Tony Van Alphen
Business Reporter


Jun 03, 2008

General Motors will halt production at its Oshawa truck plant next year and probably won't reopen it again because of the collapse of pickup sales in the U.S., chairman Rick Wagoner said today.

The move, which shocked the auto-making city of Oshawa, will eliminate the equivalent of another 1,000 jobs at the plant.

Nerarly 6,000 workers are still employed at GM's Oshawa car plant.

Wagoner said GM will stop output at four North American truck plants including the Oshawa operation which produces the gas-guzzling, full-size Chevrolet Silverado and GMC Sierra models.

There was this immediate reaction: - “We are going to fight this decision,” Canadian Auto Workers president Buzz Hargrove declared at a news conference.

“This decision is unfair, it’s unjust, it’s unwarranted, it’s illegal, it violates our collective agreement, and we’re going to do everything in our power — and we have power.”

Asked what the union’s response would be, he said: “Watch us.”

- Ontario won’t hesitate to recoup part of a $175-million provincial loan to General Motors earlier than planned in the wake of the automaker’s decision, Premier Dalton McGuinty said today.

It’s early yet, but the loss of 1,000 jobs — the latest blow to Ontario’s ailing manufacturing sector — likely means GM will be in violation of one of the conditions of the loan guarantee, McGuinty said.

The province invested $235 million with GM’s Beacon project in 2005, $60 million of which went to universities for research and development and the balance to GM for its Oshawa operation.

The agreement included minimum job levels at the truck plant, McGuinty said. “If those jobs go below a certain level, they’ll be in breach of the agreement and we’ll enforce that.”

Hargrove said GM committed in writing to produce pickups in Oshawa through the life of the new collective agreement which was ratified only two weeks ago.

He said the automaker also promised that Oshawa would build a new generation of light-duty trucks to be introduced in 2011 or 2012.

“There was no justification for a change which would lead to this kind of decision,” Hargrove said.

“It violates the corporation’s moral obligation to its workers and their families. It violates the whole concept of collective bargaining.”

He urged the federal government to refuse to allow sales in Canada of General Motors trucks made elsewhere if the closure goes through.

“It’s an American company, controlled by Americans and run by Americans,” Hargrove said. “They’re trying to cut their costs by moving some of our production into Mexico.”

Retired GM worker Dave Boissoin drove his silver GMC Sierra truck to the plant to show his support this morning when he heard the news.

Boissoin, 50, retired two years ago "so they could keep the plant running and the younger guys could keep working. This is shocking. now they're going to close the whole place down."

Boissoin, who has a nephew, brother and sister working in the plant blamed GM for the latest job cuts.

"They have to know oil's going to go to $200 a barrel, they just wanted to make money on the big vehicles. It's shocking how unprepared they really were."

Robert Nichol, 41, got off the night shift at the car plant at 6:30 a.m., but stayed around to show his support.

"The younger guys in the car plant know they'll lose their jobs because the older guys from the truck plant will get them. It's a shock, especially after we just settled the contract. Everybody was finally relaxed and now all our lives are on hold."

Soaring fuel prices and the plunge in the U.S. housing market have devastated pickup sales south of the border.

Wagoner revealed the company has not allocated any new models at the four plants and it is "unlikely" they will reopen again, Wagoner said.

GM will keep other truck plants open in the U.S. and shift development money to smaller cars, he added.

In addition to Oshawa, GM also confirmed it is closing operations in Ohio, Wisconsin and Mexico.

Wagoner noted the company believes the decline in big pickup and sport utility vehicle sales is not temporary.

Forecasters have said they expect fuel prices to continue climbing and see no relief at the pumps in the near future.

GM did not disclose when it will shut down the Oshawa plant next year.

"We've been told it's sometime next year," said Keith Osborne, plant chairman for the Canadian Auto Workers Local 222. "It's hard to believe but it's true. It's a mess here this morning."

GM, Canada's biggest auto maker, already cut a shift in January and planned to eliminate a second shift this fall at the plant.

However, the Canadian Auto Workers and GM agreed recently that instead of laying off another 1,000 workers, employees on the two remaining shifts would share the remaining jobs. Under that arrangement, employees would work two weeks and then take two weeks off and collect employment benefits.

The plant is one of the most efficient truck plants in North America and ran on three shifts for more than a decade before sales began sliding significantly last year.

Ford has revised its earnings forecasts and also cut production in recent weeks because of the slumping market.

