BUSINESS
11/26/2018 10:17 EST | Updated 11/26/2018 15:10 EST

General Motors' Oshawa Plant Shutdown Means Company Is In For 'One Hell Of A Fight': Unifor

The carmaker is shifting attention to autonomous and electric vehicles, and steeling itself for a downturn.

The General Motors Canada office in Oshawa, Ont., Wed. June 20, 2018.
The Canadian Press/Tijana Martin
The General Motors Canada office in Oshawa, Ont., Wed. June 20, 2018.

TORONTO — The union representing workers at the General Motors assembly plant in Oshawa, Ont., are promising "one hell of a fight'' after the automaker announced it would close the location along with four other facilities in the U.S. as part of a global reorganization.

Jerry Dias, national president of Unifor, said the union will fight against the planned move "tooth and nail.''

"They are not closing our damn plant without one hell of a fight,'' Dias said to cheers from union members.

"Cause you see we're sick and tired of General motors shipping all of our jobs to Mexico.''

Dias said the plant has won "every award'' and was the best by "every matrix.''

"We are sick and tired of being pushed around. And we're not going to be pushed around ... we deserve respect,'' he said.

GM announced the closures Monday as part of a sweeping strategy to transform its product line and manufacturing process that will see the company focus on electric and autonomous vehicle programs, a plan that it said will save the company US$6 billion by the year 2020.

"This industry is changing very rapidly, when you look at all of the transformative technologies, be it propulsion, autonomous driving ... These are things we're doing to strengthen the core business,'' GM chief executive and chairwoman Mary Barra told reporters Monday. "We think it's appropriate to do it at a time, and get in front of it, while the company is strong and while the economy is strong.''

Earlier on HuffPost Canada:


GM also said it will reduce salaried and salaried contract staff by 15 per cent, which includes 25 per cent fewer executives. The US$6 billion in savings includes cost reductions of US$4.5 billion and lower capital expenditure annually of almost US$1.5 billion.

GM's shares in New York jumped as high as 7.8 per cent to US$38.75. The automaker's shares were trading at US$37.95 by the early afternoon, their highest level since July.

Dozens of workers walked out of the Oshawa Assembly Plant on Monday morning, with some saying they were very unhappy with news of the planned closure.

The impending shutdown is "scary,'' said Matt Smith, who has worked at the Oshawa plant for 12 years. He said his wife also works at the GM facility and the pair have an 11-month-old at home.

"I don't know how I'm going to feed my family,'' he said outside of the plant's south gate, where workers instituted a blockade for trucks from the entrance.

"It's hard, it's horrible? We have always been the best plant in North America. It's a kick in the nuts.''

The Canadian Press/Eduardo Lima
Workers from Oshawa's General Motors car assembly leave the plant, Mon. Nov. 26 , 2018.

Unifor, the union representing more than 2,500 workers at the plant, said it has been told that there is no product allocated to the Oshawa plant past December 2019.

Production began at the Oshawa plant on Nov. 7, 1953, and in the 1980s the plant employed roughly 23,000 people.

GM is also closing the Detroit-Hamtramck Assembly plant in Detroit and the Lordstown Assembly in Warren, Ohio in 2019. GM propulsion plants in White Marsh, Md., and Warren, Mich., are also due to close as well.

The automaker did not say the plants would close, but used the term "unallocated,'' which means no future products would be allocated to these facilities next year.

On top of the previously announced closure of the assembly plant in Gunsan, Korea, GM will also cease the operations of two additional plants outside North America by the end of next year.

Under pressure from Trump's tariffs

The closures come as North American automakers feel pressure from U.S. tariffs on imported steel and aluminum. Last month, GM rival Ford Motor. Co. reported a US$991 million profit during its third quarter, but said tariffs cost the company about US$1 billion. Of that amount, US$600 million was due largely to U.S. tariffs on imported steel and US$200 million from retaliatory tariffs imposed by China on American vehicles, Ford said.

The restructuring announcement also comes after Canada and the U.S. reached the United States-Mexico-Canada Agreement to replace the North American Free Trade Agreement, after months of strained negotiations.

Under the new trade deal, 40 per cent of the content of automobiles must be produced by workers earning at least US$16 per hour to qualify for duty-free movement across the continent. The agreement also stipulates that 75 per cent of the automobile's contents must be made in North America in order to be tariff-free.

Last month, as GM reported a US$2.5-billion third-quarter profit, the automaker also said it was aiming to cut costs by offering buyouts to roughly 18,000 white-collar workers with 12 or more years of service. That represented more than one third of the company's 50,000 salaried workers across North America. Workers had until Nov. 19 to decide, and they would have to exit by the end of the year.

And in July, GM executives said pressure from commodity prices and foreign exchange rates had been more significant than expected and the automaker expected a $1-billion additional headwind, with the biggest exposure being steel.

"The writing has been on the wall for quite some time so it was a matter of when not whether they would make this move,."Dennis DesRosiers, DesRosiers Automotive

Meanwhile, GM's Barra said Monday the company will be investing in autonomous and electric vehicle technology. Vehicles have become more "software-oriented'' and GM will be looking to hire more employees with the "right skill set'' going forward, she said.

"You will see us have new employees joining the company as others leave the company,'' Barra said.

The changes announced Monday will not impact GM's new trucks and SUVs, which are Barra said are "doing very well.''

The Oshawa plant, however, has been producing an older model, she said.

"Oshawa is building the previous generation trucks that are very helpful in the crossover period ... As we're transitioning to the new truck architecture,'' she said.

The timing of the decision was surprising, but not the decision itself, said Dennis DesRosiers, president of DesRosiers Automotive Consultants. He pointed to the steep production decline over the past 15 years from nearly a million units to roughly 148,000 units in 2017.

"The writing has been on the wall for quite some time so it was a matter of when not whether they would make this move,'' he said in an email.

The decision is "devastating'' for workers at the plant and auto suppliers, but Oshawa has adapted over the years and will survive this as well, DesRosiers added.

In addition to the Oshawa assembly plant, GM has an engine and transmission plant in St. Catharines, Ont. and the CAMI Assembly plant in Ingersoll, Ont.

Ontario Premier Doug Ford said it was a "difficult day'' for the Oshawa plant workers, Ontario auto part suppliers and their families.

The provincial government has begun exploring measures to help impacted workers, businesses and communities cope with the "aftermath of this decision,'' including a training program to help local workers to regain employment as quickly as possible, Ford added.

"It is disappointing that GM failed to see and build upon this competitive advantage,'' said Ford in a statement on Monday.

"While the company is entitled to make its own business decisions, I am confident that history will prove them wrong.''

— With files from Ian Bickis in Oshawa and Tara Deschamps in Toronto