GM Canada To Cut Nearly 6,000 Jobs

Automaker’s Canadian arm says it will reduce its hourly workforce from 10,300 currently to 4,400 over the next five years as part of a broad restructuring plan.

TORONTO (CP) -- General Motors Canada will slash its workforce by more than half by 2014 and close as many as 310 dealerships by the end of next year as part of a broad restructuring plan announced by the company Monday.

The troubled company's Canadian arm will reduce its hourly workforce by 57 per cent, from 10,300 currently to 4,400 over the next five years. The company employed 20,000 Canadians as recently as 2005.

Many of the 5,900 jobs being eliminated under Monday's latest streamlining plans by GM and its parent company, General Motors Corp. had been announced in the last year. At the time, GM Canada revealed it would close its pickup truck plant in Oshawa this spring, with the loss of 2,600 jobs, and its transmission plant in the southwestern Ontario city of Windsor next year, with another 1,400 job cuts.

An unspecified number of white collar jobs were also put on the chopping block last year as the Oshawa-based automaker tried to reduce operating costs to cope with reduced car sales and mounting losses.

Although GM Canada said previously it would reduce its workforce to about 7,000 employees by next year, the new retrenching effort announced Monday suggests further layoffs are coming, perhaps as many as 2,000. But since they will occur over the next five years, that suggests they can be done through attrition and early retirements.

Meanwhile, a spokesman for the Canadian Automobile Dealers Association estimated that the dealership closures -- from 705 today to between 395 and 425 by the end of next year -- could affect another 12,000 Canadians.

The company said it also plans further cuts to its white-collar workforce.

The announcement by General Motors Canada came as the company's Detroit-based parent, General Motors Corp., said it would cut 21,000 U.S. factory jobs by next year, phase out its storied Pontiac brand and ask the government to take stock in exchange for half of GM's government debt. About 7,000 of those cuts appear to be new.

The company released its new restructuring plan after governments in Canada and the U.S. said its previous plan was insufficient for the company to receive long-term government aid. GM has until the end of May to get its new plan approved so it can continue receiving billions of dollars in government assistance.

GM Canada said the new plan will moves "faster and deeper" than its previous one and will "speed the reinvention of the company's operations into a more customer-focused, leaner, and more cost-competitive automaker."

The company also said it plans "further discussion" with the Canadian Auto Workers and will likely ask the union to provide it with the same concessions it gave Chrysler in a deal ratified this weekend.

That deal cut Chrysler's labour costs by $19 an hour, while an earlier agreement between the CAW and GM cut that company's labour costs by about $7 an hour.

While neither agreement cut workers' base wages, the Chrysler agreement makes substantially deeper cuts to benefits, including reductions in paid relief time, cuts to some supplementary unemployment benefits, increases to prescription drug fees, and the elimination of semi-private hospital coverage, an employee car purchase program and tuition rebate programs, among other things.

"The achievement of these competitive labour costs together with capacity reductions will enable (GM Canada's) active hourly labour costs to drop by 50 per cent from US$1 billion in 2008 to US$500 million by 2010," the company stated.

In one piece of good news, GM Canada will launch three of six new products at its Oshawa car plant and the CAMI joint-venture factory in Ingersoll, Ont. the company runs with Japanese carmaker Suzuki.

These will include the Chevrolet Camaro, the Chevrolet Equinox and the GMC Terrain.

The Ingersoll plant currently produces the Pontiac Torrent, which will be phased out along with the rest of the Pontiac brand, but GM Canada spokesman Stew Low said the Torrent would be replaced with the new GMC Terrain.

"This has been planned for some time and naturally fits with our core brand strategy," Low said.

GM said it expects to capture between 16 and 17 per cent of the market between 2010 and 2014. The new plan lowers GM's break-even point in North America to an annual U.S. sales volume of 10 million vehicles, the company said. That's slightly more than the current sales rate, and most economists expect an uptick in the second half of the year.

In the U.S., GM said it would speed up six additional factory closings that were announced in February and said more salaried job cuts are coming.

Including previously announced plant closures, the restructuring will leave GM with 34 U.S. factories at the end of next year, down from 47 at the end of 2008.

The company also said it plans to thin its U.S. dealership ranks by 42 per cent from 2008 to 2010, cutting them from 6,246 to 3,605.

GM said it would phase out its storied Pontiac brand no later than next year, and the futures of its Hummer, Saturn and Saab brands will be resolved by the end of this year by either selling them or phasing them out.

GM Canada currently employs 10,300 hourly workers and 2,000 white-collar employees at car and truck plants in Oshawa, a transmission plant in Windsor and an engine plant in St. Catharines, Ont. It also operates the GM-Suzuki joint-venture CAMI plant in Ingersoll.

The truck plant is slated to close May 14 and the transmission plant will close in 2010.

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