TORONTO — General Motors Corp. plans to reopen its Oshawa, Ont., assembly plant, invest up to $1.3 billion in the facility and hire up to 1,700 workers in a stunning reversal of fortune for an operation that had appeared to have fallen victim to the forces of supply chain economics.
GM's tentative three-year deal with the Unifor union, which has not yet been approved by workers, would reopen the Oshawa assembly line to make Chevrolet Silverados and Sierras, 11 months after it was idled as part of a global restructuring plan by the automaker.
"During this process, we had numerous critics — and when I say numerous, it's a dramatic understatement — those that never thought we did enough, those who thought we should have pushed harder," said Unifor president Jerry Dias.
"We never gave up hope, and frankly, neither did General Motors."
GM Canada president Scott Bell said construction at the plant would begin immediately and would include a new body shop and flexible assembly module for the company's new line of pickup trucks.
The deal, if approved, would be an unexpected but welcome development for the plant east of Toronto, which was downsized to 300 workers last December, down from 2,600. Unifor's members are set to vote on the new tentative agreement on Sunday.
The restored plant would call back 175 laid-off workers, and Dias said it could create about 2,000 jobs after vehicle production restarts in January 2022, with a second shift in March 2022 and the work on the second vehicle beginning in May 2022. Up to 2,500 workers could be needed if a third shift is added in July 2022, Dias said at a press conference in Toronto.
Dias noted that some of the former workers at Oshawa GM have since moved on to new positions, and some of the buildings there have already been rented out or sold. About 60 workers there have been making face masks for the government.
The union and company plan to talk to settled or severed former employees as well as others in the Oshawa community as they try to find the right skill sets for the new jobs, Dias said.
In a statement, the mayor of Oshawa said the city was celebrating the proposed deal.
“General Motors has been an integral part of the Oshawa community for more than 100 years," Dan Carter said. "With today’s announcement, that legacy will continue for years to come."
The wind-down of the Oshawa plant — which opened in 1907 and was bought by General Motors in 1918 — was “devastating,” Dias said. GM said last year the plant would become a part-stamping and autonomous vehicle testing facility.
Dias said the company and union agreed in May 2019 to “pause” the production at the plant, rather than permanently halt the facilities.
“GM agreed that we'd maintain the integrity of the plant, a plant that has a world-class paint shop. But the key thing was that we maintain the ability to build vehicles in the future. And that in itself was the key piece of what we were able to accomplish in May of 2019,” Dias said.
Several Ontario auto parts and service companies also closed after GM’s Oshawa downsizing last year. Dias said he expects many jobs to return for making “bulky” parts, such as seats, that are hard to ship from elsewhere.
Dias also said he believes GM union jobs in Woodstock and St. Catharines, Ont., are secure under the tentative three-year deal. While up to half of St. Catharines workers were on track to be laid off prior to bargaining, GM has agreed to invest $109 million there, as well as about half a million dollars in Woodstock to secure 74 jobs.
In total, Dias estimated GM could spend about $1.4 billion under the terms of the deal, which includes building transmissions for the Chevy Equinox and a new program for the Corvette.
Trucks are both popular and profitable for the company, noted Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions LLC in the U.S. With GM operating its existing truck plants on an overtime schedule, Fiorani said, the investment in Oshawa makes sense to stem the overflow.
Ian Lee, associate professor at the Sprott School of Business at Carleton University, said Dias' "skilful political leadership" in cultivating ties with the federal Liberal government was one of a "remarkable convergence of events" that helped reverse the fortunes for the Oshawa plant. Lee also cited the "increased recognition that Canada is the largest GM market outside of the U.S. — and especially for light trucks."
The tentative deal with General Motors is the last agreement reached by the union with the major U.S. automakers. Earlier deals with Ford Motor and Fiat Chrysler Automobiles also included promises of billions in new investment in Canada, totalling $4.7 billion between the three companies.
Unlike the commitments from Ford and FCA, which included companion government funding for green initiatives, Dias said talks with GM in Canada this year did not focus on electric vehicle production. A statement from Minister of Innovation, Science and Industry Navdeep Bains on Thursday did not include any financial commitment to GM, although it said the government has "demonstrated that we are prepared to support the future of our auto sector."
One of many sticking points in the overnight talks was the future of the Oshawa plant, Dias said, since revamping the plant for electric vehicle production would take several years, and the union did not want to see the plant sit vacant.
“We entered into bargaining with Detroit Three in August of 2020 amid an incredible, devastating pandemic,” Dias said. “But we went into contract negotiations with the Detroit Three understanding that we needed to solidify the footprint for the auto industry here in Canada.”
GM has announced plans to produce electric vehicles at three plants in Michigan and Tennessee. CEO Mary Barra, speaking to analysts about the company's quarterly results on Thursday, said the company plans to "go hard at EVs," funded in part by gains in the North American business.
"Automakers are looking to enhance their image, as more socially and environmentally friendly," AutoForecast's Fiorani said, "and especially to change the view of stockholders who see car production as old technology and electric vehicles as cutting-edge.
"The Canadian government has stepped up ... unfortunately, this new investment will take years and won’t bear fruit until 2024 or 2025. GM’s agreement provides the investment immediately and gets people working inside the current Unifor contract."
Over the past two decades, Canadian autoworkers, and their unions, have had to compete with plants offering lower wages or taxes in Mexico and the southern U.S., presenting a challenge for Unifor heading into the 2020 negotiations.
But despite factory shutdowns this spring to limit the spread of COVID-19, and what Barra called "austerity measures," the Detroit Three automakers made strong showings in their latest financial results.
The United States-Mexico-Canada Agreement, which replaced NAFTA on July 1, included a provision that a significant percentage of the value of a car be produced by workers earning the equivalent of at least US$16 per hour, something the Canadian government said could improve Canadian automotive manufacturing's competitiveness compared to that of Mexico.
With the United States now finalizing presidential election ballot counts, Barra told analysts that the company will continue to invest in U.S. operations regardless of the outcome.
The Canadian operations will help GM meet demand for full-size pickups, Barra told analysts on the conference call.
This report by The Canadian Press was first published Nov. 5, 2020.
Anita Balakrishnan, The Canadian Press
Note to readers: This is a corrected story. An earlier version included an incorrect figure for GM's planned spending at the Woodstock operation.