By on April 14, 2014

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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.

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15 Comments on “Ontario Government Selling GM Shares To Fund Public Transit...”


  • avatar
    Frownsworth

    Makes a lot of sense to me. Invest in public transit, something a government ought to do.

  • avatar
    gtrslngr

    Three Cheers to the Canadian government for coming to their senses : dumping their GM shares and presence in favor of Public Transportation . Along with the Aussies … one of the few major governments coming to the realization that subsidizing – bailing out – giving tax incentives to automakers is a losing proposition : with said money’s being better spent on projects that benefit the Majority of the population rather than a select undeserving few .

    So when the h*ll are we [ US ] gonna start coming to our senses ?

    • 0 avatar
      Dr. Kenneth Noisewater

      Public transit is for commies and hobos.

      Plus, it smells like pee.

    • 0 avatar
      mikey

      @gtrslngr..So your advocating no tax incentives/bail outs for any automaker? All of the major governments every where, at all levels? What about the other industries? Nobody gets anything, no how, nowhere?

      Right!…I can see that happening.

    • 0 avatar
      BrianL

      It is doubtful that the majority of any population would actually benefit from public transit. Most probably don’t use it. It is seriously doubtful that the majority of tax payers and businesses who end up funding this actually get the benefit out of it worth the money that they put into it.

      It is sad to consider public subsidies bad when it is for business, but gov’t take over and subsidizing of transit is ok. Both are equally bad.

      Just look at how well Amtrak is doing..

      • 0 avatar
        mikey

        @BrianL….That’s the issue here in Ontario. Public transportation means squat to those outside of the GTA. They don’t want the cost on their tax bill.

        Selling GM shares is one thing. The government is so broke they want to sell Ontario Hydro. They even want to sell the money making LCBO. The LCBO has the monopoly on Liquor sales,and sets the retail price with zero competition.

      • 0 avatar
        bigdaddyp

        “Just look at how well Amtrak is doing..”

        I read an article last year about an investigation in to why Amtrak was losing money.
        One thing in particular really stood out to me. On some of their runs Amtrak runs food service. They were selling a burger for $10 or $12 each, but costs around $18 to produce (quoting from memory here). So the bureaucracy of Amtrak looks at the number and decides the best solution is to………quit selling so many hamburgers. Not how to reduce the costs, examine wages or find other ways to bring the costs down. Nope, their bright idea is to just reduce the availability dinner service.

      • 0 avatar
        ect

        BrianL, you are wrong on so many fronts.

        As a sidebar, Amtrak is not transit. It’s a national passenger rail service – quite a different beast.

        In cities around the world (Toronto included)public transit is very widely used. In Totonto, the TTC alone carries about 1.7 million riders per day (the city population is 2.5 million, so that represents about 1/3 of the total population). Which takes up to 850,000 cars off the road.

        What we also see is that land prices and rents are much higher around subway stops and other transit hubs than elsewhere, reflecting the value generation of transit – something that public authorities should do a much better job of capturing.

        Mass transit is a substantial net wealth generator, and the only way that cities can hope to handle increasing populations.

        In the US, city after city has proven you can’t build roads fast enough to meet traffic increases. The only viable strategy is to use transit to move people, and reduce road demand.

  • avatar
    mikey

    Not much else to add Derek. Love the photo. That would be final assembly Chassis. I spent 17 years working, about a hundred feet from where that photo was shot. I retired before the first Camaro came off the Flex line. Wow, nothing looks familiar. You could eat of that floor. It sure didn’t look that way in 1972.
    n
    For the benefit of the non Canadians. The Ontario government of today is being led by a scandal {some would say corrupt} riddled unelected Premier. She needs the support of the minority far left wing NDP to survive. So basically she has to kiss their a$$, or her government will fall and force an election.

    The opposition Conservatives are chomping at the bit, for an election.

    Ontario is broke, and deeply in debt. Just like GM back in 2006-2008 their selling off the family jewels. The Greater Toronto area is suffering from paralyzing grid lock. Successive governments at the provincial, and municipal level have ignored it for years. Now its come back to bite them in the butt.

    Raising taxes is not an option. The government would fall, and the Liberals would be sent to the wood shed for the next ten years.

    So the burning question would be. Can Ontario let 4000 plus another 2000 feeder jobs vanish? Remember somebody has to pay for our, “oh so expensive” social safety net. Politics is politics, and politician’s do whats right for politician’s. Letting GM Oshawa vanish could be political suicide.

    As Derek described, 2016 is the key. Is it a given that Oshawa will close?

    Speaking as someone with a dog in this fight. I would say, No it’s not inevitable.

    But it sure has hell ain’t looking good.

    • 0 avatar
      Hummer

      Canada’s not exactly small, I can’t see how anyone could justify the govt selling shares of a company bought with everyone’s money, to benefit a single city that means nothing to a very large number of Canadians. IMO it would make a lot more sense to use that to help fix problems that effect everyone, Alberta has exploded, but what could happen if it was given more attention?

      • 0 avatar
        wmba

        You have to remember that this is Ontario’ shares, not Canadian Federal government shares. So it’s only Ontarians who will pay this debt. Alberta is a separate province entirely.

        Only Ontario has a stake in this particular cashing in of shares.

  • avatar
    oboylepr

    The fat lady is on the stage and she’s about to start singing. It’s over for GM in Oshawa. They want out badly, its been heading that way for years so its only a matter of time. Oshawa will live on though. It’s fortunes are not as tied up in GM as was once the case. That said, I wonder what will become of the thousands of acres of manufacturing space that is there now. Will it be left to rot or will some enterprising Canadian buy some or all of it and start a trully ‘domestic’ auto industry. Well I’m not holding my breath. Ontario is not a right-to-work province. Who in their right mind would make such an investment? No, as the say in the old country, “it’s all over bar the shouting”

    • 0 avatar
      scwmcan

      Just because Ontario is not a right to work province doesn’t mean an automaker couldn’t buy the plant when it closed and reopen it with non union labour, both Honda and Toyota have operated non union plants in Ontario for years. As Mike has said UNIFOR does not seem to have the clout that the CAW had back in the day.

  • avatar
    mikey

    @ oboylepr…..Havn’t heard from you ages. Your right. the Shwa has certainly diversified.

    Maybe its wishfull thinking,but I don’t see GM closing the Flex. Because of the plants flexability, a can see GM using it for overflow from the US plants.

    Though, I wouldn’t rule out seeing Kia, or Hyundai, buying it?


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