By on May 8, 2012

A study commissioned by Canada’s federal government suggests that Canada could be in a position to benefit from strong auto sales from the Big Three OEMs, and a lack of capacity could lead to more manufacturing jobs for Canada, including the revival of mothballed factories.

The Globe and Mail article quotes a study, done by CAR (Center for Automotive Research) an industry think-tank in Ann Arbor, Michigan, as stating that capacity shortages will be a major issue by 2018. 2.6 milion units of capacity were eliminated during the 2008-2011 era, and with auto sales projected to rise for the Big Three through 2018, it’s likely that they’ll be scrambling for places to churb out vehicles.

The shortage will cause the Big Three to scramble for capacity, and make it difficult for the OEMs to coerce Canadian governments into subsidizing their operations with threats of closing plants and moving production to cheaper locales . The study claims that GM may be at risk of losing market share as early as 2015, if sales rise and production capacity remains constrained, leaving GM and Chrysler unable to meet demand and sell trucks to consumers.

Ford had previously threatened to close their Oakville plant unless they received a $1 billion investment from governments, but the Ontario plant, which builds crossovers like the Ford Edge, would be a poor candidate for closure as production constraints and demand for the Edge and other crossovers continues to rise. But The Globe notes that some kind of government assistance and concessions from the unions would be required to help keep the plant running.

For its part, the CAW would also be left in a stronger position during labor talks, since automakers would be averse to jeopardizing their already shaky situation with a work stoppage brought on by a strike. The Globe cited Chrysler’s Bramalea, Ontario plant as one target where a strike would be disastrous. The Chrysler 300, Dodge Charger and Dodge Challenger have seen booming sales in 2012, and a strike that affected production of these cars would be disastrous for Chrysler.

As for the shuttered plants? The article suggests that GM’s Oshawa truck plant is a candidate for having production re-started, or converted to build unibody cars. No mention was made of the Ford St. Thomas plant, spiritual home of the Panther platform. Keep dreaming, B&B.

 

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21 Comments on “Shuttered Canadian Plants May Help Big Three Ease Projected Capacity Crunch...”


  • avatar
    Gardiner Westbound

    The automakers won’t put a fresh TP roll in the washroom without a government handout. Subsidies to auto industry projects since 2004 total $1.4 billion. Bailing out Chrysler and GM cost an additional $9.5 billion. The taxpayers are tapped out.

    • 0 avatar
      alluster

      “Subsidies to auto industry projects since 2004 total $1.4 billion”

      $1.4B since 2004??!!! Oh, the humanity!! $1.4B is what the Pentagon burns through in 12 hours.

      “Bailing out Chrysler and GM cost an additional $9.5 billion.”

      We could have stayed in Iraq for a week longer with that $9.5B.

      Coming production crunch? Tell that to GM with 3 months supply of cars and trucks.

  • avatar
    86er

    It would warm my heart to see Oshawa 2 back online. Closing a Gold Standard facility was dumb, even for GM. I know the C$ played a role, but damn it if Oshawa 2 didn’t put out some well screwed together product, such as the 86 Silverado in my avatar.

    • 0 avatar
      mikey

      @ 86er.. Thanks Oshawa Truck had a great reputation,I’m glad your still enjoying your truck.

      Here’s a couple of facts. Oshawa #2 is still there,its now called the “consolidated plant” running Impala, and overflow Equinox. It’s scheduled to close May 2013. GM has nothing,at this time in the pipe line. With 2400 jobs going, anything would be welcome.
      Plant # 1 was gutted,for the Flex plant. Flex is running Camaro, Buick,and some Caddilac.

      The former Truck plant was gutted in late 2009,its now an outsource supplier park. With a paint shop out of the sixties, there is not a chance this place would ever see production again.

  • avatar
    jbltg

    Heaven forbid any of this work should be done in the US by American workers, no offense whatsoever to Canada.

  • avatar
    Robert.Walter

    Report is optimistic rubbish.

    Given the glut of still non-repurposed Assy plants, any government that thinks it doesn’t have to play ball incentive-wise is just whistling past the graveyard.

    Oakville is a former “twinned” plant (OTP & OAP) now only running on the OAP side, same situation exists in Wayne, MI. In fact, Ford has a problem with unused capacity in Flat Rock.

    As long as there are just a couple of unused plants out there, not to mention plants with flexible assy lines, unused capacity, or twinned plants running half empty, any resistant government, or recalcitrant union puts itself at risk of wrecking the local tax base, or being out of a job respectively.

