Employees at General Motors of Canada Ltd.'s sprawling Oshawa factory learned a harsh lesson yesterday as layoffs hit North America's largest car manufacturer. No matter how productive the company's Canadian plants are, the financial woes at the struggling U.S. auto giant are now too deep to escape.
Hampered by mounting losses and trying to cut costs, Detroit-based parent General Motors Corp. stunned employees by announcing 30,000 layoffs at 12 of its North American plants, including extensive cuts at its GM Canada unit's two Oshawa operations.
The Oshawa plants are among the most efficient in North America -- ahead of several Toyota and Honda operations -- and form Canada's largest auto manufacturing site.
GM's deepest cutbacks since 1991 will see 3,900 Canadian jobs, most of them in Oshawa, eliminated by the end of 2008.
The company will chop 1,000 jobs at the Oshawa No. 1 plant, maker of Chevy Impalas and Monte Carlos, by eliminating one of its shifts. The Oshawa No. 2 plant, which manufactures the Pontiac Grand Prix and the Buick LaCrosse and Allure models, will lose both of its shifts by the end of 2008, leading to 2,750 layoffs. Most of the reductions will come through attrition, the company said.
The company's battles with rising labour costs, including soaring heath care bills in the United States, are well known throughout the struggling North American auto sector. Still, Oshawa employees were angry the Canadian plant is being targeted, saying the plant is paying for corporate mistakes south of the border.
Kevin Sexton, an assembly line worker with 22 years experience at the company's Windsor and Oshawa plants, said the Canadian operations are being forced to prop up the U.S. factories.
"We shouldn't have to pay the price because of their inefficiencies and their problems but that's what's happening," Mr. Sexton said.
The Oshawa plants have fared well in two key industry rankings this year, placing first and second in J.D. Power's annual quality studies, which track customer satisfaction and defects. Meanwhile, Oshawa No. 1 scored the highest in North American productivity rankings compiled by Michigan-based Harbour Consulting. Oshawa No. 2 wasn't far behind in fourth spot.
Both plants manufacture cars that aren't selling well for General Motors. Industry watchers said the Canadian layoffs are a sign of how deep the troubles run at GM.
"The fact that General Motors can't make good productive use of one of the most efficient automobile factories in North America indicates that the problem isn't merely on the factory floor," said Peter Morici, an auto industry expert at the University of Maryland.
GM Canada president Michael Grimaldi tried to ease the frustrations of Oshawa employees, saying the auto maker "remains committed" to producing cars in Canada.
But he said cuts at Oshawa are needed to reduce GM's costs and to align production levels with slumping consumer demand.
"This is not a reflection in any way on the performance of our employees," Mr. Grimaldi said. "If we do not improve the profitability of General Motors, there will be a whole series of potential additional actions that will be needed."
Sales of the cars produced at the Oshawa plants have declined in recent years. The number of Impalas sold in the United States dropped 17 per cent in 2005, falling to 201,238 in the first 10 months of this year from 242,391 during the same period in 2004.
Grand Prix sales have also dropped off, with sales of just 106,313 this year, compared with 112,707 during the first 10 months of 2004, a drop of 6 per cent.
"They just don't see the sales coming back. That's what's going on," said Greg Gardiner, a spokesman for Harbour Consulting in Flint, Mich.
Oshawa's Mayor John Gray, who drives a Chevrolet Monte Carlo SS, expressed frustration at the decision to cut Canadian jobs.
"We know that this is one of the most productive, efficient, award-winning plants and it certainly contributes greatly to the profitability of General Motors," he said. "That's got to play at some point with the decision makers in Detroit."
The continent-wide restructuring by General Motors Corp. is having ripple effects across Southern Ontario's auto sector. Companies that supply auto parts to Oshawa and St. Catharines plants will also feel the pinch.
Employees: 6,043 workers, including 5,537 hourly and 506 salaried employees at two assembly plants.
Size: More than 8 million square feet of plant space on 700 acres.
Car Plant #1
Layoffs: The plant's third shift will be eliminated in late-2006, affecting 1,000 hourly employees.
Production: Chevy Impala 4-door and the Chevy Monte Carlo 2-door.
Daily output: 1,560 cars. Productivity ranking: #1 assembly plant in North America according to the Harbour Report, which tracks efficiency.
Quality ranking: #2 in North and South America in the 2005 J.D. Power Initial Quality Study, which tracks defects and customer satisfaction.
Car Plant #2
Layoffs: 2,750. Both shifts will be eliminated at the end of 2008.
Production: Buick LaCrosse/Allure 4-door and the Pontiac Grand Prix 4-door.
Daily output: 1,070 cars a day Productivity ranking: #4 assembly plant in North America according to the Harbour Report, which tracks efficiency.
Quality ranking: #1 in North and South America in the 2005 J.D. Power Initial Quality Study, which tracks defects and customer satisfaction.
GM St. Catharines
Employees: 3,614workers, including 3.200 hourly and 414 salaried employees at two plants.
Size: 3.2 million square feet of plant space on 231 acres.
Ontario Street Plant
Layoffs: 130 jobs
Production: A variety of components including connecting rods, clutch shafts, radiators and struts.
Daily output: 10,000 connecting rods a day, 1,400 radiator assemblies and 1,260 rear strut assemblies.
Built: 1900, began as McKinnon Industries.
Glendale Avenue Plant
Production: A variety of engines ranging from 3.6 L to 6.0 L.
Daily output: 3,025 engines. Productivity ranking: #2 V8 engine plant in North America according to the Harbour Report, which tracks efficiency
Impact on the auto parts manufacturers
Frames, chassis components, seats, interior panels, exterior parts and many other components
Head office: Aurora, Ont.
21,000 Canadian employees scattered over a number of plants
Impact: GM is Magna's biggest customer. One product is fascias (bumper covers) for cars from GM plants No. 1 and 2 in Oshawa, as well as mirrors, some body stampings and engine components.
ThyssenKrupp Budd Canada Inc.
Plant: Kitchener, Ont.
Impact: Plant supplies frames to GM's Oklahoma City factory, which is being closed, and to one in Moraine, Ohio, which is losing a shift.
Seats and interiors
Plant: Lear Seating operation in Whitby
About 750 employees
Impact: Makes seats that go into the vehicles made at both GM car plants in Oshawa.
Johnson Controls Inc.,
Instrument panels and door trim panels
Plant: Whitby, Ont.
Impact: Assembles panels for GM plants No. 1 and 2 in Oshawa, with most of their components feeding the Pontiac Grand Prix and Buick Allure sedans.