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GM closing all operations in Oshawa, Ontario: sources
- hourislate 8y agoI understand Ontario has very high electrical rates and labor rates. There is also the issue of the Federal Governments new Cap and Trade policy although I don't know if GM received a waiver. Did these things maybe cause GM to close the plant?
- FractalParadigm 8y agoThe cap and trade system was done away with by our current government in a populist bid to "reduce the price of gas" (and unsurprisingly, gas prices didn't change with the removal of the program). Our Hydro prices are about middle-of-the-road in North America. We have a tiered-use system that sees prices as high as 13.2¢/kWh On-Peak (during the day) and 6.5¢/kWh Off-peak (at night), with an average around 8-9¢/kWh IIRC. Far from expensive, but when everyone compares our prices to Quebec (one of the cheapest in NA and is something around 4¢/kWh average IIRC) it seems astronomical. Labour rates generally aren't too crazy either, we do have a relatively high minimum wage of $14/hr, but when unions start to run the show and wages become "competitive" it starts getting out of hand. Cami is in my hometown and IIRC the average employee takes home something around $35/hr. Toyota in Woodstock and Cambridge are over $35/hr at their highest rate, even though they aren't unionized, but they still have to pay competitive wages or they'd never have enough employees. A lot of the feeder plants (i.e. the places that make components; engines, doors, etc) are in the $20-25/hr range and they have an astronomically high turnover rate, nobody wants to do the work unless there's huge money involved. I'm wondering if this is the reason; why pay thousands of ungrateful employees >$30/hr for work that can be done for <$10/hr virtually anywhere else on the planet? Even by the time you factor in the costs of shipping vehicles it's gotta be thousands of dollars cheaper per-vehicle. It can't be easy to justify the cost to shareholders unless the (monetary) benefits massively outweigh the cons
- vkou 8y ago> I'm wondering if this is the reason; why pay thousands of ungrateful employees >$30/hr for work that can be done for <$10/hr virtually anywhere else on the planet Because if everyone does this, you wouldn't have any customers that can afford to buy your $35-$70,000 cars.
- sheepmullet 8y ago> and they have an astronomically high turnover rate, nobody wants to do the work unless there's huge money involved. Maybe because Ontario has ridiculous housing costs? Id be happy to work for $15/hr if I could get a decent 3 bedroom house for $70-80k. I mean seriously mortgage costs + $11/hr on top and I would be happy. Yet even somewhere like London it will cost 400k+ and just forget about Toronto.
- wenc 8y ago> decent 3 bedroom house for $70-80k These seem like unusual expectations. Are there any decent areas anywhere in the country with these kinds of prices? That seems abnormally low. Also a $15 wage single income isn't supposed to support a 3bd house.
- sonaltr 8y ago> and unsurprisingly, gas prices didn't change with the removal of the program While that might not be completely true...gas prices are down. I'm talking $1.45 to $0.99 / L. As someone who drives ~ 3 hrs a day (and all my friends do too) - We do appreciate the reduction in the gas price.
- alexsb92 8y agoBut is the bulk of that lowered cost due to the removal of the cap and trade, or is it mostly unrelated? I'll be the first to admit that I'm not sure, but looking at the average gas price in Ontario (no cap and trade), Quebec (cap and trade) and Canada on [1], the same kinda of savings existed all around, so we can't really credit the removal of the cap and trade. Overlaying the price of cure, it does seem to have had more to do with the massive price drop in crude. [1] - https://www.gasbuddy.com/Charts https://www.gasbuddy.com/Charts
- the_unknown 8y agoMillions in gov't subsidies, a major bailout in 2009 that saved their company, non-stop threats of closure and ongoing clawbacks of manufacturing. And in the end... up and out. Obviously it is GM's prerogative and can do as they please but it is time for politicians to stop falling for the folly. Just like your stocks and mutual funds - diversify your industries and don't rely on one big player.
- walrus01 8y agoThe North American auto industry essentially held the Canadian and US governments for ransom in the 2008-2009 financial crisis, "bail us out or we'll go belly up completely, and look how many people will be unemployed!".
- WrtCdEvrydy 8y agoWe should have let it happen. That money could have been funneled into social services instead of propping up industries. You played and lost, you don't get my tax dollars.
- walrus01 8y agoYes, agreed. They should have gone chapter 7 and the canadian equivalent in bankruptcy law. Some foreign buyer would have bought up the assets worth buying, and made better cars. Maybe 1/3 to 1/2 of the workforce could have been re-hired, the government bailout money could be spent on retraining and supporting the remaining 2/3 to 1/2 of the workforce.
