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GM strike could lead to thousands of job losses in Canadian auto industry

Alicja Siekierska, Yahoo Finance
September 16, 2019

The United Auto Workers union’s strike by nearly 50,000 members against General Motors Co. in the United States could lead to thousands of job losses in the highly integrated Canadian automotive industry.

Unifor president Jerry Dias, whose union represents thousands of Canadian GM workers, said workers in GM’s three Canadian manufacturing plants could be served temporary layoff notices in the coming days if the strike in the U.S. is not resolved.

“Overall, and depending on what happens, this could be up to 5,000 jobs,” Dias said.

Nearly 50,000 UAW workers went on strike on Monday, marking the first walkout against the automaker in over a decade. The U.S. union said it is looking to secure an agreement that addresses fair wages, job security and a path to permanent seniority for temporary workers. GM released a statement Monday that said negotiations had resumed, and that the goal was “to reach an agreement that builds a stronger future for our employees and our business.”

GM’s sprawling North American footprint means a strike in the U.S. could reverberate through to its manufacturing facilities in Ontario.

Dias said GM’s Oshawa Assembly Plant, which produces the Chevrolet Impala and Cadillac XTS and finishes the GMC Sierra and Chevrolet Silverado trucks, would likely be impacted by the strike by Wednesday. The St. Catharines Propulsion Plant, which manufactures engines that are shipped to some of the U.S. plants, has a three-day supply of parts, Dias said, and would also likely suffer temporary layoffs if the strike isn’t resolved soon. GM’s CAMI Assembly plant in Ingersoll, meanwhile, relies on the U.S. plant for 50 per cent of its engines, Dias said.

A spokesperson for GM Canada did not say what impact the strike may have on its Canadian operations, but that it will “continue to monitor the situation closely.”

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said there is “so much at stake” with how the situation unfolds between the UAW and GM, given how highly integrated the automotive industry is. The impact of the strike could be felt by suppliers after just 24 hours.

“After a day or so companies are going to have to adjust their operational plans,” Volpe said in an interview.

“If you supply seats to a car assembly plant that isn’t making cars, you’re not making seats. And if you’re not making seats, you’re not buying foam.”

While GM is not the sole customer for Canadian automotive parts suppliers, the automaker remains a key customer for many companies. For example, Magna International Inc., Canada’s largest automotive parts manufacturer, was recently named GM’s Supplier of the Year for its driveline system technologies.

“Everybody works with some cushion of inventory and operational flexibility… But we’re really talking about a day or two before you have to make some kind of adjustment,” Volpe said.

“All of which means that this thing has got to come to a close for everybody, including the UAW, immediately.”

According to Credit Suisse analyst Dan Levy, the strike could cost GM about US$50 million a day.

“The impact could potentially be nominal if the strike is resolved quickly, yet the longer it lasts, the more it will be felt in GM’s earnings profile,” Levy wrote in a note to clients Sunday.

Unifor, which released a statement supporting UAW, has two collective agreements with General Motors scheduled to expire in September 2020 and September 2021. Negotiations in relation to those contracts scheduled to begin next year.

GM had announced in November that it would halt production at its Oshawa plant and four other North American factories, cutting thousands of jobs as part of a global restructuring plan and an increased focus on electric vehicles. Since making that announcement, the automaker said it will invest $170 million to convert the Oshawa facility into a stamping and after-market parts facility, as well as building an autonomous vehicle testing track. The investment preserves 300 jobs, but falls short of saving the approximately 2,300 unionized jobs that will be lost when vehicle assembly productions ceases at the plant in December.

With a file from the Associated Press.

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