TORONTO - General Motors of Canada Ltd. will slim down to just 7,000 employees by next year and cut deeply into its dealer network as the company seeks more government aid to help it survive one of the worst periods in the auto industry's history.
In a plan the auto company presented to the Ontario and federal governments late Friday, GM Canada said it will also cut executive salaries by 10 per cent, reduce benefits for hourly employees and commit to building new models in Ontario.
However, already announced factory closures and streamlinings will pare the company's Canadian workforce to 7,000 by 2010, down from about 20,000 in 2005 and about 12,500 today.
David Paterson, GM Canada's vice-president of corporate and environmental affairs, said he doesn't foresee any further job cuts in GM Canada's near future.
"We have comprehended already all the major changes we're going to see in terms of our capacity and our workforce," Paterson said in an interview with The Canadian Press.
"We don't foresee the need to really have further plant closings or any significant further employment changes. What we have to do is get at our cost base."
A major part of the GM plan calls for government help to deal with financial obligations in the company's pension plan, which the automaker said is no longer sustainable.
"It is becoming increasingly difficult to service GM Canada's legacy cost due to an increasingly large retiree population, high health-care cost, health-care inflation and poor pension asset returns stemming from a recessional market," the automaker said in its 52-page proposal.
The proposal is part of a broader plan by Detroit-based carmakers GM and Chrysler to restructure their global operations with the help of tens of billions of dollars in loans and other aid from the U.S. and Canadian governments so they can survive.
GM Corp. (NYSE:GM) said earlier this week it will cut another 47,000 jobs around the world while Chrysler plans to pare its workforce by another 3,000 jobs. The cuts reflect earlier plant shutdowns announced in Canada.
The two automakers submitted requests on Tuesday for an additional US$21.6 billion in help from the U.S. government.
While the industry's restructuring plans depend on government to survive, they also lean heavily on the United Auto Workers in the U.S. and the Canadian Auto Workers union in Canada for concessions.
The car companies want to lower labour costs to help them compete more effectively with Japanese rivals such as Toyota and Honda.
GM Canada said it's in discussions with governments and the CAW about setting up a health-care plan similar to a union-owned and directed system GM's Detroit-based parent and the UAW have created in the United States.
Paterson said reducing pension costs will be an important part of the automaker's discussions with the CAW, especially since the ratio of retired to active workers is expected to balloon to five to once GM's previous announced plant closures are completed.
"What we need to do is really arrest the growth in those costs so we can ensure we've a viable business here, and that's a very important part of what we need to achieve with the CAW," Paterson said.
He added that wage reductions will also be part of the discussions.
"Personally, I've had my salary reduced by 10 per cent, I can tell you that all the people who work as salaried workers have seen reductions in the range of three