Mixing business and emotion is dangerous, as some 2,000 workers in Oshawa, Canada are learning today. The GM plant they work at, which manufactures the Chevrolet Impala and runs a flex line for the Equinox, will axe 2,000 jobs.
Long expected, the move is the direct result of General Motors’ economic woes and restructuring. Unfortunately for the affected Canadian workers, that restructuring means a number of them will be unemployed. Part of the restructuring meant GM having to examine its costs and find ways to consolidate. Union wages have long been a significant burden on American automakers, and at the peak of the U.S. financial crisis when the government was bailing companies out in a last-ditch effort to preserve jobs, high wages looked particularly bad.
Spying an opportunity, the United Auto Workers (UAW) agreed to take significant pay cuts and benefit revisions in exchange for remaining employed. The same wasn’t true north of the border where the Canadian Auto Workers (CAW) stood fast, insisting on a higher wage. Simple supply and demand economics that a high school student could explain meant GM had a simple choice on its hands: go where the labor is cheaper. In the Oshawa plant’s case, that meant shipping a large number of jobs stateside.
Consolidation will occur in June of next year, with half of the 4,000 workers being displaced. That said, a nearby flex plant is expected to create an additional 500 shifts, cutting that number down to 1,500 lost jobs. The displaced workers will also get the first shot at those shifts if they are, in fact, created. GM hasn’t actually confirmed that will happen. Even if it does, 1,500 people will still be out of jobs.
[Source: Globe and Mail]