GM: No Plans To Speed Up Canadian Plant Closures

Automaker has no plans to speed up plant closures in Canada despite accelerated cuts in the U.S., but analysts say the industry is being forced to make decisions on a ‘day-to-day basis.’

TORONTO (CP) -- General Motors has so far announced no plans to speed up plant closures in Canada despite accelerated cuts in the U.S., but analysts say the auto industry is in such flux it's being forced to make decisions on a "day-to-day basis."

"We have not made any new timing announcements as it relates to Canada," GM Canada spokeswoman Patty Faith said Tuesday.

The automotive giant announced Monday that slumping sales force it to shutter a Michigan metal stamping plant and move up the planned closure of a sport utility vehicle plant in Wisconsin to the end of the year. The closures will put about 2,700 people out of work.

GM had already announced in June that it would close the SUV plant in Janesville, Wis., and three other factories -- including a pickup truck plant in Oshawa, Ont. -- by 2010.

Monday's announcement left the Canadian industry worried that the closure of the Oshawa truck plant, which will put 2,600 people out of work, and a Windsor, Ont., transmission plant, affecting 1,400 workers, would be sped up as well.

Canadian Auto Workers president Ken Lewenza said the union hopes GM will respect the closure agreement at the Oshawa plant, which guaranteed it would stay open until 2009, but he has little faith the company would honor the agreement if it felt closing the plant sooner was in its best interests.

"At the end of the day, they don't consult with us on these particular issues," said Lewenza.

"We're holding our breath."

Richard Cooper, vice-president of Canadian operations for industry research firm J.D. Power and Associates, said it's impossible to determine what will happen next at the beleaguered carmakers.

"It's very difficult to speculate on anything in the automotive industry at the moment," said Cooper.

"I think things are so fluid that companies are having to make decisions almost on a day-to-day basis," he said.

"The one thing you can be sure of is that there's a lot of uncertainty and that we won't know of these decisions well in advance."

U.S. sales by most automakers plunged in September amid high fuel prices and rising financial anxiety. Ford Motor Co., Toyota Motor Corp. and Chrysler LLC all posted drops of more than 30 percent compared with a year ago. Honda Motor Co. reported a 24 percent drop in U.S. sales while General Motors saw its U.S. sales drop 16 percent.

Canadian sales fared better, but the Canadian industry is heavily reliant on the American market, where about 90 percent of vehicles assembled in Canada are sold.

Chris Piper, a business professor at the University of Western Ontario, said he wouldn't be surprised if sales continue to decline, but companies like GM should be wary of reacting too swiftly to what could be a temporary downturn.

"People cannot defer purchasing vehicles indefinitely," said Piper.

"The companies walk a fine line between on the one hand eliminating recurring expenses that are killing them, but on the other hand maintaining flexibility to have the capacity available when the market opens up again."

But Piper said further layoffs and plant closures are still possible in Canada, particularly if reports of a potential acquisition or merger between GM and Chrysler come to fruition.

On Friday night, word leaked that GM had held talks with Chrysler LLC owner Cerberus Capital Management LP, but a merger move has been shelved because of the financial crisis in the U.S.

GM is Canada's largest carmaker, with 19,000 employees and major assembly and parts operations in Oshawa, east of Toronto, St. Catharines in the Niagara region and Windsor in southwestern Ontario. The company also builds vehicles at a plant in southwestern Ontario under a partnership with Japanese carmaker Suzuki.

Chrysler has more than 10,000 Canadian employees but is restructuring to pare that workforce to 8,400 by next year. The company operates a parts plant in Toronto, a car assembly plant in Brampton, northwest of Toronto, and a minivan plant in Windsor.

In more bad news for the Canadian vehicle manufacturing sector, Daimler AG announced Tuesday it will close its Sterling assembly plant in St. Thomas, Ont., pushing another 700 people out of work, in addition to 720 already set to lose their jobs next month.

Industry analysts say closing factories or cutting shifts would help GM reduce costs and preserve cash at a critical time.

GM had $21 billion in cash and $5 billion available through credit lines at the end of June for total liquidity of $26 billion but has been burning up cash at a pace of more than $1 billion a month.

The company announced a plan in July that calls for cutting $10 billion in costs and raising another $5 billion through asset sales and borrowing through 2009.

GM's shares had lost nearly half their value last week and plunged to their lowest level in 59 years, but they jumped $1.62, or 33 percent, to $6.51 Monday. They added another seven cents to $6.58 in early afternoon trading Tuesday.

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