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Canada could escape auto restructuring relatively unscathed: CAW, expert

TORONTO — Both General Motors and Chrysler have released restructuring plans to the U.S. government that include a total of 50,000 layoffs, but an analyst and labour leader say the companies' Canadian operations could emerge relatively unscathed from the latest round of cuts.

GM (NYSE:GM) said it plans to reduce its global workforce by 47,000 employees in 2009, 26,000 of which will come from outside the United States.

But company spokeswoman Patty Faith said those numbers include GM's previously announced closure of its truck plant in Oshawa, Ont., this spring, and its transmission plant in Windsor, Ont, next year, which will cost a about 4,000 Canadian jobs.

Tony Faria, an auto industry specialist at the University of Windsor, said it's likely GM has already cut what it can north of the border.

"Beyond that, I don't really see anything further in Canada," Faria said.

GM employs approximately 5,000 people at its car assembly plant in Oshawa, and confirmed in its restructuring announcement late Tuesday that it still plans to begin manufacturing the new Chevrolet Camaro there this year.

The company also said it plans to begin production of the Chevrolet Equinox at the joint-venture GM-Suzuki CAMI plant in Ingersoll, in southwestern Ontario, in 2009.

"I think the Oshawa car plant, which is highly productive and making some good vehicles, could temporarily lose some jobs due to inventory adjustments, but I don't think Oshawa will permanently lose any jobs unless there's real difficulty reaching concession agreements with the (Canadian Auto Workers union)," Faria said.

"Fairly recently, GM invested a lot of money in Oshawa to make it one of their most flexible and up-to-date plants, and that's another hopefully strong reason that GM will continue production there," he added.

CAW president Ken Lewenza said he believes GM has already cut as much as it can in Canada, with layoffs at assembly and parts operations in earlier restructurings of the automaker's North American operations.

GM Canada has cut its workforce by about 11,000 jobs in the last decade and now employs about 12,500 hourly and white collar workers at its assembly and parts operations in Ontario.

"The reality is, General Motors in Canada has already restructured from our perspective to the bare minimum," Lewenza said in an interview Wednesday.

He added that the introduction of the Camaro and the Equinox is a good sign for Canadian auto workers, although every time a new vehicle is launched operations tend to be streamlined so fewer hours of manpower are needed to build it.

"The auto industry is not going to grow ... but I'd be totally surprised if there was a major announcement of job loss by GM," Lewenza said.

"They've restructured Canada already, and I can't see us, quite frankly, losing any more jobs."

Ontario Premier Dalton McGuinty said he was glad to see there were no announcements of further job cuts in Canada in the companies' restructuring plans, but added that he's not ruling out anything at this point.

"At first blush, it seems on the grand scheme of things it's relatively good news," McGuinty said Wednesday.

"That's not necessarily saying much today, given the times, but the fact is that industry is still not in a state where it's improving, the market has not yet begun to turn around, restructuring will continue."

Ontario Economic Development Minister Michael Bryant agreed that the plans spelled some good news for Canada.

"The report that came out yesterday from GM and Chrysler made pretty clear that these companies see Canada as a critical partner, arguably like no other that they have, and that the industry is integrated," Bryant said.

The CAW is preparing for concession talks with the Canadian divisions of the Detroit Three carmakers - GM, Ford and Chrysler - and says it will open the contracts it signed last year to ensure Canadian labour costs are competitive with U.S. costs.

The CAW has already agreed to a three-year wage freeze in Canada that will save the auto companies $900 million in wages to 2011, or $300 million a year. The union will likely come under pressure to provide more concessions since the United Auto Workers' deal with Detroit's three automakers limits overtime, changes work rules, cuts lump-sum cash bonuses and gets rid of cost-of-living pay raises to help reduce the companies' labour costs.

Chrysler said Tuesday it plans to pare 3,000 U.S. jobs. Chrysler chairman and CEO Bob Nardelli said the 3,000 job cuts won't impact the automaker's Canadian operations directly, but implied that he expects proportionate cuts north of the border.

Faria said Chrysler hasn't indicated that it will cut any of its Canadian operations immediately, but its Brampton, Ont., assembly plant could be on the chopping block if the carmaker gets desperate.

Chrysler employs about 11,000 hourly and white collar jobs at assembly and parts plants in Windsor and in the Toronto area.

The two companies' Canadian divisions will release their restructuring plans to the federal and Ontario governments this Friday so they can tap into C$4 billion in aid. That amounts to about 20 per cent of the U.S. aid package in the hopes that the Canadian industry will be able to maintain its 20 per cent share of the companies' North American production.

Last week, the Ontario government said GM was no longer seeking an emergency $3 billion loan but is still seeking longer-term aid, while Chrysler is still looking for $1 billion in help from the two governments.

Ford, which borrowed from private sources two years ago and is in better financial shape, is not part of any bailout talks in Canada or the United States.

GM and Chrysler said Tuesday they will seek billions more in U.S. government loans than they predicted just two months ago, and McGuinty said Wednesday he expects the companies to ask Ontario for more aid money as well.

The Canadian auto industry lost approximately 13,000 jobs in 2008 and experts say it faces another 15,000 layoffs this year as parts makers scale back output as the vehicle companies cut the number of cars and trucks they assemble to cope with a slump in demand from consumers.

LINK:The Canadian Press: Canada could escape auto restructuring relatively unscathed: CAW, expert
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