide the fact that they’re a terrible corporate citizen.”

GM says it will be discussing further benefits packages for employees with the union, but Dias said the focus is entirely on saving Oshawa. If the plant closes, GM’s only Canadian assembly plant will be CAMI in Ingersoll, Ont., which produces the same Chevrolet Equinox the company produces in Mexico.

“If there’s going to be a reduction in volume, guess where they’re taking it out of?” said Dias.

“It’s all intertwined. GM is leaving Canada, and we’re not going to let them. That’s what the bottom line is here….we are going to waste General Motors over the next year. Waste them.”

Paterson said GM recognizes that the union has voiced “some strong opinions” but thinks it would be good for employees if they have time to plan for their future.

“We have an obligation and duty to work with our union to determine — in addition to our pensions and the income supplements our employees will get — what things we can provide,” Paterson said.

He said two of the prospective employers that came to GM after the closure announcement are Ontario Power Generation and Aecon, a construction company, working on the nuclear plant’s refurbishment.

“They have huge needs in terms of millwrights, boiler makers, electricians and a number of areas where our employees are especially suited to that type of work and have great experience,” Paterson said.

Why GM Closed its Oshawa Plant

General Motors didn’t blame a trade deal or government policies for its decision to eliminate nearly 3,000 jobs at the assembly plant in Oshawa, Ont. Instead, the culprit was a dramatic drop in consumer demand for cars, a shift that Canada’s entire auto sector must grapple with as it vies to remain competitive in a global industry.

These days, consumers want crossovers, sport utility vehicles or trucks – if they’re buying vehicles at all. In Oshawa, workers built sedans.

GM announced Monday it will shutter eight plants – one in Canada, four in the U.S. and three outside North America – by the end of 2019, a global restructuring that will slash 6,700 production jobs and save the company US$6 billion annually. It will invest that cash in electric vehicles and self-driving cars, industries of the future, instead of cars like the Chevy Impala that evoke memories of the past.

Oshawa’s assembly plant will be the largest closure with 2,973 job losses, followed by the plants in Ohio and Detroit.

David Paterson, General Motors Canada’s vice-president of corporate affairs, said the Oshawa plant has some of the highest quality production and insisted GM has “outstanding” support from the Canadian government. But he said it was particularly vulnerable since it made cars and operated at one-third capacity for the past several years. GM chief executive Mary Barra is not prepared to run plants at that capacity when it needs cash to invest in self-driving cars and electric vehicles, Paterson said.

“Right now the auto industry is being massively disrupted and we’re trying to get ahead of that,” he said. “If the company doesn’t take bold steps to move to the new technology, then there won’t be any jobs.”

GM will also downsize the number of salaried employees, contract staff and executives in the restructuring. It comes as auto production passes a peak in Canada and the U.S., said Doug Porter, chief economist at BMO Financial Markets.

U.S. auto sales topped out at 17.5 million vehicles in 2016, but production fell to 17.2 million in 2017. BMO estimates it will slide to 17.1 million this year. In Canada, production peaked at 2.07 million cars last year and is expected to slip just below two million in 2018.

“Those are still pretty healthy numbers but it reinforces that we are past the peak in this cycle,” Porter said.

The Oshawa plant, which made the Chevrolet Impala, Cadillac XTS and previous generation Silverado and Sierra trucks, contributed six per cent of total Canadian auto production. In Ontario, the auto industry accounts for about 2.5 per cent of the GDP without including spinoff industries, Porter said.

The news sent workers reeling, with some walking off the job Monday as their union, Unifor Canada, promised to fight for their jobs at the facility, begun a century ago.

“Unifor does not accept the closure of the plant as a foregone conclusion,” Unifor National president Jerry Dias said in a statement. “We will vigorously fight again to maintain these good-paying auto jobs.”

Closure has loomed over Oshawa before, Unifor noted, but GM invested $500 million into the plant so it could build trucks as well. It launched the Silverado and Sierra lines in February, but those will also be discontinued.

While industry watchers expected GM to reduce production at the plant, the complete closure of operations was unexpected, said Scotiabank economist Juan Manuel Herrera Betancourt.

