01/28/2015 02:26 EST | Updated 03/30/2015 05:59 EDT

GM holding back until 2016 on decision over Ontario plant

GM will not decide on any new investments in its Oshawa, Ont., manufacturing plant until 2016, its Canadian president said Wednesday in a press statement.

Stephen K. Carlisle, appointed GM Canada president late last year, said the company has begun the process of evaluating the business environment surrounding the Oshawa plant. But he was non-committal on which way GM might be leaning.

“We are going to be careful and are not expecting to be deciding on any major new mandates or investments in Oshawa until well into 2016,” he said in his statement.

Automotive suppliers, autoworkers union Unifor and federal and provincial governments are becoming concerned about the lack of a commitment to a new model to be produced at the GM Oshawa plant beyond 2017.

GM has already decided to move production of the Camaro from Oshawa to Michigan this year and next year, one of three assembly plants in Oshawa will close its doors.

Pressure to make a decision

In his statement, Carlisle acknowledged the pressure to make a decision on a new product model and the future of GM Canada. He said the question had been raised when he and GM CEO Mary Barra met with federal and Ontario industry ministers in Detroit recently.

“But people also want to hear about future products and plans for Oshawa. In any business, especially one as large and complex as an automotive company, there are detailed planning processes before investment and product decisions are made,” he wrote.

A 2016 decision on a new product line would leave GM Canada with a tight timetable to retool a plant and line up automotive suppliers by 2017.

Among the considerations before GM are the value of the Canadian dollar, which is making manufacturing cheaper in Canada, the cost of oil, economic conditions in Canada and its agreement with Unifor.

“One key milestone is that we must complete our 2016 union contract negotiations before we can make any final decisions,” Carlisle said, indicating the pressure on the union to keep costs in line.

He has expressed concern about GM Canada's competitiveness.

Jockeying for incentives

Carlisle acknowledged the importance of Canadian sales to GM, saying Canada ranks fifth for country sales and sixth for vehicle production.

Another big question mark is the willingness of federal and provincial governments to provide incentives. With a election on the way, GM may be waiting to see if an election campaign would make the federal government more amenable to handouts.

Under terms of its 2009 bailout, GM is committed to maintain 16 per cent of its production in Ontario until 2016. 

But while GM has made big commitments to manufacturing in Mexico, announcing a $3.6 billion investment in December that would double capacity, it has yet to announce upcoming capital investment in Canada. Carlisle said it has invested $1 billion in its St. Catharines, Ingersoll and Oshawa, Ont., plants since the 2009 bailout.