GM plans major announcement on global operations Monday – The Canadian Union

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

Unifor, who represents most of the unionized auto workers in Canada, said he was informed by GM that no proceeds would be awarded to the Oshawa plant after December 2019, a development that would affect the production of the factory.

The union's statement comes after a Canadian television news channel announced that GM was planning to close all operations at the Oshawa plant near Toronto.

A spokesman for GM declined to comment Sunday night.

GM cut jobs to deal with a drop in car sales in North America. The company has been internally debating for months how it could cope with shrinking auto demand, said a person informed of the problem. This question should be raised again when GM negotiates a contract with the United Auto Workers union.

GM is expected to announce this week involuntary payroll layoffs after fewer volunteers have agreed to buy the expected redemptions, the person said.

On October 31, GM said that nearly 18,000 of its 50,000 paid employees in North America are eligible for redemptions.

The intensification of GM's cost reduction and restructuring comes as many industry leaders and analysts predict that global vehicle sales in the US will further decline in 2019 and 2020.

At the same time, China, the largest automotive market in the world and the largest market for GM in terms of vehicle sales, has slowed sharply in recent months.

Analysts said GM had too many North American factories building slow-moving sedans.

GM shares are down 12% for the year, and GM chief executive Mary Barra in a message to employees last month cited the stagnant price of action to justify tougher measures restructuring.

She said the builder had negative cash flow for the first nine months of the year and that it needed to reduce its costs.

Buyouts

GM offered buyouts to North American employees and announced plans to lay off white-collar employees if it did not meet a cost-cutting goal.

The informed person confirmed that GM had planned a major announcement on the future of the Oshawa plant, but stated that the builder wanted to inform employees of its plans before making any announcement about the plant.

Total vehicle production at the Oshawa complex fell 60% in the first ten months of 2018 compared to the same period last year, according to Auto News production data.

GM employs approximately 2,500 union members in Oshawa, which produces Chevrolet Impala and Cadillac XTS sedans. It also complements the final assembly of Silverado and Sierra pickup trucks, which sell best and are shipped from Indiana.

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

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

"The jobs of many families are at stake," said Colin Carrie, MP for Oshawa. "Communities across Ontario would be devastated if this plant closed.

The US manufacturer has other facilities in Canada, including a plant in Ingersoll, Ontario, where it assembles the Chevrolet Equinox.

The announced closure of the plant is a new blow to the Canadian auto industry, which has lost jobs to the US, where governments offer rich incentives to manufacturers, and Mexico where the labor costs are lower.

However, a new September trade agreement between the United States, Mexico and Canada leaves Canadian mills with considerable room for maneuver to increase their exports without paying customs duties.