Closing GM Oshawa would cost economy billions: UNIFOR

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A new UNIFOR report on the auto industry in Canada comes with a dire warning. The GM Canada operation in Oshawa, Ontario is losing production of one of its most important vehicles, the Camaro. Several other vehicles built on the two assembly lines at GM Oshawa are approaching the end of their normal life-cycle, and no new models have yet been allocated to Oshawa. This, the report says, calls into question the future viability of the Oshawa operations. Were the plant to close, the impact on the GTA, the province and the Canadian economy would be “profound.”

At present, approximately 7,500 hourly production workers and 1,000 salaried employees work at GM Canada, making up a little over 20 per cent of national employment in the auto assembly industry. About half of the hourly workers (3,600) and half of the salaried workers are in Oshawa. In 2013, 14 per cent of all passenger and light vehicles produced in Canada were built in Oshawa.

In the worst case scenario, closure of the Oshawa operations, the drop in vehicle production in Ontario would be 325,000 units, with a direct loss of employment of 4,100 highly paid jobs. Combined with the indirect impact on auto parts and other supply industries, as well as economic activity stemming from the spending and re-spending of workers’ wages, this would cause Canada’s GDP to shrink by more than $5 billion per year within two years. according to the report’s modelling. The total number of jobs lost in Ontario immediately would be 22,000–24,000, rising to 33,000 within two years. Even after a six-year period of adjustment, GDP in Canada would still be lower than it would have been had the plant not closed, though employment levels would have returned to pre-closure levels. That recovery in employment would be largely achieved with a “permanent decline” in average wages.

Not that there was any doubt of it, but UNIFOR says the report confirms that a major auto assembly facility like Oshawa is an “economic anchor,” whose spin-off benefits are felt throughout the economy. “Workers, businesses and governments all enjoy a much stronger economic situation thanks to strategic manufacturing facilities like this one,” said UNIFOR economist Jim Stanford. The loss of revenue to the federal and Ontario governments would be around $1 billion annually.

What is the purpose of releasing the report at this time? UNIFOR president Jerry Dias said it is “a call to action.” All stakeholders, he said, need to combine forces to make sure GM maintains its strong manufacturing footprint in Canada. The report does not make any recommendations as to how that should be done, but Dias repeated what he has said before, that Canada needs a “focused strategy” to win new auto investment, “just like other countries have.”

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