# GM to cut auto production in Oshawa..is this an end of an era?



## carverman (Nov 8, 2010)

The rumours may be infact writing on the wall for GM Oshawa.
1000 production jobs cut by November and more later on as it continues downsize and reconstitute itself to move production elsewhere. 



> The downsizing is being timed to the end of production of the Chevrolet Camaro sports car, now officially scheduled for Nov. 20. The company says it remains committed to Canada, and will continue to produce five other vehicles in Oshawa..for now.
> 
> 
> 
> > A decision on *another product for Oshawa won't be made until after the next labour contract with Unifor*, GM says. That contract will be negotiated next year





> General Motors announced Thursday that it plans to *spend US$5.4 billion to improve its U.S. factories during the next three years, creating about 650 new jobs.* In December, the company said it planned to invest US$5 billion to *modernize and expand its four factories in Mexico*.


http://www.ctvnews.ca/autos/gm-canada-to-cut-1-000-jobs-from-ont-operations-1.2352138


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## sags (May 15, 2010)

Announced today that GM is working with the Unifor union on retirement packages, buyouts and severance packages..........so I would think the jobs as good as gone already.

The Canadian contract is due for negotiation in September 2016, so I think GM is making their changes earlier to remove "keeping jobs in Canada" from the table.

The government money has been spent and GM is free to move to "greener pastures".

Sail on Canadian trade negotiators.........you have done a fine job of sending our jobs elsewhere.

Is there anyone else we could have a "free trade" deal with.........Mongolia or Somalia maybe ?


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## Beaver101 (Nov 14, 2011)

^ End of an era sounds alot like it ... what's the new slogan for Ontario: Closed for Business.


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## sags (May 15, 2010)

And in other news...........the GDP was reduced for February from a positive to a -0.2% and our economy is going into the tank.

And the CMHC listed the "at risk" zones for real estate. Vancouver..........the highest cost real estate market in Canada was considered "safe".

We Canadians are living in a twilight zone.


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## carverman (Nov 8, 2010)

sags said:


> Announced today that GM is working with the Unifor union on retirement packages, buyouts and severance packages..........so I would think the jobs as good as gone already.
> 
> The Canadian contract is due for negotiation in September 2016, *so I think GM is making their changes earlier to remove "keeping jobs in Canada" from the table*.
> 
> ...


While the current GM employees with enough service to be able to get Unifor to bargain a good buyout for them will survive on their lucrative DB? pensions,
the production line jobs once they are gone, they are gone forever. There won't be any employment for the next generation...ie Son works at GM because Dad worked there. GM is moving the Camaro production line to the US, where they are spending hundreds of millions to modernize the production and hire another 650 American workers to continue Camaro production.

So the 2009 bailout just prolonged the inevitable that it is no longer profitable to make automobiles in Canada to sell on world markets. The Camaro is basically
a US muscle car that is popular in the US more than Canada, so I can see that line moving to the US... perhaps a new slogan?...."Made in American for Americans'.


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## carverman (Nov 8, 2010)

Beaver101 said:


> ^ End of an era sounds alot like it ... what's the new slogan for Ontario: Closed for Business.


'We are still open for business.....anybody takers?....hello???? . I guess they have all gone to Mexico. Cheaper to produce, no fat pensions, no union wages, no benefits...
to affect the profit margins.


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## sags (May 15, 2010)

Good news for me I guess.

GM makes more money means a better ability to fund pensions.

Thanks Obama.............


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## Beaver101 (Nov 14, 2011)

^ Are you sure GM America means more $.80 to fund Canadian pensions? ... and thanking Obama not abit premature?


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## sags (May 15, 2010)

They pretty much have to unless they declare bankruptcy in Canada, in which case all their assets belong to the trustee, including property and tens of thousands of new vehicles and all the income from tens of thousands of leases.

Keep them pensions coming..................momma needs some new shoes.


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## carverman (Nov 8, 2010)

sags said:


> They pretty much have to unless they declare bankruptcy in Canada, in which case all their assets belong to the trustee, including property and tens of thousands of new vehicles and all the income from tens of thousands of leases.
> 
> Keep them pensions coming..................momma needs some new shoes.


Good thing that those pensions are still around for the retirees...but the new generation will not be able to step into their "father's shoes" unfortunately.

GM has invested $5 billion in modernizing their plants in Michigan, and another $5 billion in Mexico, building NEW factories,where the hour wage with benefits is around $8 (including all benefits) and no unions.

Compare that to the Ontario unionized auto sector wages and even the minimum wage...and just on wage disparity alone, it is plain to see that
today's announcement sets a trend for GM for the next 5-10 years here in Ontario as jobs continue to shrink at Ontario GM from 32,000 in 1992
to around 8,000 today. The Oshawa production is down from over 10,000 in 1992, to 37000 today.

With the loss of 1000 jobs as the Camero production gets moved to Michigan, it will be down to 2700 after November of this year.

GM has made no commitments to continuing auto production here after 2016, as that was part of the agreement with the bailout in 2009.

At least with the bailouts, it gave GM a reason to continue for the last 6 years, but now with both the federal and provincial gov't selling off
their shares to help pay down their debts..the incentive is no longer there. 

http://www.troymedia.com/2012/09/13/canadian-auto-workers-union-wage-demands-will-lead-to-job-loses/

GM will relocate to whereever their shareholders and decision makers decide to continue future production, and they are no longer investing in Ontario because of the economic "climate" changing , with the higher production costs of the unionized wages and benefits. 

The unions are not as powerful as they used to be, so if they don't give in with concessions , their jobs will be eliminated here..so that should be the writing on the wall.

I'm predicting that the existing lines will be slowly moved out as well to other countries, certainly the cheaper line of cars to Mexico.
Toyota is doing that..and other manufacturers may follow as well within the next 5 years.

Blame it on the unions or the federal/provincial gov'ts..Ontario is no longer a desirable place to do manufacturing in the future.

Just heard that the Newfoundland gov't is raising their HST to 15% from 13%, and Manitoba is in trouble as well. 

Alberta is facing a lot of political turmoil in the next federal election, favouring NDP more than PC because the voters are disillusions with the PC.

Ontario as it continues to see it's manufacturing base lost to other countries, with it's massive spending coming up on infrastructure and
not enough revenue to make up for the deficit, which will still continue to increase in spite of the sale of Ontario Hydro, will no doubt
be forced to increase the provincial sales tax as well within the next year or two.

As the Bob Dylan song goes.."the times they are a-changing"..


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## sags (May 15, 2010)

Lots of people putting the blame on Ontario, but it is worth noting that GM is moving to the US and Toyota to Mexico.

Neither are moving to Alberta and both are leaving Canada.


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## carverman (Nov 8, 2010)

sags said:


> Lots of people putting the blame on Ontario, but it is worth noting that GM is moving to the US and Toyota to Mexico.
> 
> Neither are moving to Alberta and both are leaving Canada.


So we have to ask ourselves as Canadians..why is that??? 
Union wages ($32 an hour + the benefit package = $50 per hour cost to the auto makers) or is it other factors as well?

If you compare "offshore" wages (and lets include Mexico as "offshore") even though it is part of the NAFTA agreement, the prodcution line salary differential alone is worth the move. 

That Toyota Corolla or equivalent GM "econo box" will be a lot cheaper to produce, giving Toyota and GM a better competition position
with the Koreans, that are SERIOUS competition now to all three NA automakers and the three Japanese automakers (Honda, Toyota and Nissan).

The exchange on the Mexican peso vs the US or Canadian dollar is a price advantage for selling the Toyota/GM models in the US as well.

Some US states are "right to work" states indicating that joining the unions is optional...Michigan (Detroit) is the central hub for the auto makers,
but there are other states as well.. Right to work states vs forced unionism states are about equal in the US.
http://www.nrtw.org/rtws.htm

So, with these options, including Mexico (which has no unions)...the writing is on the wall as far as the automakers that they will shift production
gradually, laying off a few hundred workers per year to the US and Mexico starting in 2016. The investment capital available in US to modernize
auto plants with robotics (to replace hourly line workers) and Mexico provide the incentive to "tear up roots and move elsewhere"

Indeed Oshawa better start looking for business to replace GM once it fully moves production, which no doubt will be starting in 2016 and
later. 

You can blame this on NAFTA or the unions or the lack of investment climate/concessions in Ontario.


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## sags (May 15, 2010)

It's only the beginning.

The second tier auto parts suppliers will be required to put in new bids on supplying the GM plants in the US. They have to be located in the US to qualify for bidding.

Several local auto plant suppliers in our area are saying they will lose that business or move to the US.

The spillover affect with be much broader than the lost jobs in Oshawa. All over Ontario, there are small plants that supply everything that goes into vehicle production.

I don't know what the solution is..........and suspect we are too far down the "free trade" road to do much now.

The consequences of terrible policy decisions on trade will be felt for generations.

Historians will look back and analyse how propaganda campaigns successfully convinced Canadians that giving their jobs away was a good idea.


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## carverman (Nov 8, 2010)

sags said:


> Lots of people putting the blame on Ontario, but it is worth noting that GM is moving to the US and Toyota to Mexico.
> 
> Neither are moving to Alberta and both are leaving Canada.


Not just Toyota (slowly moving production lines to Mexico, but GM has invested $5 billion US (so far) in Mexico.
A lot of US parts manufacturers have set up production there as well.

Volkswagen, which have been very popular there, have set up production. ..
http://www.reuters.com/article/2015/03/09/us-volkswagen-mexico-idUSKBN0M51LO20150309

The writing is on the wall, as I mentioned. Haven't heard any rumours about Ford yet, or Chrysler (which is mostly owned by FIAT), but I would suspect
that once the trend is established to shift production, it's ownly a matter of time. The competition from the Koreans, who have much lower labour
rates and can build and sell very good quality cars cheaper here..is putting pressure on the "Big three" and the other guys as well. 

and the latest rumours for Oshawa...
http://www.cbc.ca/m/touch/news/story/1.3057698

The Chrysler plant in Brampton..is still doing production for now, but they had to retool to take on another model once the (forget which model)
production was moved to Mexico.

and Ford isn't just sitting around in Oakville in their ivory tower either..they haven't announced anything yet but....



> Also in April, Ford announced it will invest $2.5 billion to build two new plants in Mexico.


and the "thought of the day" from Forbes...



> In recent weeks* Infiniti, Mercedes-Benz and BMW have all detailed plans to build cars in Mexico*.
> *Hyundai-Kia is expected to announce a plant any day*.
> 
> *Audi, meanwhile, is midway through construction of a $1.3 billion factory that will build luxury SUVs in Mexico starting in 2016*. Currently the world’s eighth-largest auto producer, Mexico is on pace to surpass Brazil this year. By 2020 Mexico should be number six behind China, the U.S., Japan, India and Germany, with an annual production of 4.7 million vehicles.


http://www.forbes.com/sites/joannmuller/2014/08/20/americas-car-capital-will-soon-be-mexico/


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## carverman (Nov 8, 2010)

Excerpt from Forbers (above) ^

New NISSAN auto production plant in Mexico:



> Amid bursts of sparks,* 190 shiny yellow robots weld together the steel skeletons of one of Nissan’s bestselling small cars (72% of the operation is automated)*. If need be, they can be programmed to weld four different models. Inside the high-speed stamping facility there’s a rhythmic crumping sound as steel parts are formed, 575 strokes per hour, 273,000 parts per month. Yet new technology keeps the decibel level lower than most stamping plants, a boon for workers.



and this...



