GM delays closure of Oshawa plant to 2016

General Motors announced Thursday that one of two Oshawa assembly plants scheduled to close next summer will stay open until 2016.

The automaker says it is extending production at its consolidated line two years longer than expected to meet projected demand for the Chevrolet's Impala and Equinox models, securing about 700 jobs until 2016.

The Oshawa assembly plant, which employs around 3,500 workers in total, runs two assembly lines. The flexible manufacturing line is currently building the 2014 Chevrolet Impala, Chevrolet Camaro, Buick Regal and Cadillac XTS.

Jerry Dias, national president of Unifor, formerly the Canadian Auto Workers union, says the move shows that the skills and efficiency of the workers at that plant make it worth keeping open.

The plant won the J.D. Power Silver Plant Assembly Line Quality Award earlier this month, prompting some observers to express surprise at the fact that GM planned to close the plant despite winning a top award for performance.

Last month, the federal government sold a quarter of its remaining shares in GM, which it received after giving the automaker a $8 billion cash injection in 2009. One of the conditions of the bailout was that GM was required to keep part of its production in Canada.

Slow sales decline

While the company's Canadian production has been granted a slight reprieve, GM's Canadian sales continue to fall.

According to analyst Dennis DesRosiers, GM's market share has fallen from 22.4 per cent in the third quarter of 2008 to just 12.5 per cent in the most recent quarter.

While most analysts blame the company's bankruptcy and restructuring, DesRosiers say there were other factors at play. One of the most significant was the loss of several key brands, including Pontiac, which was discontinued.

The brand was a major seller in Canada, capturing 7.1 per cent of the market in 2005. The elimination of brands such as Saturn and Oldsmobile also led to the closure of many GM dealerships, according to DesRosiers. Between 2007 and 2010, 271 Canadian dealerships closed their doors.

GM's lost market share ended up going to other U.S. automakers. Desrosiers said it is split between Ford and Chrysler, both of which now have a bigger piece of the Canadian auto market than GM.

General Motors currently employs more than 9,000 people across Canada.