- sonnyblarney 8y ago"They should have gone chapter 7 and the canadian equivalent in bankruptcy law. Some foreign buyer would have bought up the assets worth buying, and made better cars. " It's very unlikely. A) Plants are tooled for a specific car, often to platforms that are company specific. B) There is a reason GM is shutting it down, and other companies are probably in the same set of circumstances. C) Do you think company A wants to buy company B's powerful Union? Uhhh, no! It's not entirely rocket science to train people to make cars.
- protomok 8y agoI'm curious what the impact will be for GM tech workers. IIRC they hired a bunch of software devs in Markham and Oshawa over the last few years
- johnohara 8y agoSlowing sales of pickup trucks and sedans -- Silverado and Impala in particular. Ford recently announced ceasing production of all sedans in favor of SUV's. GM said it wouldn't follow suit but it looks like the market might be dictating terms.
- johnohara 8y agoOddly enough, the Equinox uses the same V6 engine as the Impala and Cadillac. I guess it comes down to how you use the vehicle and not how you power it. The 3.6L V6 VVT is a good engine too -- reliable, 300+ hp, 30+ mpg hwy, etc. Built in Detroit even though the vehicles are assembled in Oshawa. This shutdown is a bellwether, not just a cost move.
- markvdb 8y agoVery much off topic: 3.6l is >2 times more cylinder volume than useful in >95% of scenarios. Pick your favorite reason to minimise your crude oil consumption. Global warming and not subsidising oil despots are two good ones to me.
- OldManAndTheCpp 8y agoIn order to show that the engines are wastefully large, you first have to show how a smaller engine provides better fuel efficiency over the 95% range, and then show how the remaining 5% is unimportant. For example, if the big engine is 5% less efficient over the power range of the little engine, but the increased max power it provides allows you to accelerate out of getting stuck in the snow, or travel at safe speeds up mountain roads, reasonable people might decide that the trade offs are acceptable.
- slededit 8y agoHave you ever seen a muscle car in the snow? A big engine in a car is practical for nothing except having fun. That’s why my car has 300hp and my next will as well. But I don’t pretend I’m saving the environment or that it’s practical.
- grecy 8y agoIts interesting to see so many here have the opinion that the subsidies were wasted and the governments should have let GM fail, not spend taxpayer dollars to bail them out. And yet, most on HN seem perfectly happy to give Amazon huge tax breaks to setup in NY, which is exactly the same thing.
- Jedi72 8y agoMy impression was that HN largely felt that the tax breaks were unnecessary and pointless. Maybe I misread?
- grecy 8y agoThe highest comment in that discussion thread said it was good, and I got a lot of arguments when I disagreed. Thread here https://news.ycombinator.com/item?id=18454215 https://news.ycombinator.com/item?id=18454215
- int_19h 8y agoIt's not exactly the same, though. Bailout uses the money that government already has, and that could be used on something else. Tax break is using the money that you don't have yet - and, crucially, will only have if the company actually is there!
- throwawaythekey 8y agoYou are forgoing the tax revenue that would've been earned by the workers as well as any benefits that they claim. In Australia it was estimated that each auto job produces 6 other jobs through network effects [1]. All up that number would be fairly substantial and likely enough to justify some subsidies/bailouts. [1] - https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Automotive_industry_2014/~/media/Committees/economics_ctte/Automotive_industry_2014/Interim_Report/d03a.pdf https://www.aph.gov.au/Parliamentary_Business/Committees/Sen...
- tanilama 8y agoNot necessarily, the government might not have that money, they will likely raise debt to do so. It is technically not the tax payers money
- joecool1029 8y agoMy former SO lives in Oshawa and I spent a lot of time there. I got to know a few people that worked at the factory. GM announced they were going to pull out of Oshawa more than 5 years ago. They've been operating on borrowed time. Nobody there will be surprised at the news. From what I recall it was mostly impala and camaro assembly happening there. The GO train takes you right into Toronto, there's no doubt in my mind most of the laidoff will find work.
- esturk 8y agoGovernments should wise up when the next bailout happens. Seek collateral on the company via shares or some other valuable goods that are not easy to shed. Enforce some board member, etc. For all the criticism Chinese tech companies get, the main control the Chinese government has is by being the largest shareholder of said companies. If the company does something that jeopardizes the stability of society, just enforce control. Every sizable Chinese company has a party secretary for the very same reason.
- mdasen 8y agoIt's hard to say that GM made out in the bailout. Shareholders were 100% wiped out. It's not as if some fat-cat shareholders did well while laying people off. Anyone who owned stock in old-GM lost it all. It should also be noted that the US ended up owning 60.8% of new-GM while Canada owned 11.7% and the unions' benefit fund owned 17.5% with the unsecured bondholders owning the remaining 10%. I know that it's easy to hate on the bailouts. People think money was given as a gift rather than the loans and ownership stakes which were what actually happened.
