GM to halt production at Oshawa truck plant

Last Updated: Tuesday, June 3, 2008 | 8:08 PM ET

CBC News

Rick Wagoner, chairman and CEO of General Motors, says higher gasoline prices have ushered in permanent changes to the auto industry. (Bradley C. Bower/Associated Press)

General Motors said Tuesday it will halt production at its pickup truck plant in Oshawa, Ont., axing as many as 2,600 jobs in the process. The Canadian Auto Workers promised an all-out fight against what it called an "illegal" betrayal.

The Oshawa plant, which produces the Chevrolet Silverado and the GMC Sierra, is expected to close in 2009, GM CEO Rick Wagoner said during a news conference in Wilmington, Del., prior to the company's annual meeting.

Three other GM plants that assemble pickups or sport utility vehicles are also scheduled to be closed — in Janesville, Wis., Moraine, Ohio, and Toluca, Mexico. The company does not plan to allocate any new products to the four plants slated for closure.

Wagoner said higher gasoline prices are changing consumer behaviour and rapidly affecting the auto industry sales mix.

"We at GM don't think this is a spike or a temporary shift. We believe that it is, by and large, permanent," he said.

As part of the consumer shift away from large trucks and SUVs, GM plans a 2010 launch of a new Chevrolet compact car, which will be built in Ohio. Wagoner also said the company has approved the launch of the Chevy Volt extended-range electric vehicle, which is tentatively slated to be built in Detroit.

Wagoner said GM is reviewing the future of the Hummer brand.

The company said Tuesday that its U.S. sales of trucks in May were down 39 per cent compared with the same month last year. GM's overall sales of all vehicles were down 30 per cent year-over-year.

'Nothing short of betrayal': union

In May, the CAW reached an agreement with GM to postpone a 900-worker layoff at the Oshawa truck plant until September 2009.

Chris Buckley, the chair of the Canadian Auto Workers master bargaining committee with GM, said he felt betrayed by the company's latest move.

"We just ratified a new three-year collective agreement on May 16. We gave General Motors some cost savings to remain competitive here in Canada. General Motors felt comfortable enough to agree with the tentative agreement. They committed to products in this plant … and as of today they've pulled that product out from underneath us. It's nothing short of betrayal," Buckley said.

CAW president Buzz Hargrove slammed GM for announcing the closure of the Oshawa truck plant just weeks after working out a new labour deal.

"This plant is General Motors' best-quality, best-productivity, lowest-cost producer of half-ton trucks … and they're closing it," Hargrove said.

"This decision is unfair, it's unjust, it's unwarranted, it's illegal, it violates our collective agreement, and we're going to do everything in our power — and we have power," he told reporters.

"We are not going to allow this to happen."

Ontario Premier Dalton McGuinty said his government would pursue GM for an earlier repayment of a $175-million provincial loan if GM fails to meet the minimum job levels specified in their agreement.

Closure of the plant means GM will no longer produce trucks in Canada and will be reduced to one auto plant in Oshawa and a share of a joint-venture plant in Ingersoll, Ont.

Tuesday's news comes just weeks after the closure of a GM transmission plant in Windsor, Ont., which affected 1,400 workers.

GM said that closure was due to a market shift from the four-speed automatic transmissions made in Windsor to more fuel-efficient six-speed transmissions.

Detroit's Big Three automakers have cut tens of thousands of jobs in the last few years as they try to turn around their struggling operations amid market gains by their Asia-based rivals.

North American automakers have been slower to adjust their product lineups to include more smaller vehicles and fewer gas-guzzling SUVs.

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