Skip to main content
Sister Publication Links
  • Automotive News
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
Subscribe
  • Subscribe
  • login
  • HOME
  • News
    • News by Brand
    • Auto Shows
    • Canadians Abroad
    • Photo Galleries
    • Automakers
    • Suppliers
    • Retail
    • Dealer Best Practices
    • Government Relations
    • Trade and Tariffs
    • Technology
    • Labour
    • Aston Martin
    • BMW
      • Mini
      • Rolls Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ferrari
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Kia
    • Mazda
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Fiat Chrysler
      • Jeep
      • Fiat
      • Lancia
      • Maserati
      • Ram
    • Subaru
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
    • Volvo
    • VinFast
    • Toronto Auto Show
  • Opinion
    • Blogs
  • Video
  • Podcasts
  • EVENTS & AWARDS
    • 2021 Auto News Canada All Stars
    • 2022 Canadians To Watch
    • Best Dealerships To Work For
    • Canada Congress
    • Retail Forum: Dealer Discussions
    • Leading Women Roundtables
    • Embracing Diversity Roundtable
  • Jobs & Classifieds
  • +MORE
    • IN THE DRIVER'S SEAT
    • NEWSLETTERS
    • SUBSCRIBE
    • CLASSIFIEDS
    • PEOPLE ON THE MOVE
    • COMPANIES ON THE MOVE
    • WEBINARS
    • ADVERTISE WITH US
    • CONTACT US
    • DIGITAL EDITION
    • PUBLISHING PARTNERS
MENU
Breadcrumb
  1. Home
  2. Automakers
February 11, 2019 12:01 AM

Tracking GM's manufacturing move to Mexico

Dana Flavelle
Toronto Correspondent
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Automotive News illustration

    Mexico in 2018 accounted for more than a quarter of General Motors' estimated North American production for the first time, a proportion that will rise further if the company follows through with plans to end production at five plants in the U.S. and Canada this year.

    Wages in Mexico are regularly blamed for the blood on the factory floor of the Canadian auto industry, but General Motors’ growing footprint there is part of a broader trend that has turned Mexico into an auto-industry powerhouse, say analysts. 

    General Motors is on track to produce one million vehicles in Mexico next year, while its Canadian production would fall to less than 200,000 if the company proceeds with plans to close its Oshawa Assembly plant, industry figures show. 

    Mexico’s wages have become the mantra that trade union Unifor regularly chants in its fight to keep the line running at GM’s Oshawa Assembly plant, which employs about 2,600 hourly workers. GM announced in November that it would not allocate new product beyond 2019, effectively sealing the plant’s fate. Wages are just one nail in the coffin. 

    “The problem is the products that are in Oshawa are on a death watch — the [Chevrolet] Impalas, [Cadillac] XTS and older generation [Chevrolet] Silverados and [GMC] Sierras,” said Joe McCabe, CEO of the consulting company AutoForecast Solutions. As well, he said, GM faces an overcapacity problem in North America. 

    “At the end of the day, GM answers to the shareholders,” McCabe said. “And when profitability is being hampered, you’re looking at your portfolio and what’s not making it. 

    “Unfortunately, Oshawa is taking the brunt of it.” 

    Unifor cites “corporate greed” for GM’s decision to stop allocating product to the plant. 

    “The cost of keeping the Oshawa complex alive is not excessive,” Unifor President Jerry Dias said after a Jan. 8 meeting with GM executives in Detroit, where the company rejected his suggestions to keep the plant open beyond 2019. 

    “It’s a question of choice, and GM has made the decision they would rather pay employees [US] $2 an hour in Mexico than pay their Canadian employees a decent wage.” 

    According to the Center for Automotive Research in Ann Arbor, Mich., auto workers in Mexico earn on average less than US $6 an hour, excluding benefits. Canadian vehicle-assembly workers made an average of $34.85 an hour in 2016, according to Statistics Canada. That’s about US$26.25 at today’s exchange rate.

    ALL TRENDS POINT SOUTH 

    The longer-term trend among global automakers — including Japan- and Germany-based manufacturers — has been to locate new production in Mexico. Low wages, generous government incentives and favourable trade agreements have helped turn Mexico into an auto-industry powerhouse, said Charlotte Yates, the director of the Automotive Policy Research Centre at McMaster University in Hamilton, Ont. 

    “It’s not just because their [Mexico’s] unions are more collaborative. There’s a huge wage advantage,” Yates said. “And they have access to the U.S. market from Mexico.” 

    GM has been among the biggest drivers of that growth. Its three assembly plants in Mexico produced 837,200 vehicles in 2018, up from 690,400 in 2015, according to Wards Automotive. Over the same period, Canadian production fell to 327,200 units from 577,600. 

    GM continues to operate an assembly plant in Ingersoll, Ont., which builds the Chevrolet Equinox. U.S. production is forecast to dip slightly to 1.9 million in 2020 from 2.1 million vehicles in 2015. 

    GM’s Mexico assembly plants make some of the company’s most popular vehicles, including the Silverado and Sierra pickups, the Chevrolet Equinox and the GMC Terrain. Those two utility vehicles were originally and exclusively built in Canada, Unifor said. 

    The new Chevrolet Blazer, a sporty crossover, is built in Mexico. That decision prompted the United Auto Workers union to urge American consumers to boycott it. 

    Mexico in 2018 accounted for more than a quarter of General Motors' estimated North American production for the first time, a proportion that will rise further if the company follows through with plans to end production at five plants in the U.S. and Canada this year.

    GM is now Mexico's largest auto producer, topping Nissan Motor Co. in a year when it reduced output by an estimated 5 percent in the U.S. and an estimated 33 percent in Canada, according to the Automotive News Data Center.

    NOT JUST ABOUT WAGES 

    “I think Unifor has a legitimate concern and complaint,” Yates said. However, she cautioned, the situation is “complex.” In recent years, she said, some GM production in Canada has moved to the United States, where it’s harder to argue the labour costs are the main consideration. 

    “Unifor is right when it says there’s a problem trying to compete with a country where the wage rate is so low,” Yates said. “But that’s only one factor in the GM story.” 

    GM also appears to be consolidating its suppliers and moving them south, Yates said.

    “Oshawa for some time has become the outer reaches of the supply chain,” she said. The logistics of transporting goods across a congested Greater Toronto Area to the DetroitWindsor border is hard to justify when the rest of Canada’s auto industry is clustered around southern Ontario, Yates said. 

    “This is about GM’s long-term strategy,” she said. “If we’re not producing products that are selling well and gaining market share, then clearly Canada is going to lose out. 

    “And Unifor knew that. In the last round of bargaining, they got a lifeline. They didn’t get a new product. Once you stop moving new models into a plant, the writing is on the wall.” 

    GM MEXICO:

    The Ramos Arizpe complex, which opened in 1981, builds the Chevrolet Cruze small car and Chevrolet Equinox crossovers. It will also build the new Blazer. 

    The Silao complex, which opened in 1995, builds the Chevrolet Silverado and Cheyenne and GMC Sierra pickups.

    The San Luis Potosi complex, which opened in 2008, builds the Chevrolet Trax, Equinox and GMC Terrain crossovers. 

    RECOMMENDED FOR YOU
    Stellantis posts record first-half results despite rising costs, chip headwinds
    Recommended for You
    Stellantis Auburn Hills. RTRs web_2.jpg
    Stellantis posts record first-half results despite rising costs, chip headwinds
    FFord-badge-web_0_0.jpg
    Ford generates US$667 million in Q2 net income as revenue jumps 50%
    Brampton Assembly Sign
    Stellantis offers early retirement packages to workers in Windsor, Brampton, Ont.
    JaguarTCSRacingFormulaE
    Sponsored Content: Castrol ON and Jaguar Formula E Racing team-up to usher in a new era for electric vehicles
    Digital Edition
    Aug 2022 Issue Cover
    View latest issue
    See our archive
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    THE BIG STORY: Catch up on the top news of the week with our video round up. We'll email you a summary of the video and a link to watch.
    Get Free Newsletters

    Sign up today for our Weekly Newsletter, Daily Newsletter and Breaking News Alerts. We'll deliver the news you need to know straight to your inbox.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Subscribe Now

    An Automotive News Canada subscription includes 12 monthly issues – delivered in print to your doorstep, and digitally to your inbox – plus unlimited, 24/7 access to our website.

    Subscribe Now
    Connect With Us
    • Facebook
    • Twitter
    • Instagram

    Our Mission

    The Automotive News Canada mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in Canada.

    Contact Us

    1155 Gratiot Ave
    Detroit MI 48207

    1-877-812-1257

    Email Us

    ISSN 2475-5001 (print)
    ISSN 2475-501X (online)

    Resources
    • About us
    • Contact Us
    • Digital Edition Archive
    • Advertise with Us
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Canada
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • News
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ferrari
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Kia
        • Mazda
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Fiat Chrysler
          • Jeep
          • Fiat
          • Lancia
          • Maserati
          • Ram
        • Subaru
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
        • Volvo
        • VinFast
      • Auto Shows
        • Toronto Auto Show
      • Canadians Abroad
      • Photo Galleries
      • Automakers
      • Suppliers
      • Retail
      • Dealer Best Practices
      • Government Relations
      • Trade and Tariffs
      • Technology
      • Labour
    • Opinion
      • Blogs
    • Video
    • Podcasts
    • EVENTS & AWARDS
      • 2021 Auto News Canada All Stars
      • 2022 Canadians To Watch
      • Best Dealerships To Work For
      • Canada Congress
      • Retail Forum: Dealer Discussions
      • Leading Women Roundtables
      • Embracing Diversity Roundtable
    • Jobs & Classifieds
    • +MORE
      • IN THE DRIVER'S SEAT
      • NEWSLETTERS
      • SUBSCRIBE
      • CLASSIFIEDS
      • PEOPLE ON THE MOVE
      • COMPANIES ON THE MOVE
      • WEBINARS
      • ADVERTISE WITH US
      • CONTACT US
      • DIGITAL EDITION
      • PUBLISHING PARTNERS