Oshawa, Ontario – General Motors of Canada has announced changes to its restructuring plans, including the loss of 5,900 hourly jobs by 2014, following an updated viability plan and bond exchange offer announced by its U.S. parent.
GM Canada Limited (GMCL) said it continues to work closely with the Canadian and Ontario governments and expects to soon complete a short-term bridge loan agreement that will provide additional flexibility as it completes its restructuring. The two governments required the Canadian automaker to provide an updated restructuring plan by May 30, 2009 to be eligible for government financial assistance.
Among the new restructuring plans are the following:
– GMCL will complete the capacity changes already announced and being implemented in Canada, including the closure of a truck plant in Oshawa, Ontario, scheduled for May 14, 2009; closure of a transmission plant in Windsor, Ontario in 2010; and completion of the St. Catharines (Ontario) Competitive Operational Agreement with the CAW, including the November 2005 announcement regarding the closure of the Ontario Street building there.
– GMCL expects further discussion with the CAW concerning the provisions of the new CAW-Chrysler agreement in the days ahead. 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 $500 million by 2010, and remain at the $500 million level into 2014. Further savings have been achieved with salaried wage and benefit reductions, including a 10 per cent pay reduction for GMCL executives starting May 1, 2009. The remainder of the workforce will assume a three to seven per cent reduction in pay starting May 1, 2009. The company will review the status and timing of continuing wage cuts in December 2009.
– GMCL’s workforce changes in Canada will accelerate beyond the changes outlined in its restructuring plan of February 20, with the hourly workforce expected to go from 10,300 in 2008, to 4,400 in 2014. In addition, GMCL is undertaking further reductions in salaried employees, and will review overall employment levels with government as part of its overall restructuring plan.
– GMCL will follow the same plan of four core brands (Chevrolet, Buick, Cadillac and GMC) as with its U.S. parent.
– GM Canada will reduce its dealer network from 705 dealers in 2009, to between 395 and 425 dealers at the end of 2010, a 42 per cent drop consistent with that in the U.S. The move is consistent with the announced changes to Saturn, Saab, Hummer and Pontiac brands.
– In line with U.S. market share assumptions, GMCL’s market assumptions call for a projected 18.4 per cent market share in 2009, to a range between 16 and 17 per cent market share in 2010 through 2014.
The company said that despite the capacity reductions, GM Canada remains a critical manufacturing location for GM Corporation, and in 2009 it will launch three of six new GM products in North America, between its Oshawa Car and CAMI facility in Ontario. These include the Chevrolet Camaro, next-generation Chevrolet Equinox, and all-new GMC Terrain.