The CAW is holding two news conferences today on its plans to fight the closure in Oshawa.

THE CANADIAN PRESS


Jun 04, 2008

OSHAWA–Angry General Motors employees blocked the road outside the company's Canadian head office early Wednesday and promised to stand their ground until their union receives a guarantee that 2,600 local workers will have jobs.

More than 100 workers are demanding GM either change its mind about closing a truck assembly plant in this auto manufacturing hotbed or compensate the affected employees, said Chris Buckley, president of the Canadian Auto Workers union Local 222.

"Ultimately we're looking for General Motors to reverse the decision they made to close our truck plant yesterday – we want a meeting with the highest levels of the General Motors corporation and we will be here as long as it takes," Buckley said.

"It's going to have to take something that's extremely firm and set in concrete for me to end this dispute right now."

The protest could be just the first step in an ongoing fight against the automaker's plans, although GM plant workers were being told they should continue working, he added.

"We are encouraging our members in the plants to continue to build cars and trucks. We are not asking our members to withdraw our services."

Jim Freeman, 25-year GM employee and president of the Durham Region labour council, said the plant's closure could have devastating effects on the community at large.

"Everybody's going to be affected," he said.

"The trickle down is going to affect the whole community."

The protest began as a blockade of the GM building but eventually some corporate employees were allowed to walk into work. Shortly after the business day began, however, GM decided to shut down the building and send staff home.

General Motors spokesman Stew Low called the protest ``understandable" and that the company isn't looking for police to intervene.

"This is a very tough thing for employees to go through and for the union to go through and us as well," Low said.

The company would be willing to meet with the union to explain its decision, which is a reflection of the changing market for more fuel-efficient vehicles, he added.

"We'd love nothing better than to be continuing to build pickup trucks in great volumes but the thing that is going on in the U.S. marketplace, and to a certain degree in the Canadian marketplace. is consumers are moving away from big trucks to cars and smaller crossover vehicles and we're transforming to be a part of that," Low said.

"This is a very difficult thing to go through. It's a tough decision that we've made, but it's made in the context of providing customers with the kinds of vehicles that they want."

On Tuesday, GM announced that four North American truck assembly plants – including the one in Oshawa – would be closed.

The company said the shutdowns were in response to "recent developments on the global oil scene" that have led to high gasoline prices, which represent "a structural change, not just a cyclical change" in consumer demand and the company's prospects.

CEO Rick Wagoner said at the annual meeting in Delaware that the Oshawa pickup truck plant east of Toronto will cease production in the third quarter of 2009 "and we don't have plans to allocate future products" – meaning a probable permanent closure of the factory.

The CAW warned that the decision would not go down easily.

"This is not going to happen without a fight," Canadian Auto Workers president Buzz Hargrove declared at a news conference.

Asked how the union would respond, he said: "Watch us."

Hargrove said the union wasn't ruling out anything and "will explore all options." He declined to be specific, and when asked whether the options included a wildcat strike or legal action against the company, the union leader said "everything is on the table."

Police said Wednesday's protest was calm and under control with ``no skirmishes and nothing to talk about."

"They're allowed to picket," said Durham Regional Police Sgt. Paul McCurbin.

"We don't have a problem with that."

Tuesday's cuts are another blow to the battered manufacturing sector in Ontario and Quebec, which has been decimated by layoffs and closures in the lumber, auto assembly, textiles and auto parts sectors. A high Canadian dollar and a slump in the United States have squeezed exports in those industries and produced widespread streamlining at the so-called Big Three carmakers – GM, Ford and Chrysler.

At GM Canada, the CAW says 2,600 face job losses as a result of the closure and noted that GM's workforce in Oshawa will be half the size it was 20 years ago, falling from 20,000 in the late 1980s to about 9,000 this year. About 5,400 people work at an adjacent car plant in Oshawa which GM will keep open and may expand with a new product.

Ontario Premier Dalton McGuinty said Tuesday his government would try to recoup part of a $175-million provincial loan earlier than planned if GM was found to be violating minimum job levels specified in their agreement.

"They have to know oil's going to go to $200 a barrel, they just wanted to make money on the big vehicles. It's shocking how unprepared they really were."

"recent developments on the global oil scene"

Tony Van Alphen
Business Reporter


Jun 06, 2008

General Motors of Canada faces escalating disruptions after the parent company's top executive rejected demands to keep a truck plant in Oshawa open.

The Canadian Auto Workers said today they will increase pressure on the company to honour commitments in a recent contract where workers agreed to labour cost savings in exchange for continuing future production at its Oshawa complex.

CAW president Buzz Hargrove says he's disappointed and the union will now assess its options in the fight to stop the closure. He says the union may now look at challenging GM through the Canadian Labour Board or may ask for arbitration.

"We're walking away extremely disappointed. We still feel betrayed," Hargrove said after the meeting.

"They're still saying that things changed radically enough that they can't live up to their commitment," Hargrove said.

The union's plan to increase pressure followed the one-hour meeting where CEO Rick Wagoner repeated the company would close the truck plant because of plunging demand for pickup trucks in the key U.S. market.

Union officials would not disclose what they plan to do but workers have already blocked the entrance to GM's headquarters in east Oshawa for three days in protest of the company's decision. It has forced about 1,000 staff employees to work from home.

Earlier this week, Wagoner shocked the industry by announcing the closure of four assembly plants in North America within the next two years including the Oshawa truck plant.

The Oshawa closure would eliminate more than 2,000 jobs at the plant and several thousand others at scores of parts suppliers in the second half of 2009.

Wagoner said soaring gasoline prices have abrupty driven motorists from pick-up trucks and SUVs to smaller cars and there is no sign that fuel costs will ever decline.

But the union charges that it is impossible to comprehend how truck sales fell so fast from contract negotiations last month to now without the company knowing it would close the plant.

Although the contract allows GM to curb production depending on market demand, the union argues the company clearly misled and betrayed workers by making production commitments into the next decade.

The CAW says workers would have never accepted a wage freeze in the contract with no production commitments.

The financial arms of Chrysler LLC and General Motors Corp. are getting out of the business of leasing vehicles as credit tightens and resale prices for gas-quaffing trucks fall, according to company executives and independent sources.

The move, effective Aug. 1, could spark a backlash among dealers and consumers. In Canada, an estimated 43% of drivers lease their vehicles, double the U.S. rate of 20%.

Chrysler told dealers in Canada and the United States that Chrysler Financial will stop offering financing for vehicle leases, steering buyers into low-interest loans to buy the vehicle outright, sources said. Dealers wanting to offer the leasing option would have to find their own source of financing, Chrysler said.

Chrysler told its Canadian dealers of the change three weeks ago, according to an industry source familiar with the situation. GM dealers in Canada were to be told about the change affecting its GMAC financing unit on Friday. GM's U.S. dealers are also expected to be affected. A GMAC spokesman would not confirm the change, saying there is no public announcement at this time.

"The pressures on leasing are going to follow everybody," Chrysler co-president Jim Press said on a conference call on Friday. "There are a lot of financial requirements for leasing to not make it as attractive as it had been."

Auto-financing companies have seen the value of their used cars and trucks plummet amid a collapse in sales in the United States and discounting of new vehicles in Canada. Residual values -- an estimate of what a vehicle will be worth after its lease ends -- have tumbled in both countries. Ford Motor Co. on Thursday took a charge of US$2.1-billion on the declining values of leased vehicles.

GMAC is majority owned by New York private equity company Cerberus Capital Management. Cerberus also controls Chrysler.

"The removal of the need to finance leases simplifies the financing challenges faced by Cerberus," said Paul Taylor, chief economist with the U.S. National Automobile Dealers Association. "But it removes an important option for many consumers."

Geoff Helby, an analyst with J.D. Power & Associates in Toronto, said Toyota Motor Corp. and other automakers that offer attractive lease rates and decent residual values could win more business from the Detroit automakers as a result of the move. "It would definitely put Chrysler and GM at a serious disadvantage."

Chrysler has pulled its leasing for July in Canada, one source said. The company's senior Canadian management told dealers earlier this month that "‘We're basically out of the lease business. We don't have the funds,'" the source said.

The company is steering consumers worried about monthly payments to financing contracts as long as seven years, he said. "It's ridiculous because you're really taking the consumer out of the market in the long-term."

Chrysler and other automakers have slapped incentives of as much as $12,000 on vehicles in Canada and offered financing deals such as 0% for 72 months to lure buyers into purchasing the vehicle.

"We can get deals for people that are very comparable if not better [than leasing]," said David Paterson, vice-president of corporate affairs for GM Canada, adding that GM buyers are increasingly choosing financing over leasing. Financing now represents 60% to 70% of GM Canada sales, he said.