RIPPLE EFFECT OF GM CLOSURES,
MOVES A KICK TO LOCAL ECONOMIES, FIRM RISKS SHOWDOWN WITH TRUMP
According to CBC, some 2,522 automobile-assembly jobs will be lost when General Motors closes its Oshawa assembly plant late next year. That, of course, doesn’t include the knock-on effect of the closure on jobs that supply parts for the Chevrolet Impalas, Cadillac XTSs and Chevy/GMC Silverado/ Sierra pickups that Oshawa still assembles. Depending on who you’re listening to, as many as 10,000 to 15,000 auto-parts workers will be affected.
And those jobs are not coming back. Oh, the politicians will lament, Justin Trudeau and Doug Ford will cajole, and Unifor president Jerry Dias will threaten — “They are not closing our damn plant without a fight” — but the fact is that it looks like those high-paying, family-supporting, community-invigorating jobs are lost forever. Perhaps the most telling aspect of this entire experience is that the governments/unions/workers were not informed. No concessions were demanded from Unifor, no subsidies requested from Big Government. As the Ontario premier noted, “They told me straight up there’s nothing we can do.”
The only surprise, really, is the timing. Truth be told, even that — shortly after the USMCA-aka-NAFTA 2.0 was signed — isn’t all that unexpected. The fact is that the writing has been on Oshawa’s wall for quite some time. For one thing, the plant is operating far below capacity; as Dennis DesRosiers of DesRosiers Automotive Consultants points out, producing only 148,133 cars last year compared to the 940,044 it pumped out in 2003.
More telling perhaps is that while the popular Silverado and Sierras are “final assembled” in Oshawa, the plant’s main job is building Chevrolet Impalas and Cadillac XTSs, both large traditional sedans that are rapidly falling out of favour with consumers and are expected to be dumped once the plant is shut down. Indeed, GM also announced the end of the Chevy Volt and Buick LaCrosse, which explains why the Detroit/ Hamtramck plant is also being closed. Ditto for the Cruze compact sedan, which is why Ohio’s Lordstown is being mothballed as well.
As for moving production of other, more successful vehicles to any of these plants, the fact remains that General Motors is not the dominant automaker it once was. We’re a long way from the days when Chevrolet and other GM brands were responsible for one in two of the cars and light trucks sold in North America. Last year, GM’s market share was approximately 17.6 per cent in the U.S. and the company’s portion of the Canadian new car market in October was 14.5 per cent, two points lower than it was the year before. The General may remain the largest automaker in the land, but its dominance is nonetheless greatly diminished.
If you apply the same logic, that plants need to be producing popular models to remain viable, none of the Domestic Three’s operations are totally safe. Ford’s Oakville plant does produce the best-selling Edge (including the new ST model I just tested, which is beyond excellent), but it also assembles Lincoln’s MKT and Ford Flex, which are hardly setting the world alight. It is scheduled to produce the new Nautilus and one hopes that Lincoln’s SUV proves popular enough to sustain the plant’s viability.
Fiat Chrysler’s Brampton plant produces Chrysler and Dodge large cars, while its Windsor plant turns out minivans, both segments that are, to say the least, not growing. Compare that with Honda’s Alliston production facility, which assembles ever-popular Civics and CRVs, and Toyota’s Canadian plants, which build Corollas, RAV4s and Lexus RX350s.
It’s not quite all doom, however. For one thing, General Motors has hired some 500 of the planned 700 high-tech programmers and hardware designers for its Markham Technical Centre charged with developing the company’s autonomous cars of the future and is expanding its Oshawa engineering centre, both of which appear to be unthreatened by these latest announcements. More importantly, DesRosiers says Canada’s automotive industry — when you include sales personnel and service technicians as well as assemblyline workers — is healthier than ever, accounting for 806,327 “direct automotive jobs” in Canada as of June this year, compared with 687,425 in 2010.
And, as DesRosiers points out, “It also shows the strength of GM in today’s automotive sector — in the past GM avoiding these tough decisions (St. Therese in Quebec being a good example), and the lack of decisive action ultimately led them to declare bankruptcy in the U.S. back in 2009.”
That’s small comfort to those 2,522 workers about to lose their jobs, but it does seem a little early to write off the Canadian auto business in its entirety.
What is worrying, however, is the reaction of the American administration, most specifically the president. Donald Trump is already capitalizing on GM’s woes in his own inimitable, threat-that-is-not-a-threat style, vowing to get tough — “You better get back in there soon” — with GM chief executive Mary Barra.
Why does this matter? Well, though it passed largely unnoticed here in the Great White Frozen North, Trump had a similar spat with Harley-Davidson about six months ago, when The Motor Company announced it was offshoring some production as the result of the president’s ongoing tariff war. Trump’s response was to call for a boycott via his favourite policy tool, Twitter. Since then, Harley’s sales have tumbled dramatically and its direct competitor, Indian, capitalized.
Just like Harley, GM’s core buyer (especially for its extremely popular pickups and full-size SUVs) is also Trump’s hardcore “base.” As devastating as it will be for those assembly-line workers and Ontario’s economy, GM’s decision to “unallocate” — that’s the company’s legal team trying to soften the blow of getting fired — Oshawa and the four other plants it is closing is likely to have more severe ramifications down the road.