MONTREAL/WASHINGTON (Reuters) – General Motors Co (GM.N) is set to make a major announcement on Monday that will affect its global operations and threatens to shutdown a big vehicle assembly plant in the province of Ontario, a Canadian union said on Sunday.
Unifor, which represents most unionized autoworkers in Canada, said it had been informed by GM that there would be no product allocated to the plant in Oshawa after December 2019, a development that would affect production at the plant.
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The union statement came after a Canadian TV news channel said GM was planning to close all operations at the plant in Oshawa, near Toronto.
GM has been cutting jobs to deal with plunging car sales in North America. The company has internally debated for months how to address shrinking car demand, a person briefed on the matter said, and the issue is certain to re-emerge when GM holds contract talks next year with the United Auto Workers union.
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GM is expected to announce as soon as this week some involuntary salaried layoffs after it did not get as many volunteers to accept buyouts as hoped, the person said.
GM said on Oct. 31 that about 18,000 of its 50,000 salaried employees in North America are eligible for the buyouts.
The stepped up cost-cutting and restructuring at GM comes as many industry executives and analysts predict that overall vehicle sales in the United States will decline further in 2019 and 2020.
At the same time, China, the worlds largest auto market and GMs biggest market by vehicle sales, has decelerated sharply in the past few months.
GM shares are down 12 percent for the year, and GM Chief Executive Mary Barra, in a message to employees last month, cited the stagnant share price as a reason for tougher restructuring measures.
She said the automaker had negative cash flow for the first nine months of the year and it needed to cut costs.
GM has been offering buyouts to North American salaried workers and has said it could lay off white-collar staff if it does not hit a cost-cutting target.
Amid a heavy winter downpour, stunned GM workers walked off the job in protest Monday after learning the company has no plans to produce vehicles there after December 2019. The news will affect about 3,000 hourly and salaried workers, more than a third of GM’s workforce in Canada. In all, GM plans to cut 10,000 jobs in North America.
The person briefed on the matter confirmed that GM planned a major announcement on the future of the Oshawa plant, but said the automaker wanted to notify employees of its plans before making any announcements about the plant.
Total vehicle production at the Oshawa complex fell 60 percent through the first ten months of 2018 from the same period a year ago, according to Automotive News production data.
GM employs about 2,500 union staff in Oshawa which produces both the Chevrolet Impala and Cadillac XTS sedans. It also completes final assembly of the stronger-selling Silverado and Sierra pickup trucks which are shipped from Indiana.
Political pressure in Canada is already mounting on GM, which had accepted billions of dollars in aid from the U.S., Canadian and Ontario governments after filing for bankruptcy protection during the 2009 global economic downturn.
“We are aware of the reports and we will be working in the coming days to determine how we can continue supporting our auto sector and workers,” a Canadian government official said.
“The jobs of many families are on the line,” said Colin Carrie, a Member of Parliament for Oshawa. “Communities all over Ontario would be devastated if this plant were to close.
The U.S.-based automaker has other operations in Canada, including a plant in Ingersoll, Ontario, where it assembles the Chevrolet Equinox.
The reported plant closure is a further blow to the Canadian auto industry, which has lost jobs to the United States, where governments offer manufacturers rich incentives, and Mexico, where labor costs are lower.
“It’s not just General Motors, it’s all the parts suppliers, logistics companies, they’re all involved in putting these vehicles together and if we’re gone it’s a lot bigger than just GM,” said Jesse Forbes, who’s worked for GM in Oshawa for 17 years.
However, a new trade deal that the United States, Mexico and Canada struck in September leaves significant room for Canadian plants to grow exports duty-free.
(Reporting by Allison Lampert in Montreal and; David Shepherdson in Washington DC. Additional reporting by David Ljunggren in Ottawa and Joseph White in Detroit; Writing by Denny Thomas; Editing by Peter Cooney)
“Oshawa has been in this situation before with no product on the horizon and we were able to successfully make the case for continued operations,” Unifor president Jerry Dias said in a statement. “We will vigorously fight again to maintain these good-paying auto jobs.”
Provincial and federal leaders alike conceded the futility Monday of trying to persuade General Motors to keep its Oshawa, Ont., automotive plant running beyond 2019, and instead focused on ways to ease the pain of more than 2,500 workers who stand to lose their jobs.
