In an announcement that continues to illustrate the impact of globalization on the auto industry, General Motors of Canada, Ltd, has stated that the cost advantages of manufacturing vehicles in the Great White North have been nearly eliminated. GM representatives point to the rising Canadian dollar, increased living expenses in the country, and a new health-care deal with the Canadian branch of the UAW as major reasons behind the changing profitability of their Northern manufacturing operations. 

(More after the jump)

[Source: Globe and Mail] “The labour-cost advantage that the Canadian operations enjoyed five years ago — approximately $15 (U.S.) an hour in 2001—has narrowed because of CAW/UAW contracts, U.S. health care changes and to great extent the rising Canadian dollar, such that by 2007, the active labour costs are projected to be roughly comparable,” said Stew Low, a GM Canada spokesperson. Daimler-Chrysler and Ford also agreed last year at a meeting with the Canadian UAW.

Despite the pronouncement, it’s still less expensive to manufacture in Canada and the once “Big Three” (Daimler-Chrysler is German) have made significant new investments in the country. Other automakers have as well: Toyota, for example, is building a new $1.1 billion plant in Woodstock, Ontario.

But the future is more cloudy than in the past for the Canadian industry. GM has already closed one plant in Oshawa, Ontario, and Ford has book-marked its plant in St. Thomas, Ontario for possible closure.


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