GM cutting 3,900 Ontario jobs, Oshawa and St. Catharines plants to close

General Motors plants in Oshawa and St. Catharines, Ont., will shut down as the automaker announced Monday it will close or cut back 12 North American facilities and slash 30,000 jobs as part of a plan to return to profitability.

GM (NYSE:GM) chairman and CEO Rick Wagoner said the third shift at GM Canada's Number 1 plant in Oshawa will be cancelled in the second half of 2006, while the Number 2 plant will be closed in 2008.

The Number 1 plant in Oshawa builds the Chevrolet Monte Carlo and Impala models. The Number 2 plant currently builds the Pontiac Grand Prix and the Buick LaCrosse/Allure models, but they are to be phased out in 2008 and GM has not scheduled a new product to be built at the facility.

The closing of the Oshawa Number 2 plant surprised analysts, who noted that recent surveys rank it as the fourth most productive vehicle assembly plant in North America and the best in terms of initial quality.

Speaking in Detroit, Wagoner also said the St. Catharines powertrain plant on Ontario Street will cease production in 2008.

The closures mean about 3,880 jobs will be lost in Canada. The Oshawa Number 2 plant closure will mean 2,750 jobs will go, while 1,000 jobs will be lost with the end of the third shift at Oshawa Number One plant.

Closure of the powertrain plant in St. Catharines will cost about 130 jobs.

General Motors had about 20,000 employees in Canada prior to the latest cuts.

Canadian Auto Workers president Buzz Hargrove called the cuts "devastating", noting that the fallout will extend to Canadian parts suppliers who feed GM plants.

But he said he was hopeful that early retirement packages and attrition could absorb most or all of the job cuts at GM.

In the United States, the following assembly plants will be closed:

• Oklahoma City, Okla., in early 2006.
• Lansing, Mich., in mid-2006.
• Spring Hill, Tenn., at the end of 2006.
• Doraville, Ga., in 2008.

The third shift at the company's Moraine, Ohio, assembly plant will be cut in 2006.

Other GM plants affected by the cuts include:

• The Lansing, Mich., metal centre closing in 2006.
• The Pittsburgh, Pa., metal centre ending production in 2007.
• A parts distribution centre in Portland, Ore., shutting in 2006.
• A parts distribution centre in St. Louis, Mo., which will be converting to a collision centre in 2006.
• A parts processing centre in Ypsilanti, Mich., closing in 2007.
• One additional parts processing centre, to be named later, shutting in 2007.
• The Flint, Mich., North 3800 engine facility ceasing production in 2008.

GM facing production glut

Wagoner said the closures and shutdowns will cut the company's annual production capacity by one million vehicles to 4.2 million unit a year by 2008.

GM's plants were reported to be operating at 85 per cent capacity, well below the plants of its Asian competitors.

Faced with falling demand and market share, and over-capacity at its manufacturing facilities, Wagoner said GM needed to make cuts.

"These actions are necessary for GM to get its costs in line with our major global competitors," Wagoner told employees.

"In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible," he said.

Wagoner said Monday that GM is aiming to cut its costs by about $7 billion US by the end of 2006. That goal is about $1 billion US higher than its previous target.

GM lost almost $4 billion US through the first nine months of this year as it struggled to cope with its myriad of problems, which include high costs for labour, pensions and health care.

The company's struggles have prompted rumours that GM might file for bankruptcy protection, but Wagoner told employees last week that the company had no such plans.

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GM Canada's $2.5 billion Beacon Project, which is aimed at upgrading its Ontario plants and boosting research, is unaffected by Monday's announcement.

Shares of GM were off almost 2 per cent on the NYSE, dipping 47 cents to $23.58.