General Motors Corp. will shut its pickup truck factory in Oshawa, Ont., for two weeks in January as the effects of the U.S. housing crisis spill over the border into the auto industry in Canada.
The Oshawa plant is one of three GM pickup factories that will shut for two weeks as GM tries to reduce inventories of its full-sized pickup trucks. But it's a double whammy for Oshawa because GM has already announced it is eliminating one shift of production and about 1,200 jobs at the plant in January.
“It's not a good way to start off the year,” said Chris Buckley, president of Local 222 of the Canadian Auto Workers union, which represents about 3,900 workers at the truck plant, another 5,500 at two passenger car plants and thousands more at suppliers that ship parts to the sprawling Oshawa complex.
GM said on Monday that it will reduce first quarter production in North America by 11 per cent to 950,000 vehicles, from 1.06 million in the first quarter of 2007. That announcement came after November sales results for the U.S. market showed that sales slumped 11 per cent, with the GMC Sierra and Chevrolet Silverado sustaining double-digit losses.
Two key economic factors are at work – the slowdown in the construction industry that has sent demand for pickup trucks tumbling, and the rise in the price of gasoline in the United States to more than $3 (U.S.) a gallon last month, the first time it has surpassed that level in November.
“A key takeaway this month is that the shift away from traditional high-margin pickups and SUVs appears to be accelerating,” Rod Lache, auto analyst for Deutsche Bank AG said in a note on the November U.S. sales results.
The GM move is another sign of how dependent the auto industry in Canada is on a strong U.S. market. In addition to the Oshawa cuts, GM's joint-venture assembly plant in Ingersoll, Ont., Cami Automotive Inc., is planning to eliminate a shift of production in the first quarter.
One shift and more than 1,000 jobs will be eliminated at a Chrysler LLC plant in Brampton, Ont., as the No. 3 Detroit auto maker scales back production in the first quarter at its North American plants.
Parts suppliers in the Oshawa area are already laying off hundreds of employees as a reaction to GM's August announcement that it is eliminating one shift of production at the truck plant, Mr. Buckley said.
© The Globe and Mail
