The image of cars in a showroom
Magna International Inc. is laying off about 400 workers permanently at its Formet Industries plant in St. Thomas, Ont., because of a sharp downturn in demand for full-size pickup trucks.
The Aurora-based auto parts giant announced today that the reduction in production and salaried jobs will take effect on Sept. 8. The plant, south of London, Ont., makes truck frames for the General Motors assembly plant in Oshawa, Ont., which has also planned to cut production.
Magna, which makes various parts and components for the three big U.S.-based automakers, said employees at its Formet Industries plant will receive severance packages based on their years of service.
The reduction represents about 25 per cent of the current workforce at Formet, a division of Magna’s Cosma Structural Systems. The plant currently employs 1,600 people.
It is the first permanent layoff at Formet since it opened in 1997.
The layoffs announced Wednesday adds to the spate of industrial woes that have hit the southwestern Ontario blue-collar city, which depends heavily on light manufacturing â€” much of it geared to the auto sector.
Fordâ€™s St. Thomas-Talbotville car-assembly plant, just outside the city, continues to make the Crown Victoria rear-wheel-drive sedan.
Under a three-year labour contract ratified by the Canadian Auto Workers in May, Ford agreed to keep the plant in operation until at least September 2011, when the contract would expire, instead of the previously scheduled end in 2010.
However, a similar agreement between the union and General Motors has failed to prevent the automaker from closing its truck plant in Oshawa, Ont., next year as a result of the soaring price of gasoline, which has changed consumer buying habits.
Demand for GM Sierra and Chevy Silverado began falling last year, causing General Motors to cut its No. 3 shift at the Oshawa truck plant in late 2007 and reducing its workforce to about 2,600 people.
GM later announced in April it will end the No. 2 shift in September and most recently, after signing its three-year contract with the CAW, said this month it will end truck production in Oshawa and three others in 2009.
Toyota said Tuesday that it is laying off 200 temporary workers and slowing production at its San Antonio truck plant in Texas, where the Japan-based company employs 2,000 full-time workers.
Toyota will also schedule 14 days between now and October when no trucks will roll off the assembly line.