Editorial: It's Too Late For Oshawa

Not long ago, Canada was, according to ex-GM CEO Dan Akerson, the most expensive place in the world to build a car. A strong Canadian dollar meant that the cars and crossovers built at GM’s plants in Oshawa and Ingersoll, Ontario, weren’t as profitable as those built in the US or Mexico, where labor costs were significantly lower.

But even a newly weakened Canadian dollar isn’t going to save Oshawa.

TTAC has been predicting the end of Oshawa for nearly two years, The Globe and Mail (Canada’s newspaper of record), has come around to this notion, citing similar logic as our previous reports – namely, that all of Oshawa’s product can be built at other factories, or is being moved away from Oshawa entirely.

While some products, like the Chevrolet Camaro, are being moved due to a change in architecture (the next-gen Camaro will be built in the same factory as its platform-mate, the Cadillac ATS), others are being moved due to labor costs (the popular Theta crossovers will be produced in Mexico and Tennessee) or contractual obligations (the next-generation Buick Regal is almost certainly being built at an under-utilized Opel factory in Germany). In the case of the W-Body Chevrolet Impala (sold as a fleet only vehicle) its lifespan is coming to an end, and with it, a dedicated assembly plant, the ancient Oshawa Consolidated Line, which has already been given one stay of execution.

The Oshawa Flex Line, on the other hand, is a modern assembly plant that can build everything from the Camaro to the new Impala to the Equinox CUV all on one line. But even that won’t be enough to save it from closing, not when every single product can be made cheaper in Mexico, in the Southern United States or at the UAW’s lower, two-tier wage scale. If it were not for the Vitality Commitment signed by GM, (which promised to maintain 16 percent of vehicle production in Canada in exchange for bailout funds), the plant would probably be closed by now.

Instead, the earliest GM can depart is 2016, and the plant’s closure will be a devastating blow to a town that is as invested in General Motors as Green Bay is the Packers. According to The Globe and Mail, 3,600 jobs would be lost from the Oshawa plants- good, full-time jobs that are badly needed in a region that is economically limping along after years of a rout in manufacturing.

But discussion of a moribund auto industry for Ontario is a bit of a stretch. Chrysler, Ford, Honda and Toyota have all made significant commitments to Canadian manufacturing in the same window of time that GM has continuously cut product from Oshawa. The weaker Canadian dollar and strong auto sales both in Canada and the United States will only help.