GM Oshawa suppliers’ diversity lessens impact
Lessons learned from past closures
Years of declining output at the GM plant along with a push among suppliers to diversify their customer base means the impact from the decision to wind down the Oshawa facility will be far less severe than production shutdowns of the past, industry observers said Tuesday.
For the larger auto parts suppliers, the damage to their business will be limited, said BMO senior economist Alex Koustas, although he said the hit will be more immediate for local contractors and suppliers that are “within a stone’s throw” of the 10-million-square feet Oshawa factory.
A spokesperson for Magna International Inc. said the Aurora-based auto parts giant is not commenting on any potential impact as of now “because there are still many moving pieces.”
Guelph-based Linamar Corp., Canada’s second-largest auto parts maker after Magna, said it expects minimal to no
impact from the closure of GM facilities, including the Oshawa plant, since Linamar primarily supplies product for powertrain platforms to a variety of GM plants, with most output being exported to the U.S.
“The impact to GM’s total vehicle build is expected to be quite minimal,” spokesperson Linda Hasenfratz said in an email. BMO’s Koustas said GM sources parts from a supply chain that has diversified since the auto sector’s near collapse during the global subprime credit crisis in the later part of the last decade. Suppliers are able to shift their products to GM plants where production is increasing and away from declining operations such as Oshawa. He also said the Oshawa plant’s focus on finishing and painting of mostly assembled pickup trucks from the U.S. means “there aren’t a lot of parts needed.” General Motors on Monday said it will not allocate product for assembly at the Oshawa plant beyond the end of next year and will also “unallocate” another four facilities in the U.S. in a move that will free more than $6 billion (U.S.) in annual cash flow. Transmission factories will also be unallocated in 2019, with the moves so far directly affecting 2,522 hourly workers in Canada and 3,301 in the U.S.
“We’re in scramble mode trying to gauge impacts on the outer ring,” said Kyle Douglas, president of the Greater Oshawa Chamber of Commerce. Douglas said he is hearing concerns from some of the chamber’s business members as well as from others that they have taken steps to become less reliant on GM.
According to Unifor, the union representing Oshawa GM workers, every job at the plant is tied to seven spinoff jobs in the community, while the Automotive Parts Manufacturers Association says the GM move could compromise the jobs of as many as 15,000 Canadians working for auto-parts suppliers.
Tim Galbraith, sales manager at Cavalier Tool and Manufacturing in Windsor, which supplies molded plastic products to customers including GM, the business will “feel a dent” from the GM moves but he doesn’t expect job losses.