GM production in Canada declined from a peak of one million units in 2007 to 330,000 projected for 2018, he noted, reflecting reduced auto demand and a shift of some production to Mexico. Plus, he added, consumers prefer SUVs.

“The plant has been underutilized for about three years, with production only at 36 per cent of max capacity this year compared to 76 per cent in 2014,” he said.

A General Motors worker attends an information meeting at Unifor Union Hall in Oshawa. Cole Burston / Bloomberg

GM will keep its head office in Oshawa, where it will continue to employ about 2,000 people.

Dennis DesRosiers of DesRosiers Automotive Consultants was surprised by the timing of the decision, but said it was only a matter of time given the drop in production at the plant. He too believes Canada has passed its peak for car production.

“At its peak total, Canadian production across all companies was over three million units and lately we struggle to get two million units out of our remaining plants,” he said. “I am not saying that Canada will become Australia and eventually lose all its vehicle assembly operations, but there is more to come, I just don’t know which plants and when they will disappear.”

For Canada’s part, DesRosiers said it must invest to remain competitive in a global industry or it will see more closures. He doesn’t think the Oshawa plant will be saved, but said it’s worth a fight and called on the government to help the workers. He said the workers and the union aren’t to blame, given uncompetitive labour costs were sorted out with the near bankruptcy back when Canada bailed out GM and Chrysler a decade ago. (That left taxpayers on the hook for $3.5 billion.)

Still, he said GM needed to make this tough decision to avoid another bankruptcy like it faced in 2009, when governments bailed out the auto sector.

“Strangely, although this decision is devastating for the workers at the plant and the suppliers feeding the plant, it also shows the strength of GM in today’s automotive sector,” DesRosiers said.

Martinrea International Inc. is one of the 100 suppliers to the Oshawa plant that will be affected by the GM closure.

While the plant represented less than one per cent of Martinrea’s business (it reports revenue of about $3.5 billion to $4 billion annually), executive chairman Rob Wildeboer said 77 employees will be without work at its Ajax plant come 2020 unless something changes.

He’s saddened by the closure, but said it wasn’t surprising given consumers are more interested in SUVs. For instance, Martinrea recently increased the number of people working on parts for GM’s Chevrolet Equinox, a small SUV, to 500 people from 200 people at its Toronto facility.

At the end of the day, Wildeboer said Canada will attract and maintain assembly plants based on overall competitiveness, including taxes and research and development funding. The federal government’s announcement for accelerated depreciation is a good move, he said, but this comes after years of added costs to the sector.

“What the Oshawa closing shows is that there’s work to be done to make us more competitive in advanced manufacturing,” he said.

Vocabulary

  • bail out – help by investment form government
  • commitment – the state or quality of being dedicated to a cause, activity, etc
  • committed – pledged or bound to a certain course or policy; dedicated
  • culprit – the cause of a problem or defect
  • deprecation – a reduction in the value of an asset over time, due in particular to wear and tear
  • devastating – highly destructive or damaging
  • distraction – a thing that prevents someone from concentrating on something else
  • eliminate – completely remove or get rid of (something)
  • foregone – past
  • grapple – engage in a close fight or struggle without weapons; wrestle
  • intertwined – twist or twine together
  • loom – appear as a vague form, especially one that is large or threatening
  • millwrights – a person who designs or builds corn mills or who maintains mill machinery
  • occupations – a job or profession
  • outstanding – exceptionally good
  • prospective – expected or expecting to be the specified thing in the future
  • put out – In a sporting competition, to put out a player or team means to defeat them so that they are no longer in the competition
  • refurbishment – is the act or process of cleaning it, decorating it, and providing it with new equipment or facilities
  • shutter – close the shutters of (a window or building)
  • slash – reduce (a price, quantity, etc.) greatly
  • spinoff – a by-product or incidental result of a larger project
  • supplements – a thing added to something else in order to complete or enhance it
  • top out – If something such as a price tops out at a particular amount, that is the highest amount that it reaches
  • vie – compete eagerly with someone in order to do or achieve something
  • vulnerable – exposed to the possibility of being attacked or harmed, either physically or emotionally

Sources of information was used for preparing this article:

  1. Canadian Business
  2. Financial Post

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