General Motors’ surprise decision to invest up to $1.3 billion in its Oshawa, Ont., plant and resume vehicle production there in 2022 was, until recently, almost unthinkable to many.
It was less than a year ago that vehicle assembly ended at the storied Oshawa plant. To many industry observers, analysts and journalists, it looked like an end of an era. Canada’s auto industry has its roots in Oshawa, but vehicle manufacturing didn’t look to be a part of the city’s future anymore.
Unifor President Jerry Dias and union leadership felt otherwise. In a settlement with Unifor following a heated dispute in late 2018 and early 2019, GM agreed to maintain the integrity of the plant even as it launched an aftermarket parts operation there, leaving the door open for potential investment down the line.
Because of that, Dias said on Thursday that he and union leadership “never gave up hope” that vehicle assembly could return to Oshawa. He’s certainly always made that hope clear in public, but Dias was also working behind the scenes with GM to make that happen. He said that by the fall of 2019, he had decided to “turn the page” with GM and work to find a solution.
“After the UAW strike [in fall 2019], I reached out to GM and we started to talk,” Dias said. “We only started to put meat on the bones during this set of negotiations, but we always kept the door open.”
Dias said the end of vehicle assembly in Oshawa was “personal” for him, not only because much of his family is from the city but because of what took place after 2016 bargaining. That year, Unifor and GM announced a $400-million investment in the Oshawa plant, which would do final assembly on GMC Sierra and Chevrolet Silverado pickup bodies shipped from Fort Wayne, Indiana. Oshawa would also continue to build the Chevrolet Impala and Cadillac XTS sedans.
Dias at the time framed the deal as a big win for workers that would keep the plant alive at a time when its future was uncertain. GM’s decision to end production there before the end of its contract with Unifor caught Dias by surprise and would kick off months of intense protesting by the union.
“I thought we had a solution in 2016, so the closure was personally disappointing,” he said.
Thursday, Dias again announced that Silverado and Sierra production would come to Oshawa. But this time, it would be full-vehicle assembly — and a much larger investment from the automaker. GM plans to put in somewhere between $1 billion and $1.3 billion into the Oshawa plant, in large part for a brand-new body shop. The retooling would begin immediately, according to GM, and production of light-duty and heavy-duty trucks would start in 2022, with between 1,400 and 1,700 hourly hires anticipated by GM.
The investment is subject to ratification of the new contract by Unifor members. Ratification voting begins Sunday morning and will last 24 hours, with results expected to be known midday Monday.
Union and company leadership deserve credit for putting aside what had been a rocky relationship in recent years to put together a deal that, pending ratification, will revive vehicle manufacturing in Oshawa.
For GM, the investment makes sense. Sales of the Silverado and Sierra in the United States were up from a year earlier in the first three quarters of the year, despite a down market triggered by the COVID-19 pandemic. The trucks are currently built at three plants — one in Michigan, one in Indiana and one in Mexico — all of which have been consistently running on overtime since the trucks’ 2019 model year redesigns, according to Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions LLC.
Oshawa is “a great place for GM to provide overflow production of the popular trucks,” Fiorani said.
The Silverado and Sierra are two of GM’s most profitable and highest-selling vehicles. But inventory levels have been an issue at GM dealerships in the U.S. and Canada ever since the two-month North American production shutdown during the pandemic earlier this year. GM’s days’ supply of vehicles on hand was estimated to be 52 days in October, down from 83 days a year earlier, according to Morgan Stanley. And the inventory problem might be even worse for the ever-popular pickups.
“Trucks usually have large inventory because if you’re a truck buyer, there are so many choices to choose from. You want to have your choice on the lot,” Fiorani said.
GM could also see an opportunity to gain market share in the pickup segment, Fiorani said.
“GM has a history of attempting to increase market share at moments like this where the rest of the competition is rightsizing or trying to recover from a down market. GM sees that as an opportunity to increase market share,” he said.
Previous attempts at doing so have proven to be unsuccessful, Fiorani said. But if GM’s instincts are correct this time around and there is additional demand out there for its pickups, then truck production could stick around at Oshawa “for the long haul,” he said.
Heading into this round of bargaining between Unifor and the Detroit 3, Dias framed the talks as crucial in determining the future of Canada’s auto industry. He saw Canada slipping behind the rest of the world in electric-vehicle production and was still stinging from the end of assembly in Oshawa last year.
But now, after nearly securing nearly $5 billion in combined investment plans between each of the Detroit automakers, Dias said he and Unifor have a lot to celebrate. Despite so much negative news surrounding Canadian auto manufacturing in recent years, the industry’s future is brighter today than it was a year ago, he said.
“It feels particularly sweet, especially with all the critics” who doubted Canada’s future in the auto sector, Dias said. “The critics can, frankly, kiss my ass.”