JOHN IRWIN

Parsing what GM means by closing 'unallocated' plants

The grill and bumper assembly are installed on a Chevrolet Camaro at GM's car assembly plant in Oshawa, Ontario, in May 2009. Photo credit: BLOOMBERG
John Irwin is a Toronto correspondent at Automotive News Canada.

You're forgiven if you were a bit confused about what exactly General Motors announced Monday.

Instead of saying it will shut down three car assembly plants, GM said the plants "will be unallocated in 2019."

Those plants will be in Oshawa, Ontario, Lordstown, Ohio, and Detroit-Hamtramck, Mich., which build six low-margin car models that GM will discontinue.

That means the demises of all three plants are imminent, right?

It's not so simple.

Let's start in the U.S. If GM wants to close those Ohio and Michigan plants, it can't just lock the doors tomorrow and throw the keys away. Under its collective agreement with the UAW, GM must negotiate the closure of those plants with the union.

As you'd imagine, the UAW isn't happy, calling the decision a "slap in the face" in a statement. Expect the fate of those jobs to be at the forefront of contract talks next summer.

So while things look bleak for Lordstown and Hamtramck , all hope is not lost, especially since GM CEO Mary Barra declined Monday to discuss whether or not the plants might reopen as part of the UAW negotiations.

Oshawa, however, is a different story.

It is, indeed, slated for closure. And one reason for the certainty is that it's just easier for the company to close a plant in Canada than it is in the U.S. Under GM's contract with Unifor, the company only has to give the union a year's notice.

Document No. 12, attached to the 2016 Master Agreement between the union and GM, lays that out:

"The parties agreed that when management is considering the implementation of restructuring actions that would result in permanent job loss, management will give written notice [to the union.] In the case of a plant closure, the notice will be given one (1) year in advance."

That apparently hasn't happened yet, but GM still has time. It plans to shut down Oshawa in December 2019.

Unifor President Jerry Dias blasted GM for the decision when we spoke earlier Monday, calling it the "ultimate betrayal" and promising a big fight with the company.

But the fact is, when it comes to factories with unallocated products, Dias has far less leverage with GM than do his counterparts in the U.S.

You can reach John Irwin at jirwin@crain.com -- Follow John on Twitter: @JohnDIrwin

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