Ontario Confident GM's Plant Closing Won't Start Broader Exodus

(Bloomberg) -- The Ontario government is confident General Motors Co.’s plan to end production at one of its plants in Canada will be an isolated incident and won’t be followed by other manufacturers, the province’s finance minister said.

In an interview Thursday with Bloomberg News in New York, Ontario Finance Minister Vic Fedeli said his government has a “comfort level” that the Oshawa plant closing won’t snowball, either to other companies or additional GM facilities. Ontario Premier Doug Ford has spoken to executives from all the manufacturers in the province, Fedeli said.

“He has a level of certainty from them of stability,” Fedeli said of Ford’s conversations with GM and other automakers about “shoring up” their facilities. “We’re comfortable for the time being that, should all else be equal, we are where we need to be.”

The shutdown of GM’s Oshawa plant at the end of 2019 will affect about 2,900 hourly and salaried workers. This has raised concerns about the industry’s viability in Canada at a time when manufacturers are shifting investments to lower-cost countries including Mexico. The sector employs more than 100,000 workers in the province.

Automaking has plunged in the last decade, with output at the GM plant alone down 59 percent, or 570,000 units, since 2004, according to BMO Capital Markets estimates. The factory, which makes cars including the Chevrolet Impala, accounts for just 5 percent of production in the province, compared with more than 21 percent for the Honda Motor Co. plant in Alliston, Ontario, and 12 percent for the Ford Motor Co. plant in Oakville.

As for the Oshawa plant, GM appears to be “very definitive” about shutting it down, and the government will assist workers, Fedeli said. Premier Ford said earlier this week that the company was unlikely to change its mind.

“We’re being pragmatic about it,” he said.

--With assistance from Esteban Duarte.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Craig Trudell, Melinda Grenier

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