GM’s Oshawa closure is full of lessons for governments to ignore

OPINION: The company is closing its Oshawa plant, eliminating 2,500 jobs in the process. The move could serve as a lesson for politicians, writes John Michael McGrath — but it probably won’t
By John Michael McGrath - Published on November 27, 2018
Oshawa’s GM assembly plant has been a major part of the city’s economy for several decades. (Eduardo Lima/CP)

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The confirmation on Monday morning that General Motors Canada would close its Oshawa plant, resulting in the loss of 2,500 jobs, came as a blow to that city and to the families whose livelihoods depend on vehicle assembly there.

But the closure could teach politicians a lesson about how little the word of Big Business means in the 21st century. That is, if any of them were willing to hear it.

Less than a decade ago, GM was bankrupt. The company (and its smaller competitor, Chrysler) needed — and received — billions of dollars in public money from the federal governments of the United States and Canada, as well as from Queen’s Park, to stay afloat. GM transferred its assets to a new company and dissolved the old one, along with its liabilities. Ontario’s courts spent years trying to disentangle certain elements of the bailout, including the wind-down of franchise agreements with GM dealers. Some workers kept their jobs, but their primary function was as hostages the automakers could hold for public ransom.

GM exists today thanks only to massive public action across different countries and levels of government. And now, in gratitude, GM is throwing thousands of people out of work in Ontario, Michigan, Ohio, and Maryland.

Premier Doug Ford says he asked GM whether there was anything he could do to keep those jobs in Ontario but was rebuffed — and there’s every reason to believe him. If the billion-dollar bailout wasn’t enough to keep those jobs in the communities that rely on them, what possibly could be? (The company has stated that its engine plant in St. Catharines will remain open and that it will maintain research-and-development operations in Ontario.)

But when Ford tries to blame the closure on the previous Liberal government’s carbon-pricing policies, he’s being disingenuous. It was the Liberals (along with the federal Conservatives) who opened the public purse for GM. If carbon taxes mattered, then why are plants in Ohio and Michigan — states lacking any kind of carbon price — being shut down?

The real culprit behind the closure is probably the North American auto industry’s relentless shift south- and westward, to the Sun Belt and Mexico. Plants in the Midwest and Ontario are simply too far from the industry’s continental supply chain — a fact that has troubling implications for the rest of Canada’s automotive industry.

If policymakers’ goal is to preserve manufacturing jobs in the auto sector, then it’s far from obvious what they should do next. In Canada, governments and labour unions made GM pinkie-swear that it would keep the Oshawa plant open, to no avail. And whatever political blowback the company is facing now, it’s not going to change anything. GM hasn’t given anyone reason to count on its stated commitments to maintaining a workforce here.

Which leaves us with two questions: What can politicians do for Oshawa and its workers now? And what should they do the next time a big multinational corporation comes to the taxpayer cap in hand?

The federal and provincial governments have already leapt into action, making retraining funds and EI payments available to workers. As for the 280-plus hectares of land that the Oshawa plant occupies, the Progressive Conservatives would do well to consider expropriating and redeveloping it in concert with the city — whether for new industrial firms or for something else altogether.

The second question is more difficult to answer. Asking voters to soberly consider policy options that have backfired in the past is tough; expecting them not to blame their elected representatives when things go sour is even tougher. But if Ontario is faced with the prospect of bailing out the next major employer that comes begging, it should remember that Big Business will gladly shoot its hostages — the workers — even after extracting its ransom.

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