‘Ottawa’ What Does the Future Hold for GM’s Oshawa Plant? Here’s a vehicle-by-vehicle Breakdown
TORONTO — Eleven years ago, General Motors Co.’s then-chairman Rick Wagoner announced plans to shut down an assembly plant in Oshawa, Ont., calling it “tough medicine.” Today, however, the plant is still lurching along on life support.
The Oshawa consolidated plant, as it’s known, received a fifth lease on life last year and continues to turn out the popular Chevrolet Equinox crossover. But it appears there won’t be a sixth.
Under current plans, the Equinox won’t be produced at the consolidated plant after next year, while the neighbouring flex plant has no product slated for it beyond 2019. GM already shifted production of the Chevrolet Camaro from the flex plant to Lansing, Mich., last November, cutting 1,000 jobs.
Perhaps most worrisome, the commitments made by GM Canada as part of its 2009 government bailout, including a promise to maintain at least 16 per cent of its North American production in Canada, lapse this year.
Steve Carlisle, president of General Motors of Canada Ltd., has said repeatedly that Oshawa’s future is dependent on the outcome of labour negotiations with the company’s workers, represented by Unifor, which will get underway in mid-August. Unifor president Jerry Dias has said workers will strike if GM doesn’t allocate any new products to Oshawa.
But industry experts say Oshawa is unlikely to survive no matter what workers do, resulting in the loss of approximately 2,700 jobs plus a significant amount of spinoff employment.
“I have not seen any professionally produced forecasts that have any continued production at Oshawa beyond 2019,” said Kristin Dziczek, director of the industry, labour and economics group at the Center for Automotive Research in Ann Arbor, Mich. “This is the plant that everybody’s worried about.”
The primary problem for the blue-collar city east of Toronto is that every one of the four vehicles currently produced at its two plants can easily be produced elsewhere.
“The short story with the Canadian footprint, especially for GM, is that every vehicle they currently build in Canada can or is built in another facility that could manage that capacity,” said Joe McCabe, president and CEO of consulting firm AutoForecast Solutions LLC. “Every one of the vehicles can be built somewhere else right this second.”
The Equinox — the only vehicle keeping Oshawa’s consolidated plant alive — is also built at GM’s plant in Ingersoll, Ont. McCabe said Ingersoll could easily replace Oshawa’s output once production of the GMC Terrain, also produced in Ingersoll, is shifted to Mexico in 2017.
Meanwhile, the three vehicles produced at Oshawa’s flex plant — the Buick Regal, Cadillac XTS and Chevrolet Impala — also face uncertain futures.
Passenger-car sales have slumped in both Canada and the U.S. as consumers have turned in droves to crossovers, SUVs and pickup trucks, encouraged by low gas prices, improving fuel economy and sleek new models.
This has prompted several automakers to revisit their lineups. Fiat Chrysler Automobiles NV said in January that it would stop producing the Chrysler 200 and Dodge Dart, while GM said it would stop selling the Buick Verano compact car in North America later this year.
Other automakers are shifting production of lower-margin cars to lower-cost jurisdictions. Toyota Motor Corp. said last year that it would move production of the Corolla sedan from Cambridge, Ont., to Mexico. It will replace the Corolla with the popular RAV4 SUV, which is also produced in Woodstock, Ont.
“Traditionally, a major manufacturer had to play in every space to be considered a global player; that’s not necessarily going to be the case anymore,” said McCabe. “You’re going to see a lot of strategic direction going on in terms of manufacturing footprint in order to satisfy shareholder value.”
The slowdown in sales of GM’s Oshawa-produced cars is particularly dramatic in Canada, where sales of the Buick Regal midsize sedan have dropped 30.9 per cent through May and sales of the Cadillac XTS, a full-size sedan, are down 24 per cent, according to data compiled by DesRosiers Automotive Consultants Inc.
These declines are offset by small increases in the U.S., the destination for approximately 85 per cent of vehicles produced in Canada. (The full-size Impala bucks the trend, with joint Canada and U.S. sales up 9.9 per cent through May.)
Production of the Regal is set to end next year, and McCabe believes GM will build the next generation of the vehicle at an Opel plant in Germany. The XTS, meanwhile, appears destined for the dustbin once production ends in 2018, and McCabe believes production of the Impala will be shifted to Hamtramck, Mich., in 2019.
This scenario would leave Oshawa with nothing to produce by the end of 2019 unless new vehicles are allocated to it — a scenario that seems unlikely given the billions of dollars that would need to be invested to do so when GM has other plants with idle capacity, McCabe said.
“It’s not a complete loss,” as GM plans to turn Oshawa into a global research and development hub, hiring of hundreds of engineers over the next few years, McCabe said.