    • 0 avatar
      tresmonos

      OAC is not a ‘twin’ plant. The Truck plant shut down with the Freestar. I’d also like to point out that OAC is bringing in operations that were outsourced with the additional Final / Body Area absorbed by your ‘twinning’ process. It’s OAC, not OAP (Ontario Assembly Complex). Thank a past plant manager for that new name.

      Similar story to Wayne / Michigan truck. Why have two ‘non flexible’ body shops in one location when a flexible body shop and upgraded paint shop can do the same? Cheer up, buttercup.

      • 0 avatar
        Robert.Walter

        My point still stands sweetcheeks.

        One used to be able to afford two non flex B&A ops when the plant was running full out plus o/t, we also referred to this as profitless prosperity because some plants didn’t make any incremental (and for some, no) profit from that exercise.

        Fact remains that no matter how a single site with two final assy plants and an on site stamping plant are repurposed to build several vehicles off a flex line, you still have a massive amount of needless square footage on the site, and it doesn’t have that great an impact on utilization if some work comes back into the plant via insourcing or getting suppliers to lease floor space because the plants all come (except Dearborn Truck) from a time before the outsourcing trend took off in the late 80′s/early 90′s.

        It is foolish to think that as long as an OEM has such significant underutilized within his plant operations that he wouldn’t use this threat to extract concessions from locals and pols alike.

        Before nafta (which I believe killed the US-Ca Auto Treaty), and as long as there was adequate demand in the US market and a USD-CAD relationship favoring the USD, it made sense to build in Canada.

        Today not so much.

        Maybe it is not enough, but Oakville does have he fact that it is fords last Canadian assy plant, and the site of fords Canadian subsidiary hq going for it.

      • 0 avatar
        tresmonos

        Haha. Touche.

        The plant’s sq. footage will not be under utilized. The old paint shop got knocked down recently (it was a cool thing to see). The rest of OAC will be used. To assume the insourcing isn’t a cost savings (your utilization argument) would be incorrect. A OEM wouldn’t undertake such a massive task for no gain. And there is no stamping operation @ OAC. It’s all Buffalo sourced. Also, your property tax is based on usable sq footage. Not sure how it works in Canada, but I could be incorrect.

        I agree with you on the general idea that there won’t be any expansion. But I disagree with you on the utilization aspect of your argument (I don’t think any site is ‘at risk’). I can only speak for what I know, but Ford’s manufacturing sites are now running 2+ shifts. 8 years ago, there were many 1-2 shift sites, which is just silly. There has been a lot of right sizing in the organization. I think the worrying can now pass.

        I may be overly optimistic, but optimism is a good thing to spread in this industry. After all, it’s just a job. Might as well be happy while doing it. (and you’re right, the ‘glass house of the north’ also helps the site)

  • avatar
    jjster6

    Good effing luck Canada. With the appreciation of the Canadian dollar over the last few years and the militant Canadian Auto Workers (CAW) it wouldn’t surprise me to see more plants shuttered in Canada.

  • avatar
    Joss

    America needs faster robots.

  • avatar
    tparkit

    Double rubbish. The world is spiraling into depression. In North America and Europe we’ll eventually need less capacity, not more. It will be possible for some manufacturers to expand, but only because they are stealing share. In the overall, the market will shrink as measured by revenue. Smaller, cheaper cars will be in greater demand, and that will make it look – for a while – as though the market is holding up.

  • avatar
    chicagoland

    Japan and Korea hand money to all their industries, so?

  • avatar
    jimmyy

    14 million sales per year is considered strong? This is a joke.

  • avatar
    86er

    “No mention was made of the Ford St. Thomas plant, spiritual home of the Panther platform. Keep dreaming, B&B.”

    It’s gutted. They moved anything of use, such as the gym equipment, to Oakville.

  • avatar
    jimmyy

    From wall street, we see 14M car sales as weak. Remember, before 2007, 14M would have been considered a disaster. Now, we have the near communist Democratic party brainwashing the USA with 14M sales as very strong. This is nothing more than an attempt to get Obama relected by pointing to a 14M sales figure as justifying massive taxpayer money being dumped into Detroit. This is all about the election.

  • avatar
    enzl

    So, it’s Obama’s fault that we haven’t returned to a cheap money, ‘have a pulse, have a loan’ or HELOC ATM 17 million units?

    I’m not going to defend the president on many issues, but the auto bailout and his handling of that industry in general is one of the few truly solid performances of his presidency.

    I simply don’t get those that would like to run to another credit crisis before the last has been fixed…that’s the only ( unsustainable) way to get to 17m in the short term in this market.


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