November 26, 2018
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 in order to meet changing demand in the transportation industry, a plan that it says will save the company $6 billion by the year 2020.
GM also says it will reduce salaried and salaried contract staff by 15 per cent, which includes 25 per cent fewer executives.
According to GM’s website, the Oshawa Assembly Plant employs 2,522 workers with Unifor Local 222. Production began on Nov. 7, 1953, and in the 1980s the plant employed roughly 23,000 people.
GM is shifting more investment to electric and autonomous vehicles.
The issue will be addressed in talks with the United Auto Workers union next year. GM Chief Executive Officer Mary Barra made calls early on Monday to disclose the plan.
“We are right sizing capacity for the realities of the marketplace” CEO Mary Barra said.
GM shares were last up 2.2 per cent at US$36.72 before being halted.
Cost pressures on GM and other automakers and suppliers have increased as demand waned for traditional sedans. The company has said tariffs on imported steel, imposed earlier this year by the Trump administration, have cost it US$1 billion.
Prior to Monday’s closure announcement, GM announced back in October that it was attempting to cut costs by offering buyouts to about 18,000 white-collar workers in North America.
The company made the offer on October 31 to salaried workers with 12 or more years of service.
The October announcement came on the same day that GM reported a US$2.5 billion third-quarter profit. The company says in a prepared statement that although it is performing well, it wants to continue to reduce costs while the company and the economy are strong.
The auto industry faces looming troubles such as slowing sales in the U.S. and China and higher steel and aluminum prices due to U.S. tariffs.
GM wouldn’t disclose terms of the buyout offers. The company has about 50,000 salaried workers in the U.S., Canada and Mexico.