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GM to convert Oshawa factory into ‘aftermarket plant’ and AV test track

GM to convert Oshawa factory into ‘aftermarket plant’ and AV test track

John Irwin, Automotive News Canada
May 8, 2019

TORONTO — General Motors will turn its Oshawa, Ont., factory into an “aftermarket plant,” producing parts, but most of the 2,600 hourly workers will still lose their jobs after vehicle production ends by the end of the year.

The company plans to invest $170 million to support the transition of operations at Oshawa. GM also will convert part of the plant property into a test track for autonomous and advanced technology vehicles.

Dias, speaking with Automotive News Canada ahead of a joint press conference between GM and Unifor today in Toronto, said the automaker has 10-year commitments to build parts, such as quarter panels, trunks, doors and hoods at the plant. He also said the company is working with suppliers including Magna International Inc. and Martinrea International Inc. to “bring in stamping work” to Oshawa.

GM Canada CEO Travis Hester said during the news conference that the plant will focus on “parts manufacturing, sub-assembly and other miscellaneous activities for GM and other auto industry customers.”

The programs will keep the plant alive after vehicle production stops by the end of 2019, but they will only save about 300 jobs, though that number could rise as more products are identified.

“It starts off really low, but then it builds over time,” Dias said. “There will be a lot more [jobs] by the time December rolls around. It’s all a question of stages. They’re going to bring some work from overseas back. Everybody’s at it, but the problem is we need to make some sort of announcement. But it’s not complete. It’s a work in progress.”

Dias said Oshawa will provide aftermarket parts for the GMC Acadia, Chevrolet Traverse and Chevrolet Equinox.

‘THINGS CHANGE’

General Motors – GM Canada CEO Travis Hester and Unifor President Jerry Dias shake hands Wednesday. The automaker and union had been in discussions about GM Oshawa for months.

The news comes almost six months after GM said no vehicle production would be allocated to Oshawa beyond 2019 as part of a larger corporate restructuring. The plant currently produces Cadillac XTS and Chevrolet Impala sedans, models that will be phased out of GM’s lineup amid slumping North American car sales. It also does final assembly on previous-generation Chevrolet Silverado and GMC Sierra pickup bodies shipped from Indiana.

Dias said he “will never stop fighting” for new vehicle assembly mandates for the Oshawa plant but acknowledged that “vehicles don’t fall out of the sky.”

“This isn’t a home run at all. The problem is I’m running out of time,” he said. “There’s no vehicle at my fingertips right now in order to keep everybody working. So now the question is, how do we transition the operations and buy some time?”

Dias said keeping the plant operational will allow GM to resume vehicle assembly at the plant in the future. He pointed to GM plants in Spring Hill, Tenn., and Orion Township, Mich., which were both idled in 2009 but now produce new vehicles.

“When we say that maintaining the integrity is so critically important, that’s exactly what we mean,” Dias said at the press conference. “Because things change, and I understand that better than anybody.”

Hester said GM’s investment in the plant shows the automaker is committed to Oshawa, despite the impending end of vehicle production.

“I’m pleased to make the announcements today to underscore our long-term partnership and commitment to Oshawa’s sustainable future,” Hester said.

RETIREMENT, RETRAINING

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said that while today’s news does little in the short-term for affected suppliers, keeping the plant operational and maintaining assets such as its paint shop will make Oshawa an attractive option for a potential product mandate in the future.

“When General Motors gets another product that it’s got to build somewhere, the first thing they’re going to do is look at where they can allocate it internally,” Volpe said. “If it’s a dead facility with the lights off, it’s considered a total reinvestment and becomes an external option. The fact that you’re keeping the lights on and people in there keeps it an internal option and raises the potential infinitely.”

General Motors – Jerry Dias said the 300 workers who are retained will keep their current pay and benefits in the new roles.

Workers that will not be kept on at Oshawa will be offered “a variety of severance packages,” he said. Details were not immediately known. Although GM Canada did say in a news release that it will offer “enhanced retirement packages to retirement-eligible Oshawa Assembly employees including vouchers toward the purchase of new GM vehicles.”

Hester said more details about the retirement packages will be made public Thursday. He said about 50 per cent of Oshawa’s hourly employees, or about 1,300 workers, will be eligible for pension this year.

Some eligible employees will have an opportunity to transfer to GM’s St. Catharines Propulsion Plant and Woodstock Parts Distribution Centre in Ontario. It was not known how many workers would transfer.

