Topic: GM closing Oshawa truck plant

[Rupert]

I was thinking more generally. Other industries like the IT that you were refering to.

[UmroAyyar]

Toyota MAY switch Camry production to Indiana and consolidate truck production in Texas, or they may shutter the Indiana plant altogether, depends on just how severely the US auto market is affected by the current recession.

Just wondering about the wage thing. Lets say an IT manager in Switzerland make $161K/yr, while one in Vietnam makes $20k, does this mean that the Swiss manager earns too much? Should all IT services be moved from Europe to Vietnam or India?
There is no sector that could not be done as effectively in the third world. A race to the bottom on wages is in no worker's best interest, though the suits would make a killing.

I have been at the both ends of the market. Five years ago, I did almost the same job as my current job while in Pakistan for a US based company. My salary was 1/3rd of what I make now. Purchasing power was equivalent to what I have now with my current salary.

[99 Silver]

Here is a scary hypothetical scenario:

This scenario is based on the Chrysler minivan which is produced in three shifts in Windsor and one shift at a plant in St. Louis.  Each shift in Windsor employs about 1500 workers. St. Louis has been operating at one shift for quite a while now. 

Chrysler decides to eliminate one shift in Windsor and send the work to St, Louis where new workers can be hired for $15 per hour.  After adjusting for benefit costs they could save approximately $50 per hour for each new hire in St. Louis versus the Canadian labour cost.  The savings on each worker is approximately $50 x 2000 hours/yr = $100,000 per job.  Let's assume that they can hire two thirds of the workers required (ie. 1000) at the new hire rate, and the balance are recalled workers at the normal UAW rate.

The labour savings on this move is approximately $100 million per year (1000 workers x $100,000) excluding any savings on the amount that the legacy UAW workers are cheaper than CAW workers.

This company has it's back against the wall and is fighting for it's survival.  The St. Louis plant is already set up for this product and would require no new tooling.  I am sure the company will be forced to look into this strategy as $100 million is a heck of a lot of money.

I don't feel good about this situation and what it would do to the workforce. 

The only traction that the CAW has currently is they could strike and disrupt the production at Brampton.  In the long run the company would want to marginalize the production in Canada to remove the last strategic strength of the CAW.

Keep in mind that Chrysler is now owned by Cerberus which is a venture capital firm and will be looking to make quick profits.  If they can't make a good return, they will cut their losses, dismember the company and sell off the pieces for as much as they can to get their capital back to re-invest elsewhere.

[inco]

The only flaw I see in your scenario is that the St. Louis plant has traditionally built lower quality vehicles (JD. Power stuff) and if that holds true buyers would eventually spurn purchasing. Granted that would take a long time for any effect to be felt and so it could make sense.

However can they actually hire people at that lower rate? If so and the union has agreed to it, they would be silly not to take advantage of it. Given Cerberus is an investment firm first, I would expect them to do something like that.

Doesn't bode well for us here in Canada though does it?

[tpl]

I think this is two "laws"  peaking together here.

The Law of comparative advantage                   almost anywhere can build cars more cheaply than in Canada.
The law of unintended consequences             Getting rid of the Autopact  as a consequence of NAFTA  perhaps could have  been better thought out.


To be contrarian about it... there was never any REALLY GOOD reason for the US car manufacturers to build cars in Canada except for the Autopact.

[Rupert]

What is NAFTA. Is that not where everyone gets the same chance to get stuff at the same price except since our dollar is less than the American dollar we have to compensate for it by paying more of them.

[gta_driver]

A couple of editorial cartoons are attached from the local Durham region paper.

I'm suprised to see in the "letters to the editors" page little support for GM plant workers (more hate mail then support mail). Even more suprised to see public sniping between former CAW leaders and current CAW leaders.

[Snowman]

Thank ore bodies are not portable.

[barrie1]

You could imagine if they were what would happen to your industry. It would be gone almost overnight as our Gov would not do a thing to assisst in any way or help tp prop it up at all. 

[toolatecrew]

Why should the government have to "prop up" industries that have non competative wage scales or production costs?

Its not sustainable.

Lets say the government gives GM a few 100 million to retool the OSawa pklant to produce a new economy car. How long will that free $ offset the increased cost of producing in Canada vs somewhere else? At some point GM says once agoan hey it costs 10 times as much in labour as building it in Mexico and we have to deal with the unions. Lets shut it down. What happens then? The government pumps more money in to save the 1000 jobs for another X years. Its simply not a sustainable strategy. We've seen it beofre with Sydney steele. If it can't stand on its own two feet it deserves to close down simple as that.

