End of GM's Oshawa plant to be a $2.3B blow to Canadian supply industry

General Motors’ decision to end production at its Oshawa assembly plant next year is a blow to Canada’s multi-million dollar auto supply industry, the head of the Automotive Parts Manufacturers’ Association said Tuesday.

“It’s not good for the workers at the Oshawa plant and it’s not good for our members, and the people who work in their plants,” Flavio Volpe said in an interview after GM announced it had no product planned for the Oshawa plant beyond December 2019.

The plant buys about C$3 billion a year ($2.26 billion U.S.) in auto parts and tools from Canadian suppliers, which in turn supports about 10,000 jobs, Volpe estimated. That represents about 10 percent of Canada’s auto parts industry.

That’s in addition to the 3,000 jobs that would be lost at the plant itself. Oshawa Assembly is the anchor at the east end of the Highway 401 automotive corridor, he said. 

While no single supplier relies on GM Oshawa for all of its business, Volpe said, it will be an issue for them.

“That doesn’t mean it won’t hurt if you’re supplying that plant and it’s going to close next year and you’ve got 100 people on that line,” he said. 
The closure is part of a massive global restructuring plan that would see the auto giant cut 15 percent of its 54,000 salaried jobs, and close four other plants south of the border  and two outside North America.

The move, which aims to cut US$6 billion in costs, comes amid slowing demand for passenger cars in North America while GM invests billions in new technology to create self-driving and electric vehicles.  

While the GM announcement Monday came as a surprise, it was not unexpected, Volpe added, noting the plant has been living on borrowed time for nearly a decade.  

Volpe held out hope the federal and Ontario governments and industry members, together with GM, could “reach a different decision” about the plant before the end of next year.

“We’ve been here before,” he added, noting the Ford Motor Co. was persuaded to reverse its decision in 2005 to close its Essex engine plant in Windsor as part of a wider restructuring plan.

The Essex engine plant is still going strong, he said.

“Yesterday wasn’t the last day for GM in Oshawa,” Volpe told a group of automotive suppliers at a conference in Toronto on Tuesday. 

“It’s the first of 400 days where we can do something in Oshawa that we did with Ford in Windsor,” he said. 

He said it wouldn’t have to involve big government incentives. 

“That’s not me saying spend money. That’s me saying get together with the other players and let’s get auto production going again on the east end of Toronto,” Volpe said. 

Volpe also didn’t rule out the plant changing hands and a new automaker entering the Canadian market. 

The federal government is considering other options to a plant closure, while Ontario’s Premier Doug Ford has said that his government would help laid off workers transition to new jobs.

During the financial crisis of 2008-09, the Canadian and Ontario governments contributed C$10.6 billion to a U.S. led bailout of GM, which was on the brink of bankruptcy. About C$3.5 billion of that was never recovered.