“We shouldn’t let go of the manufacturing capacity we have there,” said Tony Leah, who worked at the plant for 39 years before having to retire in early December. He’s part of a campaign advocating for government to take over the plant and produce electric vehicles.
The end of production at the plant, which assembled vehicles such as the GMC Silverado and Chevy Impala in the final years of its 66-year run, comes at a time of change and uncertainty in the auto industry as it grapples with slowing sales, trade disputes and the steep costs of transitioning production to electric and autonomous vehicles.
Analysts say that in this environment, there’s no clear path ahead for the Oshawa facility or Canada’s auto sector more generally, and it will have to be prepared to fight for the next generation of product commitments needed to sustain itself.
“It’s a very difficult task that Canada has,” said Joe McCabe, president of AutoForecast Solutions.
“But if they focus on the next evolution of the industry, which is this electrification and autonomy, I think that’s a stronger, long-term sustainable play for the Canadian space.”
McCabe sees conventional auto production in Canada as stable at best going forward, if not declining. The sector has already seen cutbacks in the past year at Ford’s Oakville, Ont., plant, Fiat Chrysler’s Windsor, Ont., plant, and of course GM’s Oshawa assembly plant.
He said the best bet for a major investment could be a new entrant, maybe from China, looking to get a North American foothold, but that it will take hard work and big money to lure a new plant to the province.
“The manufacturers have to be incentivized somehow to want to put that flag there.”
China-based Johnson Electric committed in late 2017 to invest more than $350 million in new equipment and capacity in the province focused largely on electric vehicle components, while the Ontario government agreed to chip in $24.1 million. BYD Co. Ltd. also committed to building electric buses in Ontario at the time, though financial details weren’t disclosed.
U.S. investments, meanwhile, will be hard to come by in the near term, said Kristin Dziczek, vice president of industry, labour and economics at the Center for Automotive Research.
“Right now, investments of any type, in the political environment we’re in, any investment outside the U.S. draws scrutiny.”
But while Canada’s auto industry hasn’t seen the major investments made in the U.S., like GM’s announcement of a US$2.3-billion battery plant in Ohio and billions of dollars to build an all-new electric pickup truck in Detroit, it should still see increases in electric production, said Dziczek.
Most companies will be ramping up from very low levels, while Toyota is expected to have the most production with a 77 per cent increase to 107,000 units by 2023.
The company says hybrid models of its RAV4 and Lexus RX already account for more than 20 per cent of its Canadian production, and that it will also start producing the Lexus NX hybrid in 2022.
“We’ve made significant investments in our facilities to enable them to produce electrified vehicles,” said Stephanie Pollard, vice president of Toyota Motor Manufacturing Canada, in a statement.
Green Jobs Oshawa, the group Leah is a part of, would like to see the Oshawa plant also get into the electric race, with an aim to produce about 150,000 electric vehicles over five years focusing on postal trucks and other federal vehicles.
While great in theory, the chances of it happening are slim to none, said Unifor president Jerry Dias.
“That would be wonderful, but it’s not going to happen.”
Instead, Dias is focused on making sure GM maintains the integrity of the plant and invests in the test track it has promised, so the plant is ready for potential future production that could be lured there by the advanced infrastructure in the area.
“If GM is going to have a test track to use to test out their autonomous and electric vehicles, that will be designed and engineered in Markham, the natural next step is, why wouldn’t you build a car?”
GM has committed $170 million to transform the plant into an auto parts manufacturing operation and build the track, but it hasn’t made any commitments to future vehicle production. It has focused lately more on its technology research and development in the region.
“In times of change, it’s best to focus on the future,” said Scott Bell, president and managing director of GM Canada in a letter on the plant’s closure.
Electric vehicle commitments are just one of the many issues Dias will take into contract negotiations next year with the Detroit three automakers. Electric vehicles remain a sliver of the market, and could still be only about five per cent of sales in 2025, according to Unifor’s estimates.
But it will certainly be an increasingly pressing issue going forward. Management consultant AlixPartners estimates automakers globally will be spending US$255 billion in research, design and capital expenditures and roll out some 207 electric models by 2022.
“It’s inevitable, it’s happening, and so you want to be on the forefront of that, you don’t want to be lagging behind,” said Dias.
He said government will need to work with industry to lure new commitments for the next generation of automobile assembly to keep a bedrock of Ontario’s economy healthy.
“All of the auto companies are talking about the inevitable transformation, and I agree with them, there will be an inevitable transformation. The question becomes, what’s Canada’s role in the transformation.”