The government of Ontario has announced it will sell its shares in General Motors as part of an effort to fund new public transit programs in the Greater Toronto Area. But the move could end up hastening the demise of GM’s Oshawa plant, located in the same metropolitan area.
According to The Globe and Mail, the sale could net about $1.4 billion for the province, which would “wait over the next year for the best time to sell.” While divesting its stake isn’t necessarily a bad thing, the timing of the sale coincides with two events that have a major impact on Oshawa’s future.
The first is the expiration of GM’s Vitality Commitment, a document signed during the bailout as part of the terms for receiving government funds., which requires GM to keep 16 percent of production in Canada until GM’s loan to the Canadian and Ontario government is re-paid, or until December 31, 2016, whichever comes first.
With the loans repaid, and GM’s shares now being sold off, the biggest question mark for Oshawa will be the expiration of GM’s contract with Unifor (formerly the CAW), which will expire in 2016, along with Unifor’s Ford and Chrysler contracts.
Oshawa has slowly seen its product whittled away, most recently losing the Chevrolet Camaro to Lansing, Michigan where the Cadillac ATS is built. As of now, the Flex Line (one of two assembly lines) has no unique product, with the Cadillac XTS and Chevrolet Impala also built in Michigan, the Buick Regal is also built in Germany and the Chevrolet Equinox/GMC Terrain are made in multiple locations.
The Consolidated Line, which builds the old W-Body Impala for fleets, is due to be shut down in 2016. The big question is whether the Flex Line will follow. The 2016 date may provide an easy out for GM, since it can use the labor contract expiry to close down Oshawa.
The plant’s closing would be a devastating blow to Oshawa, which is just as much of a “GM Town” as Flint, Michigan was in the “Roger & Me” era. Of the Detroit Three plants currently operating in Ontario, Oshawa has been in jeopardy the longest – but at this point, it’s an inevitability.