The GM Closure in Oshawa and the Future of the Auto Industry in Canada

by Daniel Blazekovic

On November 7, 1953, production began at the Oshawa General Motors (GM) assembly plant. A century later, the Oshawa plant has become “the most decorated plant with 29 J.D. Power awards, [with] a proven track record of great quality and customer satisfaction.” On November 26, more than 65 years after GM began producing Pontiac, Chevrolet and Buick models in Oshawa, Ontario, GM Canada’s president announced that the plant would be permanently shut-down following December 2019.

The decision, which came from GM headquarters in Detroit will result in the loss of more than 2,500 jobs at the plant. Chris Buckley, the head of the Ontario Federation of Labour, claims that the closure of the plant will affect not only GM workers, but thousands of others across the Durham region: “For every job at the assembly plant, an additional nine jobs are created in the community.” As a result, there is the potential that the regional retail sector shrinks while housing prices fall.  According to a recent report released by BMO, the economic effects of the eventual shutdown will be “impactful” for Oshawa and the regional economy – “Oshawa and surrounding areas will see incomes shrink by $300 million once the plant is shut”, the report says. As for the Ontario economy, the effects will be much less impactful. The BMO report notes that “the province’s economic output will shrink by 0.3 to 0.5 per cent”, which is projected not to “move the needle” on Ontario’s unemployment rate.

The decision to close the doors at the Oshawa assembly plant stems from a global reorganization strategy which will shift the multinational automaker’s attention to the production of electric and autonomous vehicles. “This industry is changing very rapidly, when you look at all of the transformative technologies, be it propulsion, autonomous driving… These are things we’re doing to strengthen the core business,” GM chairwoman and CEO Mary Barra said on the same day of the Oshawa plant shutdown announcement.

It appears that the shift towards electric vehicles is already “well underway.” David Adams, president and CEO of Global Automakers of Canada, recently said that “decarbonized transportation” is what several automakers are pursuing for the future. This shift makes sense – Canada and the United States have both enacted legislation which looks to significantly curb greenhouse gas emissions from conventional passenger vehicles by 2025. However, this shift may be slowed down by recent policy decisions in both Canada and the United States. Ontario Premier Doug Ford recently eliminated electric vehicle rebates which were implemented by the former Liberal government. South of the border, President Donald Trump recently introduced a plan to “relax car pollution rules”, which appears to benefit the production of traditional internal combustion engine vehicles.

Following the announcement from GM Canada’s president Travis Hester, employees at the Oshawa plant voiced their opinions. The impending shutdown is “scary,” said Matt Smith, who has been employed at the Oshawa plant for 12 years. Unifor, the union representing the company’s hourly wage earners, has also been vocal about the death sentence of the Oshawa plant. Unifor president Jerry Dias told a room full of disgruntled GM employees that “They are not closing our damn plant without one hell of a fight.”

Although Ontario Premier Doug Ford announced that it was a “difficult day” for Oshawa plant workers, he also said that the NDP and Unifor were “raising false hope” by expressing to GM workers that the closure could possibly be averted. Ford’s comments came after NDP leader Andrea Horwath made her way to Oshawa to promise local business leaders and GM plant workers that her and her party would keep fighting to prevent the closure of the Oshawa plant.

The closure of the Oshawa plant perhaps comes as a disappointment to many since the Ontario and federal government helped bailout the automaker following their claimed bankruptcy in 2009. Combined, both levels of government provided approximately $9.5 billion US in financial aid to GM, in return for a 11.7 per cent stake in the company. This stock in the company, however, was completely sold off by both governments by 2015.   Aggravating this sense of uneasiness, an investigation by CBC in June 2018 revealed that the Liberal Government appears to have quietly written off a taxpayer loan made to GM possibly in excess of $1 billion.

Tragically for  Oshawa, the GM plant does not appear to be a part of the company’s transition towards the production of autonomous and electric vehicles. GM Canada’s top executive says he’s made it “very clear” to both Ontario Premier Ford and Prime Minister Trudeau that the company doesn’t have “any allocation” for the production of a particular GM model at the Oshawa plant going forward. “There isn’t anything to build,” Hester said, referring to the production at the Oshawa plant after December 2019.

Hester’s comments may come as a surprise to many, especially since decision-makers have taken steps to establish Canada as a research and innovation hub in key sectors (artificial intelligence, fuel cells, and electric vehicle technology) which are expected to play a key role in moving towards a more modern auto manufacturing industry.

Canadian efforts to contribute to the future of innovative auto-manufacturing practices can even be witnessed a stone’s throw away from the Oshawa GM plant. The Automotive Centre of Excellence (ACE) at the University of Ontario Institute of Technology (UOIT) is “the first climatic testing and research centre of its kind in Canada, and in many respects the world.” ACE is part of a UOIT’s mandate to “shape the next generation of green vehicles” and “generate new knowledge that will advance the frontiers of research and transform the auto industry.” Not to mention, GM was a partner in the development of the Automotive Centre of Excellence – many UOIT students were disappointed in the closure due to the fact that they had aspirations of working at Oshawa’s GM plant upon graduation.

The Ontario and federal government has begun to explore the different ways in which it can immediately help the more than 2500 affected GM workers and local businesses address the economic losses that will result following the closure of the plant in December 2019. These measures, however, are expected to address the short-term economic shock through income supports, training programs, and easing affected workers into new employment opportunities. However, if the governments of Ontario and Canada want to address the long-term prospects of the auto-industry in Canada, it will be crucial that political decision-makers continue to convey to GM and other auto-manufacturers that Canada will remain an integral part of achieving a more green, innovative and high-tech auto industry for many years to come. In the words of Oshawa MPP Jennifer French, let’s not forget the fact that “GM did not build Oshawa. Oshawa built GM.”

Daniel Blazekovic is a Master of Public Policy candidate at the University of Toronto School of Public Policy and Governance. Daniel completed his Bachelor of Public Affairs and Policy Management with a specialization in Development Studies at Carleton University. He is particularly interested in Latin American politics, conflict studies and populism.