I can tell you the government doesn't prop up my company.

[EV Dan]

 

The bottom line is ppl will not drive less, so other companies will increase their car production. What the gobment should really do is to help transfer former GMers to new work places; however the latter have got to understand they will need to compete for the new job positions (in salary as well)

[Trainman]

Why should the government have to "prop up" industries that have non competative wage scales or production costs?

Its not sustainable.

Lets say the government gives GM a few 100 million to retool the OSawa pklant to produce a new economy car. How long will that free $ offset the increased cost of producing in Canada vs somewhere else? At some point GM says once agoan hey it costs 10 times as much in labour as building it in Mexico and we have to deal with the unions. Lets shut it down. What happens then? The government pumps more money in to save the 1000 jobs for another X years. Its simply not a sustainable strategy. We've seen it beofre with Sydney steele. If it can't stand on its own two feet it deserves to close down simple as that.

I can tell you the government doesn't prop up my company.

And with the pulp mill in Prince Rupert.

Do not forget that for every individual business that is "propped up", all its competitors are suddenly being made to compete with the government aid.  With the pulp mill, everyone in the industry knew that there was excessive capacity and mills needed to be closed, not artificially kept open as it just meant a more competitive mill would have to close in its place.  May have been OK for Rupert in the short term but go ask the Gold River mill workers what they thought of this plan.

And note the Rupert mill, plus a few saw mills in the same general area (ie Terrace) are all now closed permanently.  So how well did that propping work?

As much as we may dislike to see our fellow Canadians out of work, there has to be some realization that there is excessive automotive manufacturing capacity in NA and that some of that has to go away if the industry is to survive.

[rrocket]

As much as we may dislike to see our fellow Canadians out of work, there has to be some realization that there is excessive automotive manufacturing capacity in NA and that some of that has to go away if the industry is to survive.

EXACTLY!!!  And the UAW saw this and went for the "kill" in making the contract they made.  Meanwhile, Buzz was wanting "guarantees" and no virtually no concessions.....Buzz dropped the ball....though I'm not sure he ever had the ball in his hands to begin with...

[EV Dan]

maybe not in his hands but he must have had at least two 

[rrocket]

^^If he had ANY he would have made some difficult choices...and he didn't.  I suspect he sits down to pee too....

[Rupert]

The closing plant is a truck manufacturing plant. My understanding is that this activity is the most profitable for auto companies. Maybe the reason this kind of vehicle was manufactured there in an area of high manufacturing costs. (for whatever reason) Smaller vehicles have a much smaller proffit margin maybe making this location impossible for production, who knows.
It seems to me that UIC and training is all that other redundent workers recieve. I don't think UI contributions are any higher for auto workers. There may be tax breaks for all though, for the expenses involved for moving house across country.
This country has all of the resources that it needs. Perhaps a vision for the future could be worked on.

[Wetson]

....  I suspect he sits down to pee too....

  Hey sitting down to pee is appropriate sometimes.... especially if you want to avoid those annoying pee dots! 

[tenpenny]

We've seen it before with Sydney steele. If it can't stand on its own two feet it deserves to close down simple as that.

I can tell you the government doesn't prop up my company.

Tell me about it; I used to do a lot of business with UPM Kymmene in Miramichi(but they're closed now); Stone Container in Bathurst (closed); Bowater in Dalhousie (closed); Abitibi in Stephenville NF (closed)....

The economy changes, and you have to change with it. 

Remember the days when railroaders were guaranteed jobs for life?  CN was privatized, now CN has bought up some US railroads, and is one of the top performing railroads in North America.

[gta_driver]

I was in the the new mega Walmart in Oshawa (Just a short drive from the Park Road autoplex) and there where probably a dozen people in the store shopping with those "made in Canada matters shirts" that the CAW has doled out. It was interesting to see what was in their carts. Lots of Made in China, India, not in Canada goods. What irony. Preaching to Canadians to buy Canadian and save local jobs when they don't. Welcome to globalization.

[tenpenny]

I was in the the new mega Walmart in Oshawa (Just a short drive from the Park Road autoplex) and there where probably a dozen people in the store shopping with those "made in Canada matters shirts" that the CAW has doled out. It was interesting to see what was in their carts. Lots of Made in China, India, not in Canada goods. What irony. Preaching to Canadians to buy Canadian and save local jobs when they don't. Welcome to globalization.

That's funny.  Wearing a 'made in Canada matters' shirt, while shopping in a US-owned store, buying Chinese and Indian goods.

I think that says it all.