The Globe and Mail

Magna International Inc., battered by production cuts at Chrysler and General Motors, will shut two auto parts plants in the Toronto area next June, eliminating 850 jobs in the latest example of how the U.S. auto slump is creating fallout on this side of the border.

Two plants that are part of Magna's Decoma International plastics unit that supply front and rear bumper covers, body side panels and fenders for those two auto companies only will close next June.

“The difficult decision to close the facility came after a careful evaluation of the facility's financial status, future business and open capacity in other facilities,” Magna said in a three-paragraph statement announcing the closings.

Workers made parts for such slow-selling vehicles as Chrysler's Dodge Durango, Chrysler Aspen and Jeep Grand Cherokee sport utility vehicles and GM's Chevrolet Equinox and Pontiac Torrent.

Overall U.S. vehicle sales fell to an annualized rate of slightly more than 10 million last month from a total of 16.1 million in 2007 and analysts are predicting an equally wretched month in November and only a slight recovery from 2008 levels next year.

The focus in recent weeks has been on assembly plants in Canada with the troubles of the Detroit Three and GM's announcement last week that it is accelerating the closing of its truck plant in Oshawa, Ont.

But the parts industry has been sustaining blow after blow in Canada for more than a year. Magna's third-quarter financial results showed its first quarterly loss since 1991, when it was on the brink of bankruptcy.

Although Magna is in much better shape to weather this downturn because of a cash pile of about $1.5-billion, “we are preparing ourselves for a sustained downturn,” co-chief executive officer Don Walker said on a conference call this month when he discussed those results.

Other Magna cuts include the elimination of 400 jobs at a factory in St. Thomas, Ont., that makes frames for GM pickup trucks and SUVs and consolidation of several small plants in Ontario.

The number of jobs has been falling steadily in the auto parts industry in Canada for several years.

As of the end of August, parts makers employed 79,852 Canadians, down 5,000 from 84,849 at the beginning of the year and almost 20,000 from the peak of 100,000 hit in 2001.