Seen from Quebec, General Motors’ decision to move the production of the Camaro south of the border leaves a strong sense of déjà vu.
Ten years ago, the American car maker closed the plant that assembled the muscle car in Boisbriand, Que., a small town north of Montreal. Now it is Oshawa’s turn to watch powerlessly as the Camaro drives off.
GM, which went into bankruptcy protection in 2009, is a very different company now, and the reasons that are causing it to reorganize its production are markedly different today than a decade ago. Yet in both cases, the car maker’s indifference to the subsidies that Canadian governments of all sizes have doled out by the billions smacks of ingratitude.
Quebec long held the dream of building a car industry of its own. But after seeing French car maker Renault and the South Korea’s Hyundai crash miserably, the province had to accept reality. Quebec only had one enduring automobile plant, and that was the old plant built by GM in 1965.
The federal and provincial governments held on to the Boisbriand plant dearly. To modernize the aging facility and to upgrade it with a new paint workshop, they each contributed to a $220-million loan, interest-free, in 1986. Had the two governments demanded, say, 5-per-cent interest, by now they could have reaped some $275-million in interest from the deal. But they chose to let GM ride for free, and the company still hasn’t repaid its 30-year loans, which are due in full on April 1, 2017.
The Boisbriand plant shortly assembled the Cierra and the Celibrity, but lost those models in 1990. With its modernized facility, however, Boisbriand was able to attract the Pontiac Firebird and the Chevrolet Camaro, the iconic American car that had been produced in California until then.
But while Ford kept on investing in its Mustang, GM neglected its rear-wheel-drive models that appealed to a limited number of drivers. A general lack of attention to design and to consumer tastes was a company-wide problem. The neglect of the Camaro was fatal to Boisbriand, an isolated plant far from the production hubs of Michigan and Ontario.
GM’s disregard for Boisbriand’s models, while the car maker continued to invest elsewhere, left a very bitter aftertaste in Quebec after 1,400 workers lost their jobs.
The old GM was a poorly run company. It is a more efficient business now, which is precisely why it is moving the Camaro to its plant in Lansing, Mich. It makes economic sense to bring together the production of the Camaro with that of GM’s other rear-wheel-drive cars such as the Cadillac ATS and CTS.
The move is not the problem: The issue is GM’s cavalier attitude, with an abrupt announcement that held little in the way of reassurance for the Oshawa plant and its 3,700 workers. This decision comes only three months after GM extracted significant concessions from the Canadian Auto Workers, which accepted a two-tier wage contract whereby new hires will start at a lower salary and will take years longer to reach the top scale.
This move also comes on the back of the momentous bailout of the car industry in 2009. Ottawa and Ontario threw a lifeline of nearly $11-billion to GM. While the car maker repaid some of it, there is little hope that the two governments will recoup the missing billions with the more than 140 million shares they still hold – unless GM’s stock was propelled into space in a not-so-distant future. And that bailout was merely the biggest of many cheques that governments have written. Even the smallest plant upgrades are, more often than not, highly subsidized. The Canadian auto industry has received $1.4-billion in project-based subsidies since 2004, according to a recent IRPP study.
The forestry industry, which has gone through its share of hardship in recent years, is green with envy. No other Canadian sector has been better treated – in good days and in bad.
That’s why GM’s lame statement on the Camaro’s departure is too little, too vague. In the American media, unidentified GM sources contended that the move will be offset by other moves, such as a decision to make the newest generation of the Chevrolet Impala in Oshawa. But that car is also manufactured in another plant in Detroit, and some analysts wonder if GM will sell enough of this remodelled sedan to justify both production sites.
Will the production of the Impala stay in Canada once GM’s bailout pledge runs out? GM promised to produce 16 per cent of its North American vehicles in Canada until 2016.
Canada fears that its auto industry will hollow out, and those concerns are not unfounded given the strong loonie and the competitive pressures put by lower-waged jurisdictions such as Mexico or even “right-to-work” states.
A commitment to the Ontario car industry is not much to ask, given all Canada has done for GM. And if GM can’t show a little more gratitude, maybe Finance Minister Jim Flaherty – on behalf of one of GM’s largest shareholders, the government of Canada – should try to flex a little muscle in the boardroom.