It’s gotta hurt in some quarters — Oshawa — to hear General Motors CEO Mary Barra crowing about the ongoing refocusing of the automaker.
“We are selling every truck we build,” Barra told analysts on a first-quarter conference call Tuesday morning. Sales of the revamped Chevrolet Silverado and GMC Sierra were up 20 per cent, year over year. Barra placed an emphasis not just on growth, but on showroom stickers. The new truck models are selling at the highest prices ever, Barra said. Nearly $6,000 (U.S.) higher than the outgoing models.
“Outgoing” is code for “Oshawa,” where the plant had once been hard at work on the finishing assembly of the 2018 Sierra and Silverado models. GM HQ had made it clear at the time of its half-billion investment in the Oshawa truck works, which transformed a vastly underused car line to a pickup line, that this was merely a stopgap measure as it transitioned to the assembly of new models. The legacy truck platform, known as K2, would be Oshawa’s. The new generation pickups (T1) would go to Fort Wayne, Ind.
It’s only natural that the CEO would front-end load her comments with positive news, given that GM’s net revenue declined 3.4 per cent to $34.9 billion in the quarter, given “volatility” in China (sales of the Baojun are down markedly; the Onyx went on sale two weeks ago), given uncertainty in Brazil.
The share price slumped. And the promising sales of new truck models didn’t make up for shrinkage in market share, to 15.6 per cent across North America for the three months ended March 31 of this year from 16.3 per cent in the comparable quarter last year.
But GM is positioning this as a looking-forward story, from an all-electric pickup truck to driverless vehicles to Barra’s combative insistence that the company will be the leader in electric and trucks and even kinda sexy (my word) with the planned launch in July of the C8 Corvette. Barra recently rode shotgun through downtown New York in a camouflaged production model, revving up market anticipation for the next generation turbo-car. Speculation runs high that the new marque will pay homage to Zora Arkus-Duntov, the father of the Corvette who once observed that “everybody who liked the Corvette liked driving.” A second shift has been announced for the Bowling Green, Ky., facility, adding 400 jobs. Optimism and happiness reigns.
That GM “transformation for the future” announced last November? The closure of five plants, including Oshawa? That drew little comment Tuesday, aside from being “on track” and “well under way” and “far from over.” The estimated $6 billion in cost savings? As much as $2.5 billion in “transformational” cost savings are expected this year as the business is right-sized and international operations are consolidated. If you want to know where the new money is going, consider this: GM has invested $4.3 billion in the U.S. since the beginning of 2017.
And GM Canada? Rumours have been building for weeks that an announcement will be coming soon about Oshawa, whether that means an extension of operations to the end of 2020 as opposed to the end of this year, or some sort of life line for the stamping operations. Perhaps there will be news on severance. (The contract signed in September 2016, not only failed on the new truck model front, it swept away any defined pension benefits for new hires, replaced with a defined contribution pension plan.) Asked to respond to the rumour that an announcement will be coming Friday, Unifor responded that nothing is confirmed at this time. GM Canada said it was not aware of any planned announcements.
At the time of the November announcement, Barra said she was pushing the company to get “ahead of the curve.”
The response from Unifor president Jerry Dias: “They are not closing our damn plant without a helluva fight.” GM insisted that it was within its rights to shutter the plant at the end of 2019. Protests and walkouts followed, and a media campaign calling for a boycott of GM vehicles with a made-in-Mexico vehicle identification number.
Those actions were suspended as Dias entered into talks with GM. In March, subsequent to a meeting with GM officials in Detroit, Dias said he was hopeful that a positive way forward could be found for Oshawa workers.
In recent weeks: silence.
I may be wrong, but the sense this week is that GM won’t be holding out much for Oshawa. Perhaps it will toss a few bones Unifor’s way to help Jerry Dias save face. That won’t address the long-term future of the once-mighty plant.
And it won’t solve the puzzle of why the Oshawa operation was allowed to deteriorate to a second-tier player in the automaker’s internationally ambitious plans.
Jennifer Wells is a business columnist based in Toronto. Reach her on email: [email protected]
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