> Part of the reason for Canada’s decline is that *Mexico is booming with billions of dollars worth of new investment by Asia– and Europe-based auto makers coming on stream. A new Mazda Motor Corp. plant began producing vehicles last month*, while the newest Honda Motor Co. Ltd. plant is scheduled to start up in the next few months. An Audi AG factory is under construction.





> Mexico is threatening to displace Japan as the second-largest exporter of vehicles to the United States and could soon challenge Canada’s leading position


.


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## gt_23 (Jan 18, 2014)

Another bi-product of decades of Liberal rule in Ontario...

The people of Ontario (and their elected representatives) want to transition the labor market towards "high-quality" service jobs in health care, policing, teaching, technology, etc., not dirty manufacturing jobs. The irony is that the latter are what gave Ontario its prosperity to make that choice in the first place, yet time will only tell whether the former are what takes that prosperity away.


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## fraser (May 15, 2010)

This has nothing to do with politics.

You cannot escape the basic facts. Labour fully loaded at $8. vs $50. Apply that to assembly and parts and the result is obvious. Not to mention the cost of facilities etc.. Only thing left to control is productivity/quality and it seems they have this one done. 

Governments can pump money in via grants or tax holidays but the end result has been the same. The REAL issue is what have all levels of successive Governments done to re shape the economy and the workforce. This has been coming for 15 years and is no surprise to anyone.

The railways saw it coming. CN purchased interests in rail lines through the US and in to Mexico years ago. CP is making similar moves.


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## Davis (Nov 11, 2014)

Well said, Fraser. Why would we want to try to compete for $8/hour jobs with no benefits? Do we want an economy like Mexico's? It's pretty clear that if we want a first-world economy, we have to let go the jobs that can be done cheaper in the third world.


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## sags (May 15, 2010)

Interesting about all the robotics in auto factories.

My best friend's son went through university and got his degree, couldn't find a decent job in his field and went back to college for "robotics technician".

He was hired by a German company to service their robotics in auto factories all over the world. Great job if you like to travel.........but he got it with his college diploma.

Those types of "one off" jobs aren't going to replace the tens of thousands who are being laid off across many sectors, including auto production.

When the government speaks of replacing the lost jobs with a new economy.........it is all very hazy on exactly what they are talking about.

Not many specific examples beyond more tax payer funded public service jobs, which is fine except who is going to pay the taxes to pay those jobs without a well paid manufacturing base?

The numbers of people involved in the Canadian real estate industry is staggering. The number of real estate agents in the GTA alone is unbelievable.

What happens if real estate slows down...........yikes.

I suspect import duties and higher corporate taxes on companies headquartered in North America will be one solution.

Higher royalties on commodities, such as being suggested by the NDP in Alberta is another.

Somehow we have to figure out how we are going to fund our "not actually working for a living" new economy.

We are successfully getting other countries to build our stuff. Now we need to successfully get the corporations to pay us to do it.

After all............we don't need the jobs. We just need the money..........

Maybe that is the answer............a market access fee. 

Companies can build wherever they want and save money...........and we can charge to access our markets.

Capitalism at it's finest, with both sides operating in their own self interest.


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## carverman (Nov 8, 2010)

Davis said:


> Well said, Fraser. Why would we want to try to compete for $8/hour jobs with no benefits? Do we want an economy like Mexico's? It's pretty clear that if we want a first-world economy, we have to let go the jobs that can be done cheaper in the third world.


As the manufacturing jobs dry up what is the next generation going to do for employment? 
Not everyone out there can be doctors, lawyers, nurses, accountants etc..for the high paying jobs. 

The low paying jobs (minimum wage) has already been shunned by Canadians, because they feel that part time jobs with little or no benefits is not for them..
...hence the rise of the temporary foreign workers to take those jobs, as even a minimum wage here is still better than a Bangladesh garment factory wage.

Over this last decade, since the recessions of 2008/2009, we have heard of US based companies pull out and close plants in Ontario.
Caterpillar, then the food industry (Heinz, Kellogg's) and maybe others. 

