How changing American demand helped breathe new life into GM’s Oshawa plant

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Americans are buying more pickup trucks in the midst of the COVID-19 pandemic, and that is spurring the unlikely rebirth of General Motors vehicle production in Oshawa, Ont.

The assembly line east of Toronto, closed since December, 2019, is being refitted to make Chevrolet Silverados and GMC Sierras, which are scheduled to start rolling off the line in January, 2022.

“We’re working hard to try to make this the fastest turn around ever of a plant,” said Scott Bell, chief executive officer of GM Canada. “The truck business is booming and we want to take advantage of that.”

GM announced the shutdown of the Oshawa assembly line and four U.S. plants in late 2018, cancelling the production of poorly selling passenger cars as it freed up money to invest in the development of electric and self-driving cars. About 3,000 people were laid off in Oshawa.

The GM shutdowns included the Chevrolet Cruze factory in Lordstown, Ohio; the Impala and Cadillac plant in Detroit-Hamtramck; the sedan transmission plant in Warren, Mich., and Oshawa, which made the Chevrolet Impala and did finishing work on pickups.

Mary Barra, GM’s CEO, said at the time: “The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future.”

In Oshawa, that future is V-8-powered pickup trucks.

Detroit-based GM is investing more than $1-billion in the plant, hiring 1,400 to 1,700 people to make heavy and light-duty trucks, the only plant in North America with that capability. With truck sales in the United States booming, GM tapped the mostly empty facility to meet the demand.

James Griffin, general sales manager at Robert Basil Buick GMC, a dealership in Orchard Park, south of Buffalo, N.Y., said the GMC Sierra trucks have been popular for years as a family car or work vehicle.

“Demand is super high. We can’t keep them in stock,” Mr. Griffin said.

The buyers of the Sierras, which have a list price of US$50,000, are “anyone and everyone. Including myself,” Mr. Griffin said. “I’ve had a truck for seven years now and I’d never go back.”

GM’s Mr. Bell said already-strong truck sales received a new boost in the pandemic as people flocked to such solo or family recreational activities as boating, trailer camping and motorcycling. “All those things require trucks to haul them around,” Mr. Bell said. “So people are certainly accelerating their interest in the truck segment.”

Light truck sales in Canada rose by 2 per cent in 2019, compared with a 22-per-cent drop in passenger cars, DesRosiers Automotive Consultants said. The light-truck segment, which includes sport utility vehicles, is the biggest seller, comprising more than half of the U.S. market and at least 70 per cent of Canadian sales. In the three months ending Sept. 30, light trucks accounted for 80 per cent of sales of trucks, SUVs and sedans, Desrosiers said. Passenger car sales fell by 21 per cent in the same period, from a year ago, while light trucks sales rose by almost 2 per cent.

The GM plant’s reopening will bring jobs back to Oshawa and the surrounding region, and has already given the area a lift as construction work gets underway, said John Henry, regional chair of Durham, which includes Oshawa.

“It’s a great story,” said Mr. Henry, whose parents and two brothers worked at the plant. “It’s about auto workers getting back to the plant that has contributed for over 100 years, and then the spinoff into the parts supply business. And then the spinoff back into the community from the employees that work there – their support for the United Way, their communities, you know, hockey coaches, soccer coaches, baseball coaches. Auto workers give freely of their time.”

Canadian vehicle production in the first nine months of 2020 was led by Toyota at 295,000 vehicles, followed by Fiat Chrysler Automobiles at 265,000, according to Desrosiers. Overall production volumes are down about 31 per cent from 2019, due in part to the loss of Oshawa production and the industry’s pandemic shutdown in April.

After the Oshawa assembly line stopped last December, a few hundred people remained at the plant, making spare parts and, lately, face masks for the pandemic. The Oshawa investment was part of the Unifor collective agreement ratified in November. The union earlier reached agreements with Ford Motor Co. and Fiat Chrysler. Altogether, the Detroit Three announced plans to spend almost $5-billion in the province, adding vehicle production and jobs to a province in the grips of a pandemic.

Ford said it will spend $1.8-billion at its Oakville, Ont., plant to make changes that will enable it to build electric vehicles. The federal and Ontario governments each contributed $295-million in taxpayer money to the plant’s upgrade, which Ford said will begin in 2024.

Fiat Chrysler will retool its Windsor, Ont., assembly line to make battery-powered and hybrid vehicles by 2024, spending as much as $1.58-billion and adding 2,000 new jobs at its Ontario operations. The investment will include a yet-to-be-announced amount of taxpayer money.

“Discussions are ongoing with General Motors of Canada and FCA Canada Inc., and we have no announcements to share at this time,” John Power, a spokesman for Navdeep Bains, Minister of Innovation, Science and Industry, said when asked about taxpayer spending on the plants.

Canada’s share of North American vehicle production has declined to 11 per cent from almost 14 per cent in 2014, although the recent investments announced by the Detroit Three are positive signs, said Andrew King, managing partner of Desrosiers.

“The recent investments are testament to what can be achieved when local Canadian management, the union and the federal government actively work together on an agreed strategy,” Mr. King said. “All three parties deserve credit for the investments – which are a huge step forward and will solidify the foundations of the Canadian auto industry for the coming decade.”

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