127
General Motors of Canada Ltd. will eliminate about 1,000 jobs at a truck plant in Oshawa, Ont., in January in the face of slumping pickup sales caused in part by the slide in the U.S. housing market.
The auto maker will cut one shift of production of Chevrolet Silverado and GMC Sierra pickup trucks in Oshawa, reducing output to two shifts from three for the first time since the early 1990s in the latest example of how the U.S. housing slump is battering the North America economy.
The U.S. market is the destination for about 85 per cent of the trucks assembled at the Oshawa plant, which employs more than 3,000 workers.
Construction trades workers represent a massive market for GM, Ford Motor Co. and Chrysler LLC, which rely on large pickup trucks as a major source of profit.
The GM cuts are another blow for the Canadian Auto Workers union, already battered this year by plant closings in Windsor, Ont., a move by Chrysler to wipe out 2,000 unionized jobs at its operations in Ontario and the permanent shutdown of dozens of auto parts plants in Ontario that supplied the Detroit Three.
GM is already restructuring two car plants that are located next to the truck plant in Oshawa.
One of the car plants is expected to close as part of $2.5-billion plan by the auto maker to build a single, state-of-the-art assembly plant on the site that will build as many as 500,000 vehicles annually.
So far, GM has confirmed only one vehicle for the plant – the new Chevrolet Camaro – but the CAW is pushing the company to add others and thus keep job losses to a minimum.
Neither CAW nor GM Canada officials could be reached for comment Wednesday night.
The crisis in the U.S. housing market was originally expected to be limited, but is now spreading from Wall Street to Main Street, George Magliano, director of North American automotive industry research for consulting firm Global Insight, said Wednesday.
Now that the crisis is damaging the broader economy, Mr. Magliano said, there are reports of auto companies tightening up on auto loans.
“With the economy and housing struggling, any appreciable improvement in the [vehicle] selling rate cannot occur,” he noted.
GM said this month that sales of its Silverado and Sierra pickups slumped badly in July amid the housing crunch and high gasoline prices.
In the first seven months of the year, sales of the pickups fell 7 per cent in the U.S. market.
“Certainly the industry is going through a mild contraction right now,” Paul Ballew, executive director of global markets and industry analysis for General Motors Corp. in Detroit told reporters and analysts on a conference call this month as he released the sales figures.
The move at the Oshawa plant will ripple through the Ontario economy by causing more cuts at auto parts companies.
Lear Corp., for example, which puts together the seats for the Oshawa-built pickup trucks at a plant in nearby Ajax, Ont., is likely to follow the GM production drop with a cut of its own, as will hundreds of other auto parts makers in the province that supply the Oshawa plant.
