TORONTO — In another sign of life for the battered Canadian auto sector, General Motors Canada announced Monday it will invest $90 million in its joint-venture facility in southwestern Ontario, resulting in the recall of about 150 laid-off employees.
The investment will allow GM to run the plant at full capacity and meet strong demand for its 2010 Chevrolet Equinox and GMC Terrain.
"This investment is an excellent example of what happens when you get the product right. If the product is right, everything else follows - increased production, increased employment and strong market demand," said GM Canada president Arturo Elias.
The added capacity will result in production of an additional 40,000 vehicles annually for the Canadian and U.S. markets at the CAMI facility in Ingersoll, Ont.
Canadian Auto Workers president Ken Lewenza said he expects this to be the first of many such announcements in the Canadian auto industry, particularly from the so-called Detroit Three who have all made promises to keep a certain percentage of their manufacturing capacity in Canada.
GM promised to keep 16 per cent of its total North American manufacturing in Canada in exchange for bailout funds from the federal and Ontario governments, while Chrysler agreed to build 20 per cent of its vehicles here. In a recent agreement with the CAW, Ford said it will keep 10 per cent of its North American presence in Canada - down slightly from its current level of 13 per cent.
"I think, as we go through this restructuring and work our butts off to win the confidence of consumers, we have reasons to feel pretty excited and pretty optimistic," Lewenza said.
"Now, I don't want to put the cart before the horse, but after what workers have been through in the last year, and what communities that rely on the auto industry have been through in the past few years, I think this is the start of many good news stories relative to product and plant in Canada."
Some of that good news has already started to flow. In addition to the investment in CAMI, GM has confirmed two new products will be introduced to its plant in Oshawa, Ont., and a new transmission will be built in St. Catharines, Ont. On top of this, company spokesman Stew Low said workers in Oshawa and Ingersoll should expect overtime until at least the end of the year.
And in a restructuring plan announced last week, Chrysler said it hopes to boost output by a third at its Canadian plants from an estimated 166,000 vehicles this year to roughly 220,000 in 2014. Meanwhile, Ford has guaranteed it will produce two new vehicles at its Oakville, Ont., plant under a new contract with the CAW.
However, these announcements are simply helping to mitigate the impact of years of bad news in the industry, centred in southern Ontario. Ford intends to close its St. Thomas plant in 2011, while GM has already shut a truck plant in Oshawa and plans to close its Windsor transmission plant next year.
The CAMI plant, which is a joint venture between GM and Japanese automaker Suzuki, has been a major beneficiary as GM ramps up production to meet demand from improved sales. In August, the company announced that it would reinstate a third shift at CAMI, bringing back 300 employees to satisfy demand for the Equinox and the Terrain.
Both vehicles are crossovers, or sport utility vehicles built on car platforms. Crossovers are becoming a popular choice across brands as consumers increasingly seek out fuel-efficient options.
Low said GM has launched six new vehicles this year, including the Equinox and the Terrain, and "they're all doing extremely well."
"Getting the product right is the biggest thing that anybody can do. Particularly with the Equinox and Terrain, you can see what happens when you get it right," Low said.
"(CAMI has) been running overtime virtually since the vehicles were launched. They added the third shift in October and now we're investing more in the plant. So if you get the product right, everything else comes."
The federal and Ontario governments invested a total of $10.5 billion in GM earlier this year as the automaker struggled to survive the economic downturn.
"As a major partner in the restructuring of the automotive industry over the past year, I am very encouraged by this investment," stated federal Industry Minister Tony Clement.
"As a result of the high demand for the Equinox and Terrain, approximately 450 workers have returned to or will start new jobs at the plant. This is great news for CAMI, great news for Ingersoll and for Canada."
GM said the planning and retooling work will begin immediately and the project is expected to be completed in about seven months. The retooling will take advantage of unused capacity that has been sitting idle since Suzuki discontinued production of its XL7 SUV in September 2008 due to poor sales.
Once the 150 recalled employees are back on the production line, CAMI will have no remaining workers on layoff.
GM Canada employs about 9,000 people at various plants in southern Ontario, including CAMI, an assembly plant in Oshawa, an engine plant in St. Catharines and the a transmission factory in Windsor that is slated for closure.
When General Motors (NYSE:GM) announced its restructuring plan when it filed for bankruptcy protection in the U.S. last spring, it said it would spend $2.2 billion on capital and $1 billion on research and development between now and 2016 in Canada.