GM investing $250 million in CAMI plant's body shop
General Motors is investing $250 million in an Ontario assembly plant to support future vehicle production.
The automaker today said it's installing flexible body shop equipment and tooling at the CAMI Assembly Plant in Ingersoll, Ontario, which builds the Chevrolet Equinox and GMC Terrain crossovers.
The plant, which employs around 2,700, produced more than 300,000 of the crossovers in 2012.
The addition will add 336,000 square feet to the operation to house the new body shop tooling and equipment, said Les Bogar, plant manager of CAMI Assembly, in a message to workers posted on the Canadian Auto Workers Local 88 Web site today.
"Flexible body shop equipment and tooling allows multiple body panels (floor plans, rocker assemblies, underbodies) to be welded with the same set of programmable tools and robots," Bogar said.
GM says the investment will allow CAMI to build a "higher variety of differentiated products, on multiple platforms, at much lower costs." GM also said the changes will help expedite new product delivery.
No product announcements have been made, a GM spokeswoman said. GM said construction will start in the coming weeks with completion expected in the fourth quarter of 2014.
Kevin Williams, president of General Motors of Canada, said in a statement: "Continually improving the flexibility of our manufacturing operations helps us respond quickly to customer needs and market demand."
GM used to operate the plant as a joint venture with Suzuki Motor Corp., but Suzuki ceased production there in June 2009 and GM bought Suzuki's half of the operation in December 2009.
"It really does signify the fact that they are confident that the current strength that we're seeing, especially in the United States, will continue for some time," said Carlos Gomes, an auto analyst at Scotiabank, noting that production at the plant increased by 5 percent in January versus a year ago.
The crossover utilities are now the largest segment in the U.S. market, outselling traditional medium sized cars. In Canada, it is close to overtaking the small car segment as well, said Gomes.
GM has fought to keep with up with demand for the Equinox and Terrain. Production rose 7 percent for both the Equinox and Terrain at CAMI in 2012, according to the Automotive News Data Center.
About 186,701 Equinoxes were assembled at the plant last year, while 118,714 Terrains were produced for a total of 305,415 units.
GM also began Equinox production at its Spring Hill, Tenn., plant last September to help shoulder the load.
Since September 2010, GM has sent Equinox bodies built at CAMI about 125 miles to its Oshawa, Ontario, plant for final assembly in another move to match demand. GM executives called it a creative solution to boost production.
GM sold 20,649 Equinox crossovers in February, up 16 percent from the year-earlier period. In 2012, Equinox U.S. sales were up 13 percent after 218,621 units were sold.
Meanwhile, 9,802 Terrains sold last month, which amounted to a 21 percent jump from February 2011. Terrain's 2012 U.S. sales rose 18 percent to 97,786 vehicles.
"This investment will prepare the plant for future vehicle production and will give CAMI the ability to build a higher variety of differentiated products, on multiple platforms," GM spokeswoman Adria MacKenzie said in an email.
She did not say what kind of models the conversion will be able to accommodate.
MacKenzie said it was too early to say if the investment will result in new jobs, while the CAW said it was confident the investment in infrastructure would result in more job security.
The Canadian auto industry exports more than 80 percent of its vehicles to the U.S. market, with crossover vehicles making up some 40 percent of overall Canadian production.
Early contract talks
Dan Borthwick, CAW Local 88 President, said the union started early contract negotiations at the plant with GM on Feb 12.
The CAW local and GM plan to resume negotiations on Sunday and with hopes of having a tentative agreement ready for a March 24 union local ratification meeting, Borthwick said in an interview today.
The plant maintains a separate contract with the CAW than the rest of General Motors, Ford and Chrysler in Canada.
Under the four-year contract between GM and the CAW reached last year, wages are frozen for existing workers for the first three years, according to previous reports. Workers then get a cost-of-living adjustment in the fourth year along with a series of lump sum bonuses. New hires will start at a lower hourly rate than under the previous contract and take 10 years to reach the top level of the pay scale, up from six years previously.
Reuters contributed to this report.
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