PLANT

No guarantee Canada’s auto plants will get new models, analysts say

Canadian assemblers could lose more than 20% of their production by 2020: AutomotiveCompass.


TORONTO – General Motors’ plant in Ingersoll, Ont., is in a good position to win production of the next generation Equinox vehicles, despite increasing concern over high manufacturing costs in Canada, analysts and the auto workers’ union said this week.

The Canadian Automotive Manufacturing Inc. (CAMI) plant, running with three shifts, is working at capacity to assemble the popular Chevrolet Equinox, and waiting to hear whether GM will allot it production of the new models in 2015.

But Joe McCabe, president of US consulting firm AutomotiveCompass, said it may be one of several plants that could see production decrease as auto assembly accelerates its shift to Mexico and the US to benefit from lower costs.

McCabe told an industry conference last week that Canada would lose more than 20% of its production by 2020, a forecast that implies closing several plants or assembly lines, and one he expects will affect GM’s Oshawa, Ont., operations.

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“Right now the Canadian automotive space, it’s no secret, it’s one of the most expensive places in the world to work; a lot of it based on the strong dollar,” McCabe said on Monday. “We’re hearing some very strong rumours from the vehicle manufacturers, specifically the Detroit Three, that are shifting production from north down to the south.”

GM has already said it plans to close one line in Oshawa and has moved some overflow Equinox production to a facility in Tennessee that used to build the now-defunct Saturn.

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The loss of that overflow production, along with a plan to move GMC Terrain vehicles to Mexico in 2016, will mean reduced production for the Ingersoll plant, according to McCabe.

“They’re running at a good pace right now but we think that production volumes at the (CAMI) facility will decrease over time,” he said.

Leading automotive expert Dennis DesRosiers of DesRosiers Automotive said he believes CAMI’s Equinox production is safe, however, because automakers are in a period of high demand.

“Every vehicle company with a plant in Canada is running short of capacity right now. They’re pushing the limits for what they can do, and the market for the rest of this decade is going to grow,” said DesRosiers. “If they’re already tight on capacity, how can they possibly close a plant?”

If GM wanted to move production of the Equinox, DesRosiers added, it would have to build a new facility because the Tennessee plant currently handling the overflow wasn’t designed for core production.

“General Motors is putting a whack of investment into CAMI,” DesRosiers said. “Why would they do that to close it?”

Anthony Faria, an automotive expert at the University of Windsor, said that while he agrees that GM wouldn’t close the Ingersoll plant, a shift reduction may be a possibility.

“Labour-wise, it’s costing GM about $67 and hour (to produce the Equinox at CAMI),” Faria said. “All of the workers hired at the Spring Hill, Tenn., GM plant, who are UAW unionized workers, are getting about $30 an hour all-in, because they are hired in at the second-tier wage rate.”

General Motors hasn’t given any indication that it plans any changes said Jerry Dias, national president of Unifor, formerly the Canadian Auto Workers union.

“CAMI is as well-positioned as any plant, anywhere,” said Dias. “As long as we keep working three shifts, maximizing three shifts, as long as GM is still committing to maximize the input at the plant, we’re in good shape.”

But Faria said that’s not a guarantee.

“It’s a very productive plant, but so is Oshawa. Oshawa just won an award as one of the top-quality plants,” Faria said. “Even though they got the award, GM is closing their consolidated line.”

© 2013 The Canadian Press