Workers at the General Motors Oshawa assembly plant work on the Camaro model, which will be produced in Lansing, Mich., later this year instead of Oshawa.Moe Doiron/The Globe and Mail
The closing of two General Motors Co. assembly plants in Oshawa, Ont., would wipe out about 30,000 jobs, slice more than $5-billion out of Ontario's gross domestic product and cost the federal and Ontario governments $1-billion in lost revenue.
Those are among the conclusions of an economic impact study of the two plants, which was prepared by the Centre for Spatial Economics on behalf of Unifor, the union that represents hourly paid workers at the two factories.
"The closure of that facility would have a profound impact on the communities in the eastern half of the GTA, for [Ontario] as a whole and indeed for the Canadian economy," says the study, which is scheduled to be released Monday.
GM's Oshawa complex has been an economic engine of the Ontario and national economies for more than a century and the 3,600 production and skilled trades employees at the two plants are among the highest-paid workers in Canada's manufacturing sector.
But whether they will continue to produce vehicles and generate an estimated $7.3-billion worth of shipments annually later this decade is in doubt, creating deep concern among workers and the union, as well as the federal and Ontario governments.
One of the plants is scheduled to close next year and the other plant has no new vehicles allocated to replace those that are being shifted elsewhere or are going out of production – including the Chevrolet Camaro, which will be produced in Lansing, Mich., later this year instead of Oshawa.
About 4,100 hourly and salaried employees at the plants and the General Motors of Canada Ltd. head office would lose their jobs, but an additional 25,000 to 29,000 jobs would disappear at suppliers and elsewhere in the broader economy within two years of the end of production, the study says.
Ontario's gross domestic product would be cut by between $5.2-billion and $5.7-billion within two years and average annual wages in the province would decline by $350.
"Most people eventually find new work, but the recovery in employment is achieved, in large part, by a permanent decline in average wages," the report says. "This decline in income is experienced even by workers who have no connection at all to the auto industry and further undermines consumer spending and aggregate economic conditions."
The permanent shutdown of the plants would also affect the Canada Pension Plan, the study says. CPP contributions would decline by between $130-million and $140-million in the year of the closing, although a gradual recovery in employment would help reduce the revenue loss to between $110-million and $120-million.
GM Canada president Stephen Carlisle said in January, in what the company called a community update, that no decisions on new products will be made before late 2016 and the conclusion of negotiations on a new contract with Unifor.
"We are going to be careful and are not expecting to be deciding on any major new mandates or investments in Oshawa until well into 2016," Mr. Carlisle said in the update.
Unifor and company officials have been meeting regularly. Federal and Ontario cabinet ministers met with GM chief executive officer Mary Barra in January.
Unifor president Jerry Dias met with Ms. Barra last month and has been talking up the benefits of the drop in the Canadian dollar and the demographic situation at the Oshawa plant, where about 60 per cent of the production workers have hit the 30-year mark, which makes them eligible for early retirement.
That means GM could hire new workers – to replace those retiring – at hourly wages that start at $20.50 and don't rise to the full $34.50-an-hour rate for 10 years.
"GM will make money hand over fist in Oshawa," he said.
The point of the study, Mr. Dias added, "is to show the incredible economic benefits that the GM Oshawa plant brings not just to the community of Oshawa, or the province, but to the country – the taxes that people pay, the jobs that are created, the spinoff jobs."