Ontario Premier Doug Ford insisted Monday there was nothing his government could do to talk GM into abandoning its plan to shutter the factory at the end of next year. Ford and lawmakers in Ottawa vowed to work together to help affected workers, their families and the city — which will lose its biggest employer.
The first thing I said was, ‘What can we do?’, Ford said Monday, recalling his phone call Sunday with the head of GM Canada. He said, ‘The ship has already left the dock.’
Video: GM plant in Oshawa set to shut down
The closure of GM’s Oshawa operation, just east of Toronto, would deliver a major economic blow to the region and will be felt at the Ontario and national levels. In addition to the Oshawa plant, the automaker announced Monday it was planning to close four other plants in the United States and two overseas by the end of 2019 as part of a global restructuring that will see the company cut costs and focus more on autonomous and electric vehicles.
In a Twitter post Monday, Prime Minister Justin Trudeau said he told GM CEO Mary Barra that he was deeply disappointed about the closure and said his government would do everything possible to help affected auto workers and their families.
Obviously, our hearts go out to the workers in the region affected, Trudeau said during question period in the House of Commons, before arguing his government has invested more than $5.6 billion to support the auto industry.
Federal Industry Minister Navdeep Bains and a cabinet colleague, Social Development Minister Jean-Yves Duclos, said Ottawa was looking at how to help workers affected by the closure. They declined to get into specifics — but insisted all options are under consideration.
We’re very disappointed and very surprised by GM’s announcement that we learned about only yesterday, Duclos told reporters Monday in French. It’s an announcement that’s disappointing because, obviously, it touches, (it) affects thousands of families in a cruel manner.
“GM workers have been part of the heart and soul of Oshawa for generations — and we’ll do everything we can to help the families affected by this news get back on their feet,” Prime Minister Justin Trudeau said in a tweet.
Ontario called on the federal government Monday to extend employment-insurance eligibility by five weeks to a maximum of 50 weeks for workers affected by the closing. Ford said the province will immediately bolster employment help and retraining measures.
I support the people out there and we’re going to do everything we can to make sure they get back on their feet, Ford said.
Politicians from both the federal and Ontario governments, who have frequently clashed in public, made efforts Monday to show that when it comes to the GM matter they have, so far, set aside their differences.
That’s cold comfort for Darryl Donnithorne 38, who said he was laid off by GM when it closed its Oshawa truck plant in 2008, He just got hired back a couple of months ago to install windshields on the pickups sent from Indiana.
This is not a political issue, this is not about pointing fingers, Bains said. This is about standing up for the automotive sector, this is about standing up for the auto workers.
At the federal level, Conservative Leader Andrew Scheer demanded Parliament hold an emergency debate on the matter Monday. Scheer said the governing Liberals must immediately explain how they will help workers and protect other manufacturing jobs in Ontario.
What we’d like to know from this government is, what is on the table? What is possible? Scheer said in Toronto.
We do know that some of the reasons being cited, being talked about, are the rising costs of energy. We know that GM and other automakers are affected by the Liberal carbon tax, so before we even get to bailouts we could be looking at any number of other ideas.
The Conservatives have launched regular attacks against the Trudeau government’s incoming carbon-tax plan. On Monday, Tory MP Pierre Poilievre urged the Liberals to put it on hold, following the GM announcement.
The federal NDP urged the Liberals to create a national auto strategy to ensure product lines and manufacturing processes meet the changing needs of the industry. The party also criticized the Trudeau government’s announcement last week that it plans to provide $14 billion worth of tax incentives for corporations over the next half-decade.
We can’t afford billions in tax giveaways to these large companies when those same companies are pulling up stakes and leaving people out of work, NDP MP Guy Caron said during question period.
At the provincial level, Ontario NDP Leader Andrea Horwath accused the Ford government of giving up on trying to keep the auto jobs from leaving Oshawa.
In 14 years of being in this house I’ve never seen a government roll over so quickly and throw in the towel on good jobs in this province, Horwath said.
Interim Liberal Leader John Fraser called the closure the worst economic catastrophe to hit the province since the recession of 2008.
The union representing the Oshawa auto workers says it will put up what it calls the fight of our lives to keep the plant open.
They are not closing our damn plant without one hell of a fight, Unifor national president Jerry Dias said Monday. We are sick and tired of being pushed around. And we’re not going to be pushed around… we deserve respect.
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