Shuttered Canadian Plants May Help Big Three Ease Projected Capacity Crunch

Derek Kreindler
by Derek Kreindler

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.

Derek Kreindler
Derek Kreindler

More by Derek Kreindler

Comments
Join the conversation
2 of 21 comments
  • Jimmyy Jimmyy on May 09, 2012

    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.

  • Enzl Enzl on May 09, 2012

    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.

  • Alan This outcome was certain.The US, Australia and Canada need to approach this differently. A policy towards plug in hybrids should of been a first step. As in CAFE gradually tighten FE from there.There's no reason why you can't have a 2 litre F-150 with electric motors putting out 400-500hp. A 2 litre turbo is good for 200hp more than enough to move a pickup.Also increase fuel tax/excise every year to fill the void in loss of revenue.
  • Doug brockman hardly. Their goals remain to punish us by mandating unsafe unreliable unaffordable battery powered cars
  • Lorenzo It looks like the curves are out and the boxy look is back. There's an upright windscreen, a decided lack of view obstructing swoop in the rear side panels, and you can even see out of the back window. Is Lexus borrowing from the G-Class Mercedes, or the Range Rover?
  • Lorenzo Didn't those guys actually test drive cars? I was told that one drove like an old lady, another like a maniac, and the third like a nervous middle aged commuter who needs to get to work on time and can't afford big repair bills, and they got together to pass judgement within their individual expertise. No?
  • Lorenzo Aw, I don't care what they call the models, as long as they don't use those dots over the O's.
Next