Skip to main content

Nov. 26, 2018 will be remembered as the day General Motors of Canada Co.’s storied Oshawa auto assembly plant received its death sentence. But perhaps the plant’s fate could be seen in the tea leaves of a happier announcement by the company more than two years earlier.

In June, 2016 – at a time when staff were hoping that U.S. parent General Motors Co. would commit to new vehicle-production allocations for Oshawa Assembly – the company instead gathered the news media in Oshawa to unveil a major new investment not in Canadian cars, but in Canadian intellect. With much fanfare (Prime Minister Justin Trudeau and then-Ontario premier Kathleen Wynne took part in the announcement), the company said it would more than triple its Canadian engineering staff, to roughly 1,000, to focus on software innovation and autonomous-vehicle technology. The major expansion in its Canadian-based R&D would include a huge new software development centre in suburban Markham, Ont., just north of Toronto, in addition to the company’s existing technical centre in Oshawa.

“GM Canada will play an important role in our evolution toward vehicles that are connected, autonomous, shared and electric,” Mark Reuss, GM’s executive vice-president for global product development, purchasing and supply chain, said at the time of the announcement.

Story continues below advertisement

What was conspicuously absent from the announcement was any new long-term commitment to continue making cars in Oshawa. None has come since. The company finally pulled the plug last week; the plant will cease production when its current production allocation expires at the end of next year.

But at the same time, the company continues to increase its footprint in engineering and software. As it prepares to end a century of vehicle production in the Ontario city that became synonymous with making GM cars, a new growth path for the Canadian operation has emerged – as a hub for next-generation automotive technology and innovation.

The Markham facility opened last January, and has more than 400 engineers and software developers working there, on its way to roughly 750 within the next year or two. It has another 250 engineers at its technology centre in Oshawa. The company opened a small innovation lab in the key Canadian tech hub of Waterloo, Ont., in 2016. It has plans for an “urban mobility” R&D campus near downtown Toronto, with up to 200 employees.

Once the Oshawa plant closes and the Markham technical centre is fully staffed, engineers will make up somewhere between 15 per cent and 20 per cent of GM Canada’s employees. A year ago, they made up about 3 per cent.

“We started to see a real opportunity to expand that about three years ago,” said David Paterson, vice-president of corporate and environmental affairs at GM Canada.

“For the past two decades, we have had a significant engineering presence in Oshawa – it started off in 1999 with a small number of people, and then grew,” he said. “It grew and changed as the technology needs changed, to become much more of a software-oriented capability. We learned that we could attract some really great expertise [in Canada].”

The pending Oshawa closing doesn’t mean GM Canada is exiting the car-making business. Even once Oshawa Assembly closes, GM will still have major manufacturing operations at its CAMI Automotive facility in Ingersoll, Ont., which makes the Chevrolet Equinox SUV and employs about 2,700 workers, and at its engine and transmission plant in St. Catharines, Ont., which has about 1,300 employees. But its near-term future, at least, looks much more focused on the technology and development side of the business – a key growth area for the automotive industry as new technologies look poised to supplant traditional motor vehicles in the coming decades.

Story continues below advertisement

“The future of the Canadian auto sector is, indeed, R&D and product development,” said automotive industry consultant Dennis DesRosiers. He noted that while Canada’s role in traditional auto assembly has been dwindling, the country’s auto sector has added roughly 2,000 R&D jobs in the past 15 years.

“It’s small, but it’s growing rapidly,” Mr. DesRosiers said. And with the hiring focused on highly skilled software engineers, he said, “Every one of those jobs is more secure and pays a heck of a lot better than manufacturing jobs.”

GM’s new wave of employees are working on technology for fully autonomous vehicle systems, as well as semi-autonomous “active safety” features such as those that keep a vehicle in its lane and brake automatically to avert collisions. Some are dedicated to the on-board information and entertainment systems in the dashboard, and to connecting vehicle functions to wearables and mobile apps.

The urban mobility centre planned for Toronto’s Port Lands district, meanwhile, will explore future opportunities beyond traditional automobiles – developing technologies to integrate public transportation, ride-sharing and autonomous vehicles. There’s no set date for the Toronto campus to begin operations, but it’s at least two years away.

Despite the rapid expansion of R&D and engineering operations in Canada, they are still modest in the U.S. parent company’s bigger picture. The vast bulk of GM’s R&D work is done in the United States, primarily at its engineering centre in Warren, Mich., a sprawling campus with more than 20,000 employees.

Still, Canada is now one of just two GM engineering hubs outside of the United States – the only other centre for this type of expertise is in Israel, with a facility only roughly half the size of the Markham operation. And Canada may offer some advantages that give it a shot at a bigger slice of GM’s tech pie as the company continues to expand its focus on next-generation automotive technologies.

Story continues below advertisement

“We like Canada because of the talent base,” Mr. Paterson said. In addition to a strong base of expertise in communications software development in this country from the likes of BlackBerry and Nortel, he said GM has been encouraged by the quality of high-skilled graduates coming out of Canadian universities, particularly the University of Waterloo, University of Toronto and McMaster University in Hamilton. And Mr. Paterson noted that Canada’s immigration policies are more conducive than those in the United States to landing specialized high-skilled foreign talent.

He added that Canada’s technology clusters that have grown around places such as Waterloo, Toronto and Markham – where IBM has had its Canadian headquarters for decades – provide a strong support network for GM to develop its technologies.

“There’s an ecosystem here,” Mr. Paterson said. “Just as in manufacturing there’s a big supply chain, there’s quite a sophisticated supply chain that goes with the technology side as well. We like that in Canada.”

Still, many auto industry proponents would prefer to see Canada landing commitments from GM to manufacture the next generation of electric and autonomous vehicles, rather than merely developing technologies for them. Mr. DesRosiers argued that it’s too soon for that – neither the demand nor the technology are ready yet.

“The need for manufacturing capacity isn’t there, and probably won’t be there for another six to 10 years,” he said.

Regardless, he cautioned Canadian policy-makers against chasing traditional auto assembly jobs with government hand-outs and financial incentives, arguing that Canadian technology expertise is where the country’s strength lies in the auto sector of the future.

Story continues below advertisement

“The [government] automotive strategy needs to focus on the six inches between our ears, rather than on subsidizing manufacturing.”

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies