General Motors is cutting 47,000 jobs globally and shutting down five more U.S. factories in a massive restructuring that will almost certainly spill over into Canada and rip into the heart of the country’s industrial sector in Ontario.
The big U.S. company and rival Chrysler LLC both proposed restructuring plans late Tuesday that will see them seek billions more in government loans than they predicted just two months ago.
The two automakers also plan further job cuts – Chrysler plans to pare 3,000 jobs in the U.S. – and additional cuts to production and the number of models they offer to car buyers over the next few years.
Prime Minister Stephen Harper and other senior Canadian politicians warned that more streamlining awaits the battered Canadian auto sector, which lost 13,000 jobs last year alone.
Meanwhile, Canadian Auto Workers union president Ken Lewenza said he will wait to see the agreement between the United Auto Workers and the automakers before agreeing to any concessions in Canada. He said the union will do what it can so it stays cost competitive with its American counterpart.
“Those negotiations would be aimed at ensuring that active labour costs at Canadian facilities of the three companies remain fully cost competitive with the companies’ counterpart facilities in the United States, even as those operations are restructured in coming months,” Lewenza told a news conference late Tuesday.
Lewenza said he wouldn’t rule anything out until he’d seen the UAW agreement, but added that there’s not much left to cut.
“I would be speculating today because until I hear what the corporation believes is a competitive cost in labour in comparison to the UAW it would just not be right to speculate at this time, but obviously there’s going to be some compromises,” he said.
The union president said the work in the coming days will be to follow up with the Canadian management teams of the U.S. automakers.
“At the end of the day we’re going to take our responsibility as a union seriously and do what we need to do to protect investment in Canada, protect our jobs in Canada and protect our retirees in Canada,” Lewenza said.
Earlier Tuesday, Harper said he’s confident that General Motors (NYSE: GM) will not pull out of Canada, a possibility raised by a CAW leader earlier this month.
But he said that doesn’t mean industry watchers should expect the status quo going forward.
“We have to be frank here – not to say there will not be job losses because we know there are some very tough decisions to be made,” Harper said following a transit infrastructure announcement in Toronto.
“But I’m confident with our participation in the restructuring that we will maintain our share of this industry in North America.”
At Chrysler chairman and CEO Bob Nardelli said the 3,000 job cuts won’t impact the automaker’s Canadian operations directly, but he implied that he expects proportionate cuts north of the border.
“This plan . . . doesn’t impact the Canadian operations, but obviously we need to have the same kind of constituent concessions to make this plan viable,” Nardelli said in a conference call.
Chrysler vice-chairman Tom LaSorda said discussions are ongoing with both the Canadian Auto Workers and the United Auto Workers, and he expects “very similar” agreements with both unions.
“We’ll get into much more detail with the CAW starting next week,” he added.
GM and Chrysler’s Canadian subsidiaries can also tap into C$4 billion in financial aid offered by the federal and Ontario governments. That amounts to about 20 per cent of the U.S. aid package in the hopes that the Canadian industry will be able to maintain its 20 per cent share of the companies’ North American production.
Last week, the Ontario government said GM was no longer seeking an emergency $3 billion loan but is still seeking longer-term aid, while Chrysler is still looking for $1 billion in help from the two governments.
Ford, which borrowed from private sources two years ago and is in better financial shape, is not part of any bailout talks in Canada or the United States.
The Canadian automakers are set to deliver their own restructuring plans to the federal and Ontario governments on Friday.
There’s little doubt the restructuring plans in both countries will include widespread job cuts, said Ontario Premier Dalton McGuinty.
“There will be more restructuring and I wouldn’t be surprised if there were more job losses,” McGuinty said.
Chrysler Canada, Ford Canada and GM Canada have been cutting plants and jobs for the last two years or so across southern Ontario where they operate as they cope with the recession and a credit crunch that has eroded car sales across North America.
McGuinty’s economic development minister, Michael Bryant, agreed “there’s no question” that the industry has already shrunk by thousands of jobs “and there will be more contractions.”
It’s not yet clear by how much the two automakers will cut their workforces or their manufacturing capabilities, but GM’s operations in Oshawa, Ont., are at particular risk, according to Bill Pochiluk, president of industry adviser AutomotiveCompass.
GM is already planning to shut down its truck plant in the industrial city east of Toronto this spring, costing 2,600 jobs, and has temporarily laid off the third shift at its car plant, affecting about 700 workers.
A GM transmission plant which employs about 1,400 people in Windsor, Ont., is also slated for closure next year.
Other potential casualties of the restructuring are Chrysler’s sedan plant in Brampton, Ont., near Toronto, and the joint-venture GM-Suzuki CAMI plant in Ingersoll, Ont., Pochiluk said.
GM employs about 19,000 people in Canada, mainly in southern Ontario. Chrysler employs about 10,000 workers at assembly and parts plants in Windsor and in the Toronto area, where a streamlining announced last year will pare the workforce to about 8,400.
The Canadian auto industry lost approximately 13,000 jobs in 2008, and analysts predict it could lose between 15,000 and 20,000 additional jobs in 2009 as auto sales in the U.S. continue to slump and the major companies work to cut costs.
The Canadian Auto Workers union agreed to a three-year wage freeze in 2008, saving the industry about $900 million in wage costs.