General Motors will close its production plant in Oshawa, Ont., along with four facilities in the U.S. as part of a global reorganization that will see the company focus on electric and autonomous vehicle programs.
The auto manufacturer announced the closures as part of a sweeping strategy to transform its product line and manufacturing process to meet changing demand in the transportation industry, 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.”
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.
Unifor Local 222 shop chairman Greg Moffat said Monday the plant is not closing “without the fight of our lives.”
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The Oshawa Assembly Plant employs 2,522 workers with Unifor Local 222, according to GM’s website. Production began 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.
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.
Meanwhile, GM’s Barra said Monday the company will be investing in autonomous and electric vehicle technology.
The Canadian Press