Late last year, General Motors (GM) announced that it would close a plant in Ontario, Canada, to save money. In recent months, the company has backtracked on that decision, saving over 300 jobs. However, the plant current employs 2,600 workers, so many more will still lose their jobs.
The plant in Oshawa, east of Toronto was scheduled to close completely at the end of this year (2019) with all operations ending. Now the company, in association with the union (Unifor), have adjusted the plans to finish all car production and convert 22 hectares into a test track for autonomous and other vehicles. In doing so, GM will look at expanding the work of their Canadian Technical Centre with contracts from other companies.
As part of the announcement, GM said that they would be investing $170M to build the track and the associated facilities. The union was caught in a difficult position, PR wise, because they had been fighting to keep all the jobs, yet couldn’t criticise the investment, although the jobs created would be far different to the manufacturing jobs that will be lost – in some respects, this plan might to be precursor to many other job role changes in the industry and the union should consider how this will affect the workforce and help their members to retrain.
GM have also set up a “job action centre” to help the affected workers find jobs in other GM factories in Ontario or they will get an “enhanced retirement package”. Ontario’s proximity to the manufacturing belt of the US is the key to the success of this action centre. GM, Ford, Honda and Toyota all have manufacturing plants in the areas around Toronto and heading out towards Windsor and the bridge to Detroit. Lincoln has a plant on the opposite side of Toronto and there are several component factories around there too. The union and the Ontario Government are partners in the process of finding new jobs for the workers, although if you live on one side of Toronto, it’s a pain to travel to the other side for shift work and it would mean a full relocation.
The biggest issue that GM had was that the vehicles made at the plant were not selling well, so they had a choice between retooling or closing the plant and reports said that only 6% of Canada’s vehicle production came from Oshawa. However the closure of the manufacturing facility wasn’t a single event, GM is also shuttering four plants in the US – much to President Trump’s anger – and one in South Korea where the old Daewoo brand builds badge engineered cars for the GM group.
The rewriting of the new North American Free Trade Agreement (NAFTA) didn’t help either. It was forced on Canada, the US and Mexico by President Trump and has badly damaged the automotive manufacturing industry in both the US and Canada. Mexico, it appears, is making hay while the sun shines, with their manufacturing plants getting more shifts and pumping out many more vehicles – the President of the Canadian union was quoted as saying that GM is building one million more vehicles a year in Mexico than it used to, and those vehicles were originally built in Canada and the US.
The reality for many countries today is that their populations want cheap products and high wages. It is not possible to manufacture cheap products with high wage costs and so the manufacturing has to go offshore with the resultant job losses at home. Manufacturing will move around the globe because companies will look for the cheapest place – remember when Asia was the cheapest, now many regions are moving the same way as Europe, Australia and the North American countries, where they are starting to lose jobs because they cannot make the products cheaply anymore.
We are in a difficult time where job specifications are changing, the gig economy is destroying the value of human work, with a race to the bottom thanks to over supply and limited demand. It is unlikely that manufacturing on any scale will return to plants like the one in Oshawa unless they can deliver a product to market that is priced well and is one that buyers want. Cost-wise, it will never happen and we’ll see many more manufacturing jobs disappear in the industry over the next decade.
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