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General Motors makes no promises on Oshawa’s future

General Motors Chief Executive Officer Mary Barra and Executive Vice President and President of North America Alan Batey introduce the 2016 Chevrolet Volt at the North American International Auto Show in Cobo Center in Downtown Detroit Monday Jan. 12, 2015.

Tanya Moutzalias/AP

General Motors Co. said it remains committed to Canadian investments, but did not make specific promises about the future of its Oshawa operations or requests for government assistance for Oshawa, Ontario Economic Development Minister Brad Duguid said Wednesday after a meeting with GM chief executive officer Mary Barra.

Mr. Duguid and federal Industry Minister James Moore met with Ms. Barra and General Motors of Canada Ltd. president Steve Carlisle in Detroit amid fears that the auto maker plans to stop building vehicles in Oshawa later this decade.

"I am more optimistic having met with Mary Barra and Steve Carlisle today than I would have been prior to that meeting," Mr. Duguid said. "We're determined to land a future mandate for that plant."

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The GM executives and the Canadian cabinet ministers discussed how they can work together on future opportunities at GM's operations in Oshawa, Ingersoll, Ont., and St. Catharines, Ont., Mr. Carlisle said in a statement.

"We underscored our ongoing commitment to Canada, which is one of our most important markets and high-quality manufacturing locations," he said.

Jake Enwright, a spokesman for Mr. Moore, said the meeting was positive and the federal government looks forward to working with GM.

Questions about the future of the Oshawa operations have arisen because GM has allocated no new vehicles to one of the assembly plants that will replace vehicles that are being discontinued or shifted elsewhere. The other Oshawa plant is scheduled to close in 2016, the same year a production commitment GM made in 2009 expires.

Mr. Duguid said Oshawa's future is his No. 1 concern in the auto sector.

The key issue for GM and other auto makers is the cost of producing vehicles in Canada as assembly grows dramatically in lower-cost countries.

The costs of electricity, regulation, labour and transportation of finished vehicles to markets are among the factors.

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Contract negotiations between the United Auto Workers union and the auto maker about its U.S. plants will be held this year. Auto makers typically compare the labour costs of their U.S. plants with their Canadian operations when it comes to investment. The UAW-GM negotiations will be followed by talks between the company and the Unifor union in 2016.

Unifor president Jerry Dias said the drop in the value of the Canadian dollar improves the company's cost position in Canada.

Ms. Barra said last week, however, that currency fluctuations will have no impact on production decisions. She called the drop in the loonie a fluctuation.

Canadian Imperial Bank of Commerce economists Avery Shenfeld and Andrew Grantham noted that comment Wednesday in a report on the impact of the drop in the value of the dollar.

The currency needs to stay in the 80-cent (U.S.) to 85-cent range for several years before all the benefits of the lower currency show up in manufacturing, they said.

Mr. Shenfeld said he disagrees that the drop in the currency is a fluctuation if that word is taken to mean a short-term fall.

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"While the weakness in oil won't be permanent, we were already destined to see a significant and lasting move to a weaker Canadian dollar from what prevailed in the 2010-to-2013 period," he said in an e-mail response to questions.

Mr. Dias, whose union represents about 3,600 workers at the two Oshawa assembly plants, said the union heard about the currency regularly from executives of the Detroit Three auto makers when the dollar was climbing to par and higher against its U.S. counterpart, so the companies need to recognize how the lower value of the currency will help them.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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