The labour cost + benefits and business taxes is too high in Ontario. 

Until the oil prices came tumbling last fall, the higher (exchange) Canadian dollar, making it expensive to produce goods for export here. 

While a lower dollar in the last few months may have helped a bit, the economic damage has been done.

Automakers don't make decisions to pull out overnight, it takes years of planning and investment, and now we are starting to see the results.

Neither the Harper, nor Wynne gov't can do anything to stop the erosion now.


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## carverman (Nov 8, 2010)

sags said:


> Interesting about all the robotics in auto factories.
> 
> My best friend's son went through university and got his degree, couldn't find a decent job in his field and went back to college for "robotics technician".
> 
> He was hired by a German company to service their robotics in auto factories all over the world. Great job if you like to travel.........but he got it with his college diploma.


Good for him. Robitics have been around for a couple decades, but now manufacturing is taking advantage of programmable robots that work 24/7, don't go on strike, don't call in for sick leave, don't need a vacation, or other persional issues.
They are consistent in quality and once the capital expenditures are written off for a production line, the ony cost is maintenance,,and one tech can maintain many.

It is cheaper to abandon old production lines (auto) than retool for every model year...a robotic line can be reprogrammed all at once to handle different models.



> Those types of "one off" jobs aren't going to replace the tens of thousands who are being laid off across many sectors, including auto production.
> 
> When the government speaks of replacing the lost jobs with a new economy.........it is all very hazy on exactly what they are talking about.


Gov't don't keep up with the changing times, and technology has a habit of passing them by. With the current population of Canada 35.7 million and 6.8% unemployment
and 0% GDP, it is very evident to anyone out there that cares..that it is only a matter of time until we ARE IN TROUBLE.

Sure, the provincial and federal gov'ts can cut benefits and raise taxes on practically everything, but taxes are inflationary and in the end, it causes more unemployment.

Years ago, the high school (gr 12) grads could get some kine of job in manufacturing or maybe some trades, but now and in the future, those jobs are going to be
harder and harder to come by, swelling the welfare lines. 



> Not many specific examples beyond more tax payer funded public service jobs, which is fine except who is going to pay the taxes to pay those jobs without a well paid manufacturing base?


Exactly, employed workers pay taxes..unemployed workers collect gov't benefits..who pays for their benefits? 



> The numbers of people involved in the Canadian real estate industry is staggering. The number of real estate agents in the GTA alone is unbelievable.


There is going to be a huge fallout in GTA real estate in the future..the average house prices are over a million now..who can afford these houses]
if the average working wage jobs dry up?



> Somehow we have to figure out how we are going to fund our "not actually working for a living" new economy.
> 
> We are successfully getting other countries to build our stuff. Now we need to successfully get the corporations to pay us to do it.


How do we pay for goods if most of us become unemployed due to lack of jobs? The household debt load already is scary...



> After all............we don't need the jobs. We just need the money..........
> 
> Maybe that is the answer............a market access fee.


Everybody needs money...adding more fees to a free market economy just stagnates and chokes off growth.


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## Davis (Nov 11, 2014)

Ever heard of the knowledge economy? High tech? Computer software? Financial services? Manufacturing employment has been in decline in Canada for decades. It is actually a small percentage of the workforce now. The idea that a modern economy is based on manufacturing is a relic of the 1970s. Even though we've been losing manufacturing, we are at pretty close to the 6% unemployment figure that economists consider to be "full employment" in Canada. (There is always a part of the population that is literally "between jobs", another part that doesn't have the skills for employment, and another part that is in the wrong region to get a job.) Thinking that we can compete with Mexico or China for low-paying manufacturing jobs does not make a lot of sense to me.


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## bgc_fan (Apr 5, 2009)

On the flip side they are hiring 100 people for their R&D at Oshawa. So it sums up this thread: more knowledge based jobs and fewer low skilled jobs.
http://www.durhamregion.com/communi...g-sets-gm-canada-development-plans-in-motion/


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