- AmVess 8y agoThe bailout cost tax payers $16 billion which has not been repaid. Nothing says gift louder than that. In the meantime, they have been offshoring production of parts and vehicles like no one's business. I looked at a new full size truck, and it had 45% domestic content. Most of it is built in China and Mexico. The Ford that I purchased has 75% domestic content.
- mdasen 8y agoYep, the government did take a loss on GM. Sometimes investments don't pan out. Investments still aren't gifts. If it was a gift, who was it a gift to? It wasn't a gift to GM shareholders who received none of it. If the bad-guy in this situation is greedy shareholders looking to layoff workers, they didn't get the government's money. One can certainly argue against the investment. However, it's hard to say it's a gift. Who was the recipient of that gift? If anything, it would have to be the workers who didn't face mass-unemployment in the wake of a crumbling auto industry. If the government hadn't bought GM's assets, workers would have been out of jobs very quickly. During the economic crisis, no one had the available capital to take on that risk. The government's investment meant that most of those workers saw stability (or as close to that as could be had). If you're on the workers' side, the government bailout is the side you need to be on. Shareholders lost everything while workers (for the most part) kept their jobs and benefits. Yes, there have been layoffs and contract re-negotiations, but that's nothing compared to the chaos of tens of thousands of people suddenly jobless concentrated in areas that don't have a lot of other employers (and during an economic crisis). That doesn't mean that everything is perfect. However, the bailout benefitted workers, not shareholders who lost everything.
- ilamont 8y agoFor those critical of the 2008-2009 bailouts, GM or any other automaker with manufacturing operations in North America going belly up would have contributed to an even larger disaster. It's not just the main plants that would be affected, but also the entire supply chain - from mom & pop shops up to the big component manufacturers located in clusters across the country, not to mention GE, National Instruments, Intel, and myriad manufacturing-focused startups.
- mdgrech23 8y agoThe short term impact of letting the automakers fail would have been rough but in the long term we would have ended up with a more competitive economy.
- lawnchair_larry 8y agoThat’s quite a bold claim. You must be one hell of an economist to just assert something like that.
- tonyedgecombe 8y agoIt's not hard to see that proving up failing businesses leads to inefficiency. Why bother making a more competitive product if you know the government will save you with bailouts or tariffs.
- joshstrange 8y agoTo be fair (and I really don't have a dog in this race) > GM or any other automaker with manufacturing operations in North America going belly up would have contributed to an even larger disaster Is an equally bold claim and is often asserted without citing a single thing.
- cryptonector 8y agoIt's a standard position for Chicago or Austrian school economists. It's also how every crisis was handled until the Great Depression. Then we resorted to massive intervention to prevent liquidation. This experiment was repeated in the 90s in Japan, leading to two lost decades of economic growth. We don't seem to want to learn.
- pfarnsworth 8y agoSince Elon Musk is Canadian, maybe Tesla will buy the operations and start building Teslas in Oshawa?
- CamperBob2 8y agoHe's from South Africa, IIRC.
- pfarnsworth 8y agoHe has Canadian citizenship (along with South Africa and US) and went to college at Queen's University in Canada.
- CamperBob2 8y agoInteresting. You don't encounter people who hold triple citizenship all that often here in the US.
- wenc 8y agoElon Musk inherited Canadian citizenship from his mother, and it was also what allowed him to move to North America. (source: Ashlee Vance's bio)
- otoburb 8y agoHe attended Queen's for two years and then transferred to University of Pennsylvannia to complete his bachelor's degrees in economics and physics.[1] [1] https://en.wikipedia.org/wiki/Elon_Musk https://en.wikipedia.org/wiki/Elon_Musk
- rchaud 8y agoI'm sure he'll tweet something that appears reasonably compassionate, half-suggest a solution, enjoy the resulting media speculation, and then move on to the next thing.
- evandijk70 8y agoMost people posting here say that the US/Canadian government should interfere here. I'd like to present a different point of view: I am relatively young, from the Netherlands and started my job a few years ago. I do not really remember the 2008/2009 bailouts. I have some savings, and I invested mostly in a Dutch ETF, which lead to a nice mix of tech, finance, Food Industry and a big oil company. I invested a small portion of my money in GM because I did not have a car manufacturer in my portfolio, and Tesla seemed hyped to me. I considered that GM is making a profit, betting on electric cars and already has an affordable model on the roads that could actually benefit society. I do not care wheter GM production is in the US, Canada, Mexico or China, as long as the employees are treated fairly. In fact, I would think it is unfair that GM makes a choice that will lead to lower dividends and is held back by something that happened prior to the moment that I invested in it.
