The lingering after-effects of the Great Recession are still shredding Canada’s manufacturing sector, more than two years after North America emerged from the downturn.
The latest victim is a Daimler AG’s Orion bus manufacturing plant in Mississauga, which will close within the next 12 months as the company abandons the North American transit bus business, eliminating the jobs of about 200 active workers and another 200 on layoff.
The Germany-based transportation and automotive giant blamed a continued slump in the North American market, uncompetitive costs and no opportunities for export.
“We are facing a very difficult environment in our business with a significant reduction in sales and anticipated ongoing losses,” Richard Ferguson, chief executive officer of Daimler Buses North America, said in a memo to employees Wednesday.
The pace of plant shutdowns has slowed since the frantic days of 2008-2009, but the Daimler closing underlines how Canada’s manufacturing sector is still under severe pressure as companies grapple with globalization, government fiscal restraint and the high value of the Canadian dollar.
Daimler is reacting to the slump in the market for buses as U.S. state and local governments deal with deficits and a slow recovery in tax revenues slashed by the recession.
When the American Public Transportation Association surveyed municipal transit authorities “over 80 per cent said they had to do something: raise fares, cut service or even lay off workers to address their fiscal crises,” Montill Williams, a spokesman for the association, said Wednesday.
Heavy-duty bus deliveries in North America fell 13 per cent last year to 5,154, from 5,933 in 2010. Manufacturers delivered 6,032 in 2009.
U.S. transit authorities are also facing uncertainty because of a delay in the passage of a new transportation bill. The U.S. federal government traditionally finances 80 per cent of the capital cost of new buses, but it’s not clear whether that will continue.
“You’ve got political uncertainty,” said industry analyst Chris Murray, who follows Orion competitor New Flyer Industries Inc. of Winnipeg for investment firm PI Financial Corp. of Vancouver. “They need to have some sort of funding clarity because these are long-term funding priorities.”
The Mississauga workers earn on average $22 an hour putting floors, carpets, windows and body panels on frames that are shipped to the plant from nearby MJ Manufacturing, a unit of auto parts maker Martinrea International Inc.
Those semi-finished buses are then delivered to Oriskany, N.Y., where engines, seats and other parts are installed, which allows the company to meet Buy American rules.
Many Canadian municipalities lack similar rules, said Arastou Rafizadeh, who heads local 2011 of the Canadian Auto Workers union, which represents the Mississauga employees.
Mr. Rafizadeh is a resident of Markham, Ont., which is in York Region, north of Toronto. The regional government purchased buses made in Belgium in 2005.
“These are $20- to $30-an-hour jobs,” he said. “These guys all have houses, mortgages, they buy cars. What am I supposed to tell my 11-year-old daughter when she comes home from school and says: ‘Dad, what happened?’ ”
Manufacturers in Canada have provided the majority of vehicles in York Region’s fleet, spokeswoman Kim MacGillivray said Wednesday.
Daimler has eliminated several thousand jobs in Canada since the turn of the century. It has closed truck plants in Kelowna, B.C., and St. Thomas, Ont., and a school bus assembly plant in Woodstock, Ont.
CAW president Ken Lewenza said he was furious that the closing was announced just weeks after the union signed a one-year extension of the existing contract at the plant.
The Orion closing comes on the heels of the announcement by Caterpillar Inc. of the closing of its London, Ont., locomotive plant after a bitter lockout.
Caterpillar said Wednesday that the closing cost $38-million (U.S.) in expenses and asset impairments.