General Motors said last week it would be shuttering its plant in Oshawa, Ont., resulting in the loss of more than 2,500 high-paying jobs.
Jerry Dias, the president of the union representing the auto workers, warns GM may be headed toward a “complete disinvestment” in Canada.
The closure will be a devastating loss to a community whose identity and prosperity is so closely linked to auto manufacturing.
The announcement came via a press release chock full of corporate jargon clearly targeted toward institutional investors, yet leaving the rationale behind the “accelerated transformation” rather unclear.
One line from the release quoting GM CEO Mary Barra states, “The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future.”
Although the decision was pegged as the company’s way to “strategically redeploy capital,” many are left wondering the impact government policy had on its decision to do so, especially considering the remarks from Canadian-headquartered Magna International CEO Donald Walker at their annual shareholder meeting, which was held earlier this year.
“I get very frustrated when I see the decisions being made that put undue administrative costs and inefficiencies on our plants, specifically here in Ontario, because we have to compete … We’re not going to get business if we’re forced to be uncompetitive.”
Actions and statements such as these puts all of us here in Alberta on notice that we have a problem in our country: not only attracting business, but retaining the ones we have.
We’re already struggling to manage what equates to an all-out recession in our conventional oil and gas sector with an estimated 100,000 energy workers out of a job.
This estimate, coming from the Canadian Association of Petroleum Producers, puts in perspective the crisis Alberta is facing relative to our manufacturing friends in central Canada.
The added cost burdened upon business, combined with weak energy prices, has created a perfect storm that saw capital investment in our province down nearly $40 billion from the 2014 peak.
Prices for Western Canadian Select oil are rebounding, thanks to the government-imposed production curtailment, however, the huge glut in supply leaves little reason for companies to pursue any drilling and exploration programs.
Imagine what it would mean to central Alberta if a major petrochemical or food processing facility decided another jurisdiction was a more economical location to deploy capital?
Without question the cost of doing business has increased significantly since 2015 through a series of tax increases, additional regulations, minimum wage hikes, the carbon levy, changes to employment standards and more.
Businesses have already made adjustments where possible to attempt to manage these changes, some of which included layoffs, reduced hours and trimmed benefits.
However, many of our local businesses are already stretched to capacity and unable to find any further efficiencies.
We’ve already heard of Red Deer-based companies shifting major parts of their operations to the U.S. and overseas.
The chamber of commerce, business leaders and other like-minded groups continue to pressure our government leaders at all three levels to consider the competitive pressures facing our businesses and to take concrete steps to address them before it is too late.
Unquestionably, part of the answer will be reductions in our tax rates that will require corresponding cuts to government spending.
Hard decisions will have to be made to ensure the future prosperity of our private sector and the jobs they create.
Reg Warkentin is the policy and advocacy manager with the Red Deer and District Chamber of Commerce.