[Mike88]

GM's move south a blow to Ontario
Rear-wheel-drive cars scrapped or moved to Michigan; company blames new fuel economy rules
GREG KEENAN

From Thursday's Globe and Mail

January 24, 2008 at 12:00 AM EST

General Motors Corp. [GM-N] has scrapped plans to build some rear-wheel-drive cars at its giant operations in Oshawa, Ont., a move that could threaten the long-term future of the largest vehicle assembly plant in Canada and thousands of jobs.

The auto maker has scuttled the rear-wheel-drive version of the Chevrolet Impala, which was scheduled to represent half the output of a leading-edge flexible assembly plant now under construction in Oshawa, industry sources said.

Production of rear-wheel-drive Cadillac and Buick sedans originally slated for Oshawa will be shifted instead to Lansing, Mich., the sources added.

GM will begin producing the reborn Chevrolet Camaro as a rear-wheel-drive muscle car in Oshawa later this year.

The move comes as GM prepares for crucial contract talks with the Canadian Auto Workers union this summer and seeks government financial help for an investment in St. Catharines, Ont., on top of $435-million Ottawa and Ontario have already agreed to give the company as part of a $2.5-billion plan to upgrade its Canadian operations.

Much of the $2.5-billion will be spent consolidating two Oshawa car plants into one flexible plant that will turn out the Camaro.

The two plants assembled 470,016 cars last year.

The next-generation Impala was designed to be heavier and larger than the existing front-wheel-drive version and would have been based on the same platform or basic underbody as the Camaro – GM's Zeta program.

The new plant would have cranked out a combined 500,000 Camaro, Impala, Buick Lucerne and Cadillac DTS cars.

The heavier Impala has been doomed by new U.S. fuel economy rules requiring auto makers to reach an average of 35 miles per gallon by 2020, industry and union sources said.

The new rules mean “some of those [vehicles] have been stricken from the future product program,” GM vice-chairman Bob Lutz acknowledged in Detroit last week when asked how the regulations would affect the Zeta cars. Mr. Lutz did not elaborate on which models were cancelled.

General Motors of Canada Ltd. spokesman Stew Low said yesterday that no vehicle beyond Camaro was ever approved, “so you can't cancel something that wasn't there.”

GM doesn't know what vehicles will be assembled in Oshawa beyond Camaro, Mr. Low said, in part because no one knows yet how the GM fleet will have to adjust to meet the new fuel economy requirements.

“Impala and the Buick will stay for the time being,” he said.

Scrapping of the proposed rear-wheel-drive Impala reduces the planned output of cars in Oshawa by 250,000 a year, industry and union sources said.

Separately, GM promised the United Auto Workers union during contract negotiations last fall that it would build two Zeta cars in Lansing, where it already assembles rear-wheel-drive vehicles for its luxury Cadillac division.

Shifting production of the Buick and Cadillac models subtracts another 100,000 vehicles from the planned output of 500,000, so the Oshawa plant could be producing as few as 150,000 Camaros unless GM finds another vehicle to build there.

Producing that number of vehicles would mean considerably fewer jobs than the approximately 3,000 positions that exist at the car plants now and likely would prevent GM from meeting job commitments it made to Ottawa and Ontario when they originally agreed to provide the $435-million.

Whether GM will find other vehicles to build in Oshawa or continue with a front-wheel-drive version of the Impala beyond next year likely hinges on the talks with the Canadian Auto Workers (CAW) union on a new contract, industry sources said.

“It all depends on what happens in these discussions come September,” one source said.

CAW president Buzz Hargrove rejected the notion that GM will tie future products for Oshawa to bargaining on the new contract.

“It would be impossible to imagine” that GM would be unable to find other vehicles for the plant after the huge investment it will make to build the flexible plant, Mr. Hargrove said.

Canadian Auto Workers members in Oshawa have already agreed to outsource janitorial jobs and to more flexible work rules in order to win the investment for the new Camaro and other products, said Chris Buckley, president of CAW Local 222, which represents workers at the plant.

“If the decision gets made based on the number of trophies on the shelf, Oshawa wins the prize,” Mr. Buckley said, pointing to numerous quality and efficiency awards the plant has won in recent years.

bad news for the Zeta platform (Camaro aside of course)?