U.S. strike against GM threatens Canadian plants

As 49,000 United Auto Workers in the U.S. strike against General Motors, there’s a risk the walkout could shut down GM Canada’s plants and auto-parts makers in Ontario.

GM Canada says it is monitoring the situation closely for any impact to Canadian operations.

The North American auto industry is highly integrated, with assembly plants here in Canada reliant on parts coming from the U.S. and Mexico.

GM has three plants in Ontario, assembly plants in Ingersoll and Oshawa and an engine and transmission plant in St. Catharines.

Because the auto supply chain is integrated, Canadian plants could soon be unable to continue working because of a shortage of parts. GM Canada did not say how soon Canadian plants might be affected.

But it could happen quickly. GM uses “just-in-time” delivery, which means hundreds of parts are moving across the border every day.

If the engines or transmissions St. Catharines is building are destined for cars assembled in the U.S., the plant may have to slow or stop operations. Similarly, if the assembly plants are depending on parts from the U.S., they may have to halt operations.

GM has not said how many days of parts it has in reserve.

It would be about two months before auto dealerships are affected by a shortage of product, according to the parent company.

Different union, different contract schedule

Canadian workers are represented by a different union, Unifor, and its contract schedule is different from the U.S. Contracts do not expire until September 2020 and September 2021.

But Unifor issued a statement on Sunday saying it “supports the UAW in negotiations for a fair contract settlement with General Motors.”

“The union advocates for all working people and their rights, fights for equality and social justice in Canada and abroad, and strives to create progressive change for a better future,” the statement continued.

GM’s Oshawa assembly plant is set to close at the end of the year, one of five plants in North America that the auto giant is closing.

That is one of the key issues for the UAW in the U.S., which is pressing GM to schedule new models for the four U.S. plants it is closing.

Unifor has pressed GM Canada unsuccessfully to extend the life of the Oshawa plant, arguing the automaker made a commitment to at least 2020 when it accepted the 2008 government bailout.

GM is negotiating a shift toward more electric cars and investing heavily in automation, considered among the key trends in the auto industry.

North American car sales have boomed in the past three years, but are stagnating this year as young consumers put off owning vehicles.

But GM made $10.8 billion in pretax profit in 2018 and the UAW is arguing it deserves a wage hike and better benefits to share in the good fortune.

Much depends on length of strike

The last strike by the UAW was in 2007, and it only lasted 17 hours, so there was not much impact on Canadian operations.

Before that a strike at just two major parts plants in Flint, Mich., in 1998 that lasted 54 days eventually shut down much of GM’s North American operations.

Such a strike could have a big impact on Canadian workers. But it might not significantly affect the Canadian and U.S. economy.

If the strike lasts to the end of September, it would take only 0.1 per cent off annualized U.S. GDP growth in the third quarter, according to CIBC economist Avery Shenfeld.

“Impacts on Canada would be even more modest. Just to give a sense of scale, in the unlikely case where the strike lasts through [the fourth quarter] in its entirety, it would subtract a more meaningful 0.7 per cent off that quarter’s annualized pace in the U.S., and take a bit of a shine off Canada as well.”

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