GM switches gears by adding engineering muscle to Canada

For decades, the splashy, job-creating announcements in the auto sector in Canada have been about manufacturing jobs.

General Motors of Canada Ltd. went in a different direction Friday, announcing the hiring of 700 to 750 new engineers who will work on the automobile of the future – vehicles that are battery-powered, connected to the wired world much more closely than they are now and will eventually drive themselves.

The announcement was made by company officials, Prime Minister Justin Trudeau and Ontario Premier Kathleen Wynne in Oshawa.

"At GM, we believe the future of the automobile will be electric, connected, autonomous and increasingly part of the sharing economy," GM Canada president Stephen Carlisle declared.

Mr. Carlisle spoke at the auto maker's existing research and development centre in Oshawa, a block away from the company's assembly plants, which have been an engine of the Southern Ontario city, the province and the entire Canadian economy for more than a century, but are now on the endangered list.

The fears about the fate of those plants – and a flood of new investment in the manufacturing side of the industry that has bypassed Canada – raise the question of whether a country without a homegrown vehicle maker can hang on to the assembly plants that generate thousands of spinoff jobs while at the same time winning a key role in a part of the industry that requires more brains than brawn. The research and development jobs for the most part have been closely held near the head offices of the auto makers in Detroit, Japan, Germany and elsewhere.

But Mr. Trudeau said he made the pitch for Canada to General Motors Co. president Mary Barra at the World Economic Forum in Davos, Switzerland, earlier this year.

"We have to be on the cutting edge," he said Friday.

The additional jobs will bring the number of GM engineers in Canada to 1,000, including the opening of a new centre for software engineers in Markham, Ont.

The jobs will likely pay more than $100,000 a year, much better than the $71,000 the average hourly worker makes.

But engineering jobs create only one additional job in an economy, according to data from the Center for Automotive Research in Ann Arbor, Mich., compared with 5.6 jobs that are created by a single job in a vehicle-assembly plant. That's mainly a result of all the spinoff jobs at parts makers, steel companies and other suppliers of the thousands of parts that go into a vehicle.

There are 2,500 jobs remaining at the GM assembly plants, 300 more at a GM engine and transmission factory in St. Catharines, Ont., and thousands more at suppliers.

Mr. Trudeau, Ms. Wynne, Mr. Carlisle and Mark Reuss, GM executive vice-president of global product development, sidestepped several questions about whether there are new vehicles that can be allocated to Oshawa to save the plants and what they need to do to make sure the plants remain open.

The GM executives deferred to negotiations on a new contract late this summer with Unifor, the union that represents the 2,500 workers in Oshawa, as well as those in St. Catharines.

GM intends to continue building vehicles in Canada for decades to come, Mr. Carlisle said, but he reminded an audience of politicians, engineering-centre employees and media that the company also makes vehicles in Ingersoll, Ont. That's two hours closer along Highway 401 to the company's Detroit head office and an easier location from which to export vehicles to the U.S. market because car-hauling trucks can avoid the traffic gridlock around Toronto.

"It's part of the labour negotiations," Mr. Reuss said. "It is a labour negotiations strategy."

Jerry Dias, president of Unifor, has made the allocation of a new product to Oshawa the union's key issue in talks with GM. Investment in Canadian operations is also the No. 1 issue for the union in contract bargaining with Ford Motor Co. and Fiat Chrysler Automobiles NV.

"I'm viewing this is as a positive," Mr. Dias said Friday outside the Oshawa R&D centre, where a handful of GM Canada retirees held signs urging the company to invest in Canada.

"If you're going to put 1,000 engineers in Canada, you would expect that you're going to use the knowledge developed to be put into vehicles to be manufactured here," he said.

He promised a strong fight to make sure the plants stay open.

"There's not going to be a settlement in 2016 contract negotiations without solidifying the footprint here in Canada," he said.