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Fresh worries arise over future of General Motors in Canada

Workers at the General Motors Oshawa assembly plant work on the Camaro model Aug 22, 2013.

Moe Doiron/The Globe and Mail

New doubts are being raised about the future of the General Motors of Canada Ltd. vehicle assembly operations later this decade.

The current General Motors Co. product plan points to the end of vehicle production in Oshawa, Ont., and a cut at a plant in Ingersoll, Ont. to a single shift, said Joe McCabe, president of auto industry consulting firm AutoForecast Solutions LLC.

"By 2019, we have Oshawa completely shut down," Mr. McCabe told the Automotive Parts Makers Association of Canada forecast conference Wednesday.

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Each of the vehicle types made at the Canadian plants is scheduled to be made at another GM assembly plant in North America or has already been earmarked for transfer, he noted.

In addition, the vehicles assembled in Canada are not sold in this country in large quantities, unlike Honda Motor Co. Ltd. and Toyota Motor Corp., whose Canadian assembly plants build their bestselling vehicles in the Canadian market.

"Is there a compelling story for [GM] to continue to build here when the vehicles they sell here are not sold in massive quantities?" Mr. McCabe asked.

The fears about the future of GM's Canadian operations, which have also been expressed by Unifor president Jerry Dias and privately by senior executives of auto parts makers, have been growing as the expiry of a production commitment made in 2009 approaches.

In return for a $10.8-billion contribution by the federal and Ontario governments as part of a three-government bailout of the GM Co., the auto maker committed to maintain 16 per cent of its North American vehicle production in Canada through 2016.

The exodus of products begins next year when Chevrolet Camaro production stops in Oshawa and begins at GM's Lansing Grand River plant in Lansing, Mich.

In 2016, one of the two assembly plants in Oshawa is scheduled to close.

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In Ingersoll where GM's Cami Automotive Inc. plant is running on three shifts, production of the Chevrolet Equinox and GMC Terrain crossovers is scheduled to begin in Mexico later in the decade, Mr. McCabe said.

He noted that when rumours arose in Toledo, Ohio, that Chrysler Group LLC might shift production of the Jeep Wrangler elsewhere, a local and statewide movement organized within 10 days to "save something that they didn't lose in the first place."

No such public movement has emerged in Oshawa or Ingersoll, he said.

A shutdown of Oshawa would eliminate about 3,600 unionized jobs at the two assembly plants. About 2,700 Unifor members work at Cami.

Tens of thousands more jobs at suppliers also depend on GM's Canadian production.

GM Canada spokeswoman Adria MacKenzie said the auto maker is investing $250-million in Cami to support future vehicle production.

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The products assembled at the Flex Plant in Oshawa will continue to be built for the foreseeable future, she said, based on market demand.

Canada's share of North American vehicle production, which is already declining as auto makers invest tens of billions of dollars to build assembly plants in Mexico, is already set to decline.

Halting production in Oshawa and cutting output at Cami would slice Canada's share to 9.6 per cent by 2021 from 14.7 per cent last year, Mr. McCabe said.

Canada would slip to 15th spot among global auto producing countries, from 10th in 2013.

Ontario Finance Minister Charles Sousa, who also spoke at the conference, told reporters after his presentation that his plan to sell the province's common shares of GM is still in place.

"Where we can reinvest that money and make greater gains, I think it's important for us to make that decision," Mr. Sousa said. "I want us to invest – and the public requires us to invest – in infrastructure and things that enable future generations to be more competitive."

The Canadian Automotive Partnership Council, an industry advisory group, urged the federal and Ontario governments last week to create a joint automotive investment board that would seek new investments and find ways to retain existing assembly plants.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More


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