New trucks crowd a parking lot at the GM assembly plant in Oshawa, Ont., on Sept. 24, 2019. The Oshawa assembly lines, which make Chevrolet Impalas and GM pickup trucks, are shut down as a result of the U.S. strike.CHRIS HELGREN/Reuters
As the U.S. strike at General Motors Co. drags on, Ontario-based auto-parts supplier Martinrea International Inc. is set to make new cuts to scale back production.
“I think most are surprised … that it’s dragged on this long,” Frank Di Tosto, chief financial officer of Matrinrea, said at a CIBC investors conference in Montreal on Wednesday. “GM is our largest customer, along with Ford. So clearly there would be an impact to us.”
About 49,000 United Auto Workers in the United States went on strike at GM on Sept. 16, shutting down more than 50 U.S. plants and warehouses. Negotiations have so far failed to produce an agreement, and the effects are now being felt across the Canadian auto industry. The auto sector accounts for nearly $20-billion in gross domestic product, according to Industry Canada data, making it one of the most important manufacturing sectors.
Ontario’s auto-parts makers employ about 100,000 people in the province and export $18-billion in components to the United States. GM in Ontario and the United States accounts for as much as one-third of sales. GM is the biggest customer of Magna International Inc., a global vehicle and parts maker based north of Toronto, accounting for US$6.3-billion in 2018 sales out of a total US$40-billion, according to company data. Magna’s revenues from GM’s U.S. operations are US$3.5-billion, said Louis Tonelli, Magna’s vice-president of investor relations, speaking at the CIBC conference.
Magna has tried to limit layoffs but has halted some U.S. production lines that supply GM in the United States, Mr. Tonelli said. “There’s a little bit of Canada impact but it’s mostly U.S.,” Mr. Tonelli said.
GM has laid off about 3,300 hourly employees in Ontario at two of its three major plants. The Oshawa assembly lines, which make Chevrolet Impalas and GM pickup trucks, are shut down as a result of the U.S. strike. Also halted is engine production at the power train plant in St. Catharines, Ont., which continues to make transmissions.
GM’s Ingersoll assembly plant, maker of the Chevrolet Equinox SUV, continues to produce. Automotive consultant Dennis DesRosiers said the Ingersoll plant’s continued operation – “for now” – and demand for parts is important for the province’s automotive suppliers. “Not only is [Ingersoll] the largest GM facility in Canada, it is also the GM plant with the most extensive ties into the Canadian auto-parts sector,” Mr. DesRosiers said.
GM said in November that it would close the Oshawa plant, permanently eliminating about 3,000 jobs, and a handful of U.S. factories as it slashed costs and got rid of slower-selling vehicles. Martinrea, headquartered near Toronto, makes engine blocks, suspension components and many other auto parts at factories in Ontario, the United States, China, Brazil, Mexico and other countries.
The North American market accounts for as much as 80 per cent of its business. In response to the end of Oshawa vehicle production, Martinrea said last year that it would close its nearby plant in Ajax, which produced suspension and engine components for Impalas and Cadillacs.
Pat D’Eramo, Martinrea’s chief executive officer, said Wednesday that he expects GM will make up the lost volume of parts orders and production by running Saturday shifts at its plants when the strike is settled. Deanna Lorincz, a Martinrea spokeswoman, did not respond to requests for an interview and details on the GM strike’s impact on Wednesday.
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