GM looks to Mex­i­can plants as On­tario strike drags on

The Globe and Mail Metro (Ontario Edition) - - Report On Business - GREG KEENAN AUTO IN­DUS­TRY RE­PORTER

Auto maker mulling dif­fer­ent ways to in­crease out­put of Chevro­let Equinox

Gen­eral Mo­tors Co., fac­ing de­clin­ing in­ven­to­ries of one of its most pop­u­lar ve­hi­cles be­cause of a strike at a plant in Inger­soll, Ont., has told Uni­for that it plans to in­crease pro­duc­tion of the Chevro­let Equinox in Mex­ico as the strike con­tin­ues.

The auto maker is look­ing at dif­fer­ent ways to in­crease out­put of the Chevro­let Equinox – the bulk of which nor­mally comes out of its Cami plant – by boost­ing out­put in Mex­ico or mak­ing use of ex­cess ca­pac­ity avail­able at some of its U.S. as­sem­bly plants, a source fa­mil­iar with GM’s plans said.

The warn­ing to Uni­for raises the tem­per­a­ture in a strike that is now in its fourth week with GM and the union, rep­re­sent­ing about 2,800 work­ers, in a dead­lock over the is­sue of job se­cu­rity.

The union is seek­ing a com­mit­ment that GM iden­tify Cami as the lead plant for Equinox pro­duc­tion, which would put it first in line for new in­vest­ment when the ve­hi­cle is re­designed and last in line for lay­offs or shut­downs if the mar­ket slows or the ve­hi­cle’s pop­u­lar­ity de­clines.

Job se­cu­rity at Cami arose as an is­sue af­ter GM shifted pro­duc­tion of the GMC Ter­rain to Mex­ico ear­lier this sum­mer. The Ter­rain, as with its Equinox twin, is one of the GM en­trants in the hot-sell­ing cross­over seg­ment in both the U.S. and Cana­dian mar­kets.

The union said that led to the elim­i­na­tion of 600 jobs at Cami, although the num­ber of lay­offs was re­duced to about 400 through retirement in­cen­tives.

The union fears GM could make a sim­i­lar move with the Equinox, which is pro­duced at fac­to­ries in Ramos Arizpe and San Luis Po­tosi in Mex­ico “We just want to make sure that if there’s a de­cline in [Equinox] vol­ume, we’re go­ing to be okay,” Uni­for pres­i­dent Jerry Dias said. “They’re not giv­ing us that.”

Mr. Dias con­firmed that GM told union of­fi­cials dur­ing a phone call Wed­nes­day that it needs to find a way to meet de­mand if the strike con­tin­ues.

“They told us they’re go­ing to start to ramp up pro­duc­tion [at the two plants] in Mex­ico,” he said.

He said the union plans to ratchet up the pres­sure on GM, but would not say what moves it will make.

» Uni­for could picket Gen­eral Mo­tors of Canada Co. deal­er­ships, call for a boy­cott of GM prod­ucts or picket other GM plants in Canada, in­clud­ing a fac­tory in St. Catharines, Ont., that sup­plies en­gines and trans­mis­sions to some U.S. as­sem­bly plants.

Mr. Dias has ar­gued that shift­ing the Ter­rain to Mex­ico to take ad­van­tage of labour rates that are about 10 per cent of the ap­prox­i­mately $32 an hour paid to work­ers in On­tario makes Cami a poster child for what is wrong with the North Amer­i­can free­trade agree­ment.

The source fa­mil­iar with GM’s think­ing said the strike has noth­ing to do with NAFTA.

An $800-mil­lion in­vest­ment GM made at Cami for the re­design of the Equinox for the cur­rent model year and the fact that the plant is op­er­at­ing on three shifts a day in­di­cate that the com­pany is con­fi­dent about Cami’s fu­ture, the source said.

Mr. Dias said GM made ver­bal com­mit­ments about job se­cu­rity at a plant in Oshawa, Ont., dur­ing a set of ne­go­ti­a­tions five years ago, then shifted a ve­hi­cle out of Oshawa to a fac­tory in Lans­ing, Mich. The com­pany an­nounced the clos­ing of a pickup-truck plant in Oshawa in 2008, a few weeks af­ter con­clud­ing ne­go­ti­a­tions with the Cana­dian Auto Work­ers union, Uni­for’s pre­de­ces­sor.

Hot sales last month of the Equinox in both Canada and the United States re­duced in­ven­to­ries to 41 days sup­ply, well be­low the 60 to 70 days worth of ve­hi­cles auto mak­ers typ­i­cally want to have on hand.

Au­toFore­cast So­lu­tions LLC, an au­to­mo­tive con­sult­ing firm, es­ti­mated that the two Mex­ico plants pro­duced 11,200 Equinox mod­els last month, while Cami turned out 16,000 be­fore the strike.

Gen­eral Mo­tors (GM) Close: $44.89 (U.S.), down 58¢ Gen­eral Mo­tors (GMM.U) Close: $44.90, down 58¢

GE­OFF ROBINS/REUTERS

The Gen­eral Mo­tors Cami plant sits be­hind rows of new GMC Ter­rain and Chevro­let Equinox ve­hi­cles in Inger­soll, Ont., in Jan­uary. Uni­for, which rep­re­sents plant work­ers, is seek­ing a com­mit­ment that GM iden­tify Cami as the lead plant for Equinox pro­duc­tion.

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