- swarnie_ 8y agoI was in almost the exact same situation as you; young, European and looking for a car maker to round out that part of my portfolio. I opt'ed for VW as it was very cheap after the scandal and had some of the best brands in the business. Why did you pick GM instead?
- evandijk70 8y agoI had two reasons: 1. The scandal itself. I do not want to support a company that has a proven record of not caring about the environment. I understand that this probably applies to all car companies, but VW is the only one that got caught. Getting caught circumventing environmental laws should be something that CEO's are afraid of, and this is an easy way to contribute to that fear. I would not buy a VW for the same reason. 2. I wanted to diversify outside of the EU. The Dutch and German economy are very connected, which would make my portfolio very vulnerable to a recession in either of those two countries.
- ericzawo 8y agoHow could you possibly say point 1 while also being a big oil shareholder?
- brightball 8y agoThe most shocking part of this to me is that they are cutting the Volt? There was so much R&D in that car and it's such an amazing vehicle that I'm shocked. Everybody I know that has one LOVES it. They just need to do a better job of advertising it. It's not advertised AT ALL. The only people who know about it know about it from word of mouth and research.
- giarc 8y agoI see no evidence of that in the article posted, nor Google News results. The Volt is not made in Oshawa either.
- pp19dd 8y agoThe linked story is just a slice of the larger story, obviously tailored to be more significant for a Canadian audience. But the larger story [Reuters report] involves a major restructuring. "GM is expected to announce it will cut the Chevrolet Volt, Impala and Cruze, the Cadillac CT6 and XTS, and the Buick LaCrosse" More info at https://www.reuters.com/article/us-gm-restructuring/gm-to-cut-car-production-in-north-america-halt-some-models-source-idUSKCN1NV1NB https://www.reuters.com/article/us-gm-restructuring/gm-to-cu...
- del82 8y agoThe linked story seems to have been updated to remove references to the Volt being cut: "The company also plans to stop building several models now assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse."
- brightball 8y agoCool. That didn't make any sense.
- pp19dd 8y agoYep, they updated it and removed all that specificity since it was attributed to an anonymous source. However, it doesn't mean it's not true yet. Until details come out, I think they're going to try to control the message tightly to make it sound like a possible ending of The Volt is not a regressive move. Or they'll keep throwing money down that well. And yes, it's not like they're moving back toward the steam engine, but in the short run it might make sense to kill the Volt and do something else. But the optics of it will look bad. Think Reuters got tripped up by the "increase investment in electric and autonomous vehicles and connected vehicle technology" line because it's broad and potentially conflicting. Here's a selection of top "Chevy Volt" headlines for the past few years: 2015: "Yes the 2016 Chevy Volt Will be Profitable." 2016: "GM Will Lose Money on the Chevy Bolt to Make Money On Other Models" 2017: "GM trims battery costs, aims to make profitable EVs" 2018: "GM races to build a formula for profitable electric cars." In the larger sense, GM's leadership has been sending some weird messages talking about a future they don't fully understand. Spouting things like blockchain, autonomous, ride sharing, and future profitability being tied to selling customer information. You know, all the apparently popular contemporary trends. They're a car company.
- jammygit 8y agoWhat other auto companies manufacture in Ontario? Toyota? Its so awful when you lose your job because the job goes away. So many people are going to have to retrain.
- slededit 8y agoFord has a plant in Oakville.
- SamuelAdams 8y agoGM's statement from today: https://media.gm.com/media/us/en/gm/home.detail.html/content/Pages/news/us/en/2018/nov/1126-gm.html https://media.gm.com/media/us/en/gm/home.detail.html/content... "Today, GM is continuing to take proactive steps to improve overall business performance including the reorganization of its global product development staffs, the realignment of its manufacturing capacity and a reduction of salaried workforce." ... Increasing capacity utilization – In the past four years, GM has refocused capital and resources to support the growth of its crossovers, SUVs and trucks, adding shifts and investing $6.6 billion in U.S. plants that have created or maintained 17,600 jobs. With changing customer preferences in the U.S. and in response to market-related volume declines in cars, future products will be allocated to fewer plants next year. Assembly plants that will be unallocated in 2019 include: Oshawa Assembly in Oshawa, Ontario, Canada. Detroit-Hamtramck Assembly in Detroit. Lordstown Assembly in Warren, Ohio. Propulsion plants that will be unallocated in 2019 include: Baltimore Operations in White Marsh, Maryland. Warren Transmission Operations in Warren, Michigan.
- microcolonel 8y agoI wonder what will happen to the wetland next to their Oshawa offices, IIRC they at least partially maintain it.
- Overtonwindow 8y agoAbout time… I never understood this car. It was way overpriced for the market, and didn’t seem to offer many advantages over the Prius.