The Future Of GM's Oshawa Plant Looks Increasingly Bleak
A report in Automotive News outlines how General Motors has committed to building a new Buick model at their plant in Russelsheim, Germany. According to AN, the logical choice is the next-generation Buick Regal, also known as the Opel Insignia, since this is a good fit for Buick, and it allows GM to use up some of the excess capacity that is currently plaguing their European operations. But for GM’s venerable Oshawa plant, this is not good news.
As TTAC and AN have both pointed out, product is leaving Oshawa much faster than it’s coming in. The Camaro will move to Lansing, Michigan by 2016, while the next-generation Chevrolet Impala and the Cadillac XTS has its production split between Michigan and Oshawa. The old-generation Impala, currently built on the old “Consolidated” line, is due to end production soon. The GM Theta crossovers, which are built partially in Oshawa due to a lack of capacity at GM’s Ingersoll, Ontario plant, will move there exclusively for their next generation. That leaves the Regal as GM’s lone Oshawa product, and even that appears to be going away too.
All signs appear to point to the closure of the Oshawa plant high. Between high labor costs, unfavorable exchange rates and a lack of new products, it would take a miracle to save Oshawa. As of now, the main thing tying GM to the plant is the “vitality commitment” that they signed as part of their bailout agreement with the Canadian government, obligating them to keep a certain amount of vehicle production in Canada. And when that ends in 2016, it’s hard to imagine that GM will keep producing cars in one of the world’s most costly jurisdictions.
Final assembly for my '90 Chevrolet cab-and-a-half Cheyenne was Oshawa (built Nov '89). Best quality vehicle I'd bought up to that time. In 2001 I was tempted to drive it up to Oshawa and sit in the parking lot to shake hands with the builders. Never had an issue with it after 16-years and 278k miles (gave it to my daughter; she sold it and it's still running well, though rusted in the usual locations, at 355k miles). 4.3 V6 w/5-spd 2wd. Always a solid 20 mpg and used no oil. Well, maybe one issue - started blowing blue smoke at 200k. Popped off the passenger side valve cover and cleaned out the oil return in the head. Replaced the cover (w/ original gasket) and, voila! No more smoke. What a shame.
Every time a big expensive - and paid for - factory closes shop because the owners can't think of anything they can economically build there, it's a sign of serious structural economic problems. You can chalk it up to globalization or evil labor unions, but if you leave it at that, you are dooming your economy to keep sliding in the race to the bottom. You might hit bottom when your wages are lower than China's, but it might be that China slides down until their wages match those in Bangladesh. By this time, there is virtually no domestic commerce at all, because nobody can afford to buy anything. Globalization is a problem, but unfettered free trade is not necessarily the solution.
So many issues and in reality probably no real solution. Free trade is all well and good as long is there is an even playing field. Why would first world nations (the USA and Canada for example) enter into free trade agreements with 2nd and 2rd world nations? Our cost of living is much higher. Our standard of living is much higher. We have better infrastructure and in return pay higher taxes. We have regulations regarding pollution, occupational health and safety and working conditions. Therefore our workers must earn more than those in the 2nd and 3rd world. And even without higher wages, the property taxes, corporate taxes and regulations make operating more expensive in a 1st world nation. Therefore we should only have free trade with nations with comparable costs, regulations and expectations. Once we allow the free importation of goods from 3rd world nations, manufacturing will naturally move there. Brazil and Mexico now produce more vehicles than Canada. Unless Canadian plants get high profit, high quality products they are at an unfair disadvantage. And the traditional D3 manufacturers no longer have an incentive to produce in Canada, if anything they are under pressure to transfer jobs back to the U.S. Canada used to have a price advantage. The Canadian dollar was low and the company/employer did not have to include medical benefits as there is universal healthcare in Canada. Those advantages have now been reduced or eliminated. As someone who has links to the old GM van plant in Scarboro, I know how devastating the loss of these jobs can be.
I know the GM oshawa plant well. GM has a whole bunch of issues with the Oshawa plant. Its old, its dirty and the roof leaks terribly everywhere in the plant ... The animal urine and feces, u can smell and see everywhere, cats rats squirrles . Thats where your caddy come from ..The whole building needs to be repaired. I doubt GM will put out that kind of cash ......