Hester said employees who will be searching for other jobs could take advantage of a new “Jobs Action Centre” that will open at the Oshawa plant in June. The centre will help match workers with potential employers, and GM will offer financial support for retraining.

“We have strong hiring demand from over 40 employers around the greater Toronto area,” Hester said. “This is a very unique opportunity to support career transition planning more than six months ahead of the end of production.”

According to a news release, GM has identified about 5,000 job opportunities in the region, ranging from technician roles at GM dealerships to jobs in “energy, manufacturing, services and other sectors.”

Dias said the 300 workers who are retained will keep their current pay and benefits in the new roles. He said he expected many Oshawa workers who will be out of a job to be disappointed.

“They’re going to be upset, and they should be,” Dias told reporters following the press conference. “I’m upset. Don’t misunderstand any of this. What do I say to a community that was hoping we could pull a rabbit out of the hat? I mean, people were legitimately hoping that we would have a solution to keep everybody employed, and that’s what we tried to do. But that’s not there as I stand here today.”

SUPPLIER STAMPING?

Oshawa currently does stamping for GM’s Detroit-Hamtramck, Mich., assembly plant. Detroit-Hamtramck, however, only has a product mandate lasting through January 2020. The Oshawa plant will also do stamping work for CAMI plant in Ingersoll, Ont., where the Chevrolet Equinox is produced.

Dias and Hester said both parties are in discussions with Magna and Martinrea about stamping work for those suppliers. No agreements have been reached.

“We absolutely have press capacity to do stamping for non-General Motors” companies, Hester said, describing conversations with Magna and Martinrea as “very positive.”

He said contract assembly “is not something we’re considering” with Magna.

Magna CEO Don Walker said in January that it would consider Oshawa as a location for contract assembly in North America, were it to secure deals with manufacturers to build between 20,000 and 50,000 vehicles annually. Magna Steyr, its Austrian business unit, builds vehicles for automakers in Europe.

GOVERNMENT RESPONSE 

No federal or provincial funding will be used at the Oshawa plant, Hester said. Dias thanked Prime Minister Justin Trudeau for speaking with GM CEO Mary Barra earlier this year about the plant’s future and said he would meet with Ontario Premier Doug Ford on Monday.

In a statement, Navdeep Bains, Canada’s minister of innovation, science and economic development, said the federal government was “encouraged” by the Oshawa news and said it will “work closely” with GM Canada and Unifor to make sure “workers and their families are supported.”

“Just yesterday, Oshawa’s autoworkers were facing a completely uncertain future,” he said. “Today, GM has committed to providing work for hundreds of them at the plant and to supporting the others, and we want to see it through.”

Todd Smith, Ontario minister of economic development, job creation and trade, said the provincial government also would work with both parties in the coming months, saying it “will always stand shoulder-to-shoulder with our auto workers.”

MORE NEGOTIATIONS

GM and Unifor had been engaged in talks since mid-March, when Unifor suspended its media campaign to save the Oshawa plant. In response to GM’s plans, Unifor staged protests at the 2019 Toronto and Detroit auto shows, aired commercials during high-profile Canadian broadcasts of the Super Bowl and other events and took out advertisements in Detroit’s local newspapers. Workers also staged protests at Oshawa and at its suppliers, briefly halting production at the plant, and members staged a blockade in front of GM Canada’s headquarters in Oshawa.

The two sides are set to negotiate again in 2020 as the union’s four-year collective bargaining agreements with the Detroit 3 end in September of that year.

“The key piece for me is, I’m keeping the footprint,” Dias said. “That’s the key, and then we’ll deal with them in negotiations in 2020.”

TEST TRACK

General Motors

The test track will be on 55 acres and will include two straight sections of track that are 1,200 feet long and joined by a banked curve on either end, according to GM.

Hester said the test track will support the nearby technical centres in Oshawa and Markham, Ont., that develop software and hardware for autonomous systems, active safety systems and infotainment.

“Think of the test track as linked to the two vehicle development sites we have here in Canada,” Hester said. “We need to be able to [test] software algorithms in a safe way, and the test track is a perfect place.”

Meanwhile, south of the border, General Motors plans to sell its idled Lordstown plant in Ohio to Workhorse Group Inc., a little known electric truck and drone maker in the state, according to President Donald Trump.

GM confirmed in a later statement it is in “discussions” with Workhorse and an “affiliated, newly formed entity” to sell the plant.

Lordstown was one of four U.S. plants also scheduled to be idled by the automaker.

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