GM cutting over 3,600 Canadian jobs at Ontario plants, 30,000 in North America
TORONTO (CP) - More than 3,600 General Motors Corp. workers in Ontario will lose their jobs by 2008 as the world's biggest automaker makes sweeping cuts to its North American operations.
GM chairman and CEO Rick Wagoner said Monday in Detroit that the automaker plans to close nine North American plants and eliminate 30,000 jobs over three years, most in the United States but also affecting its Oshawa and St. Catharines plants.
Oshawa Car Plant No. 2 will shut down after current production plans end in 2008, cutting about 2,300 hourly workers and 230 salaried positions. GM will also remove the third shift at Oshawa Car Plant No. 1, with about 1,000 workers, in the second half of 2006.
In St. Catharines, the Ontario Street West powertrain components facility, which employs 130, will close in 2008.
"The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work," Wagoner told employees.
"But these actions are necessary for GM to get its costs in line with our major global competitors. In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible."
The cuts represent about 22 per cent of GM's workforce in Canada but may be offset by new investment the province has won from the industry, which could offer "consolation" for the losses, Ontario Premier Dalton McGuinty said Monday.
"We're always concerned about GM and the other big automakers when it comes to consolidations, but we're really pleased with the fact that we've been able to land $4.5 billion worth of new (auto sector) investment during our first two years in government, and I know that GM is going ahead with its massive investment here in Ontario," McGuinty said.
"So there's going to be a little bit of contraction, there's no doubt about it but, overall, this is the fastest growing jurisdiction in North America when it comes to the auto sector."
In September, the Canadian Auto Workers union and General Motors of Canada reached a tentative agreement just before a strike deadline that would have put 17,000 workers on the picket line.
That agreement also confirmed at that time a $750-million investment for the automaker's St. Catharines and Oshawa operations.
And Japanese automaker Toyota Motor Corp. announced earlier this year it will build an assembly plant in the southwestern Ontario city of Woodstock that will directly employ 1,300 people.
"I want to emphasize that General Motors remains very committed to maintaining a strong manufacturing presence in Canada," GM Canada president Michael Grimaldi said at a news conference in Oshawa.
The total number of job cuts in North America is 5,000 more than the 25,000 the automaker had previously indicated it was planning.
The cuts represent about nine per cent of GM's global workforce of about 325,000. The plan will cut the number of vehicles GM is able to build in North America by about one million a year by the end of 2008.
Under the plan, GM will also close three service and parts facilities. They are in Ypsilanti, Mich., and Portland, Ore., and one unidentified site. A shift also will be removed at a plant in Moraine, Ohio.
The other plants that will close are in Oklahoma City, Lansing, Mich., Spring Hill, Tenn., and Doraville, Ga. Wagoner said GM also will close three service and parts operations facilities.
An engine facility in Flint, Mich., will close, along with metal centres in Lansing and Pittsburgh.
GM said the plan is to achieve $7 billion US in cost reductions by the end of 2006 - $1 billion above its previously indicated target.
GM shares rose 77 cents, or 3.2 per cent, in pre-market trading. Its shares traded below $21 last week at an 18-year low.
Wagoner said last month the automaker would announce plant closures by the end of this year to get its capacity in line with U.S. demand. GM plants currently run at 85 per cent of their capacity, lower than North American plants run by its Asian rivals.
The plant closings aren't expected to be final until GM's current contract with the United Auto Workers expires in 2007.
GM has been crippled by high labour, pension, health care and materials costs, as well as by sagging demand for sport utility vehicles, its longtime cash cows, and by bloated plant capacity.
Its market share has been eroded by competition from Asian automakers led by Toyota Motor Corp. GM lost nearly $4 billion in the first nine months of this year.
The automaker could be facing a strike at Delphi Corp., its biggest parts supplier, which filed for bankruptcy protection last month. GM spun off Delphi in 1999 and could be liable for billions in pension costs for Delphi retirees.
GM also is under investigation by the U.S. Securities and Exchange Commission for accounting errors.
Last week, after the automaker's shares fell to their lowest level in 18 years, Wagoner sent an e-mail to employees saying the company has a turnaround strategy in place and has no plans to file for bankruptcy.
GM shares rose 12 cents to $24.17 in morning trading on the New York Stock Exchange. Its shares traded below $21 last week at an 18-year low.
General Motors Corp.'s restructuring announced Monday includes the following cuts: ASSEMBLY PLANTS:
-Third shift will be removed at Oshawa, Ont., Car Plant No. 1 in the second half of 2006. Oshawa Car Plant No. 2 will cease production after the current product runs out in 2008.
-Oklahoma City, Okla., will cease production in early 2006.
-Lansing, Mich., Craft Centre will cease production in mid-2006.
-Spring Hill, Tenn., Plant/Line No. 1, will cease production at the end
-Doraville, Ga., will cease production at the end of its current products' life cycle in 2008.
-Third shift will be removed at Moraine, Ohio, during 2006, with timing to be based on market demand.
STAMPING, SERVICE AND PARTS OPERATIONS AND POWERTRAIN FACILITIES:
-St. Catharines, Ont., Ontario Street West powertrain components facility will cease production in 2008.
-Lansing, Mich., metal centre will cease production in 2006.
-Pittsburgh, Pa., metal centre will cease production in 2007.
-Parts Distribution Centrein Portland, Ore., will cease operations in 2006.
-Parts Distribution Centre in St. Louis, Mo., will cease warehousing activities and will be converted to a collision centre facility in 2006.
-Parts Processing Center in Ypsilanti, Mich., will cease operations in 2007.
-One additional Parts Processing Centre, to be announced at a later date, will also cease operations in 2007.
-Flint, Mich., North 3800 engine facility ("Factory 36") will cease production in 2008.