November 26, 2018 / 2:35 AM / 14 days ago

GM plans major announcement on global operations Monday: Canada union

MONTREAL/WASHINGTON (Reuters) - General Motors Co (GM.N) is set to make a major announcement on Monday that will affect its global operations and threatens to shutdown a big vehicle assembly plant in the province of Ontario, a Canadian union said on Sunday.

FILE PHOTO: A line up of cars is seen on a road after a shift change at the General Motors Car assembly plant in Oshawa, June 1, 2012. REUTERS/Mark Blinch

Unifor, which represents most unionized autoworkers in Canada, said it had been informed by GM that there would be no product allocated to the plant in Oshawa after December 2019, a development that would affect production at the plant.

The union statement came after a Canadian TV news channel said GM was planning to close all operations at the plant in Oshawa, near Toronto.

A GM spokesman declined to comment on Sunday evening.

GM has been cutting jobs to deal with plunging car sales in North America. The company has internally debated for months how to address shrinking car demand, a person briefed on the matter said, and the issue is certain to re-emerge when GM holds contract talks next year with the United Auto Workers union.

GM is expected to announce as soon as this week some involuntary salaried layoffs after it did not get as many volunteers to accept buyouts as hoped, the person said.

GM said on Oct. 31 that about 18,000 of its 50,000 salaried employees in North America are eligible for the buyouts.

The stepped up cost-cutting and restructuring at GM comes as many industry executives and analysts predict that overall vehicle sales in the United States will decline further in 2019 and 2020.

At the same time, China, the world’s largest auto market and GM’s biggest market by vehicle sales, has decelerated sharply in the past few months.

Analysts have said GM has too many North American plants building slow-selling sedans.

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GM shares are down 12 percent for the year, and GM Chief Executive Mary Barra, in a message to employees last month, cited the stagnant share price as a reason for tougher restructuring measures.

She said the automaker had negative cash flow for the first nine months of the year and it needed to cut costs.

BUYOUTS

GM has been offering buyouts to North American salaried workers and has said it could lay off white-collar staff if it does not hit a cost-cutting target.

The person briefed on the matter confirmed that GM planned a major announcement on the future of the Oshawa plant, but said the automaker wanted to notify employees of its plans before making any announcements about the plant.

Total vehicle production at the Oshawa complex fell 60 percent through the first ten months of 2018 from the same period a year ago, according to Automotive News production data.

GM employs about 2,500 union staff in Oshawa which produces both the Chevrolet Impala and Cadillac XTS sedans. It also completes final assembly of the stronger-selling Silverado and Sierra pickup trucks which are shipped from Indiana.

Political pressure in Canada is already mounting on GM, which had accepted billions of dollars in aid from the U.S., Canadian and Ontario governments after filing for bankruptcy protection during the 2009 global economic downturn.

“We are aware of the reports and we will be working in the coming days to determine how we can continue supporting our auto sector and workers,” a Canadian government official said.

“The jobs of many families are on the line,” said Colin Carrie, a Member of Parliament for Oshawa. “Communities all over Ontario would be devastated if this plant were to close.

The U.S.-based automaker has other operations in Canada, including a plant in Ingersoll, Ontario, where it assembles the Chevrolet Equinox.

The reported plant closure is a further blow to the Canadian auto industry, which has lost jobs to the United States, where governments offer manufacturers rich incentives, and Mexico, where labor costs are lower.

However, a new trade deal that the United States, Mexico and Canada struck in September leaves significant room for Canadian plants to grow exports duty-free.

Reporting by Allison Lampert in Montreal and; David Shepherdson in Washington DC. Additional reporting by David Ljunggren in Ottawa and Joseph White in Detroit; Writing by Denny Thomas; Editing by Peter Cooney

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