GM CANADA TO LAY OFF 600 WORKERS IN ONTARIO.
‘NAFTA at its ugliest’: union
• General Motors of Canada Co. is laying off 600 workers as it shifts some production to Mexico, a move Unifor’s president calls “NAFTA at its ugliest.”
The job cuts at GM’s CAMI plant in Ingersoll, Ont., are a direct result of the company’s decision to shift production of the GMC Terrain to Mexico, said Jerry Dias, president of the union that represents about 6,500 GM workers in Canada.
GM had told Unifor it was moving the Terrain to Mexico to free up space for increased production of the Chevrolet Equinox. The company last year said it would spend $ 560 million to prepare the plant for the next generation of the Equinox.
However, GM is now saying that Equinox production will decrease rather than increase, meaning there’s still room at the Ingersoll plant for the Terrain, Dias said.
“This caught everybody off guard and it’s completely unacceptable,” he said.
GM said the move is “related to product changeovers and transition at its CAMI facility as older models are phased out and CAMI begins production of the next- generation Equinox.”
“We continue to work with our Unifor partners to manage through the adjustment with all measures available to us within the collective agreement,” company spokeswoman Jennifer Wright said in an email.
Despite the setback, there is a growing view in the Canadian auto industry that U.S. President Donald Trump’s plan to renegotiate NAFTA, once seen as a potential disaster, could actually prove to be an advantage.
“The only thing that I would give any credit to Trump for is that he’s elevated the discussion on these horrendous trade deals,” Dias said. “This is NAFTA at its ugliest and it’s about time we renegotiate it or scrap it.”
Trump has made it clear his main trade beef is with Mexico, which has captured nine of the last 11 new North American vehicle assembly plants announced since 2011, according to the Center for Automotive Research.
Trump adviser Stephen Schwarzman played down the risk to Canada at meetings with Prime Minister Justin Trudeau and his cabinet in Calgary this week.
Schwarzman, who chairs the president’s Strategic and Policy Forum, said Americans hold an “unusually positive” view of Canada and “things should go well for Canada” in any trade negotiations.
Still, Canadian industry is worried it may end up as collateral damage.
Since NAFTA came into effect in 1994, the Canadian auto industry has grown significantly. Total vehicle and parts production rose 81 per cent between 1992 and 2015, while exports grew 72 per cent in the same period.
But Mexico’s rise as a low- cost manufacturing alternative has also hurt Canada’s overall share of North American vehicle production. While Mexico’s share is expected to hit 25 per cent in 2018, up from five per cent in 1989, Canada’s is forecast to fall to 12 per cent from 15 per cent, according to Wards Automotive, a trade publication.
As a result, a northward shift could be a boon for the Canadian industry, which is primarily based in southern Ontario.
Approximately 85 per cent of the vehicles manufactured in Canada are exported, with the vast majority of those going to the United States.
“If Michigan becomes the new Mexico, then Ontario benefits,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association. “As long as the growth is up north, we’ll benefit.”
Last year, Ontario Premier Kathleen Wynne and Michigan Governor Rick Snyder signed a memorandum of understanding to jointly promote automotive innovation and competitiveness in the Great Lakes region.
“( Snyder) is a good ally for us because Michigan and Ontario together build more automobiles than all of Mexico,” said Brad Duguid, Ontario’s minister of economic development and growth.
“We need to make sure that the new administration is fully aware of the importance to American jobs of having an unfettered border between Canada and the U.S. and in particular Ontario and the U.S.”
Like Volpe, Duguid believes a northward shift in automotive growth could be positive for Ontario.
“There’s no question that however this rolls out, while we’re alive to potential negative consequences, there could be some positive repercussions as well,” Duguid said.
Renegotiating NAFTA, as Trump has vowed to do, could also pose an opportunity for Canada to update the agreement in its favour, Volpe said.
NAFTA’s rules of origin require a vehicle to have at least 62.5- per- cent North American content in order to gain duty- free access to all three member countries. However, the 1994 agreement doesn’ t t race new technologies like software and sensors, an area where several Canadian companies like BlackBerry Ltd.’ s QNX have become global leaders.
“The Toronto- Waterloo corridor, Ottawa, all these newer companies that are getting into the software, middleware and high- tech sensor business could benefit if they get captured in the new tracing matrix,” Volpe said.
It ’s unlikely Canada’s auto industry will emerge from the new order completely unscathed. Magna International Inc., t he country’s biggest supplier, has 30 plants in Mexico and smaller players like Linamar Corp. and Martinrea International Inc. also have production facilities in the country.
But the sheer amount of automotive trade between Canada and t he U. S. — around $ 135 billion in 2015 — means it’s in both countries’ interests to keep the borders open, said Duguid.
“The auto sector is probably the most intertwined of sectors,” he said. “Frankly, millions of American jobs depend on trade with Canada.”