General Motors’ surprise decision to restart vehicle production at its shuttered Oshawa Assembly plant will pump more than $3 billion worth of business into Ontario’s parts sector a year and create thousands of jobs within it, industry stakeholders say.
The move secures a long-term future for companies such as AGS Automotive Systems, which operates a manufacturing plant near the GM factory, said Lisa Tucker Boulton, general counsel at the J2 Group, the Toronto-based owner of AGS and Tiercon Corp.
“We’re just so excited. This breathes new life into our Oshawa facility, whose future was uncertain.”
As a GM supplier, AGS expects to win the additional Canadian business, she said. The company, formerly A.G. Simpson, has been making bumpers for GM since 1974, but the future of its Oshawa facility has been in doubt since vehicle assembly ceased in the city in December 2019.
GM’s decision dealt a blow to Ontario’s parts sector, with some businesses closing their doors, while others such as AGS laid off workers.
But in a dramatic about-face, GM this fall announced plans to invest up to $1.3 billion retooling Oshawa Assembly to meet rising demand for the highly profitable and popular light- and heavy-duty Chevrolet Silverado and GMC Sierra pickups.
GM has said it expects to hire 1,400 to 1,700 hourly workers by the time production resumes in early 2022. The union representing the workers said that could reach 2,300 if a third shift is added.
For suppliers, that level of production translates into $3 billion a year in new business across southern Ontario and 8,000 to 10,000 additional jobs, said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association (APMA).
“There is nothing that compares to the economic activity that a local assembly plant provides,” Volpe said. “Ontario has its eastern bookend back, and it will help to fortify all the automotive investments in the Greater Toronto Area.”
GM Canada President Scott Bell said the company is making a “full-blown investment” in Oshawa to meet accelerating demand for its pickups, which now account for 40 per cent of GM Canada’s sales.
“What that will do to the supply chain locally? It’s going to have quite an impact,” Bell said on an Automotive News Canada podcast Nov. 20.
According to Unifor, which negotiated the GM labour contract that included the new investment, every new job in the Oshawa plant will create up to seven indirect jobs.
“It’s in that ballpark. It’s going to be significant,” Bell said.
Construction has already begun and includes a new body shop and flexible assembly line, a GM spokesperson said. The company expects to run two shifts, but that will depend on market demand, the spokesperson said.
Unifor Local 222, which represents workers at several GM suppliers as well as Oshawa Assembly, said it’s premature to say which companies will be hiring.
“We just signed the agreement,” said Colin James, who retired as president of the Unifor local in December after helping negotiate the landmark deal. “GM is just putting the work out for bids.”
Former GM suppliers will likely get first crack at the work and will know early in the first quarter which parts makers will be feeding the plant, James said.
GM expects a “significant increase” in its full-size-pickup capacity when Oshawa comes online in January 2022, CEO Mary Barra told an investor conference Nov. 5.
‘RESTORED OUR FAITH’
Suppliers as far away as Windsor, about 400 kilometres southwest of Oshawa, welcomed the announcement.
“We really needed that investment,” said Jon Azzopardi, interim chair of the Canadian Association of Mold Makers. His company, Laval Tool & Mold Ltd., supplies service parts to GM.
“It has restored our faith in GM, so it will be good for us.”
Automotive jobs pay well, with average hourly wages at an assembly plant ranging from $30 to $35 and up to $25 at suppliers, Azzopardi said.
Magna International Inc., one of GM’s largest suppliers, said it was too early to comment on the impact on its business.
For AGS, it means its Oshawa facility can resume supplying a local assembly plant, reducing transportation costs and bringing back value-added, in-house assembly, said Boulton of the J2 Group.
The plant, which performs metal stamping and plastic injection molding, employs 230 people, compared with 287 in 2017.
It’s too early to comment on any hiring plans, Boulton said.
AGS, which employs 1,500 in Canada and the United States and generates annual revenue of more than $500 million, has been supplying bumpers to U.S. customers from its Oshawa plant, Boulton said. But serving that market from a distance was becoming a challenge, she said.
The reopening of GM Oshawa will make the AGS plant more viable, said Boulton. It will also allow for the actual assembly of bumper components to resume – instead of making parts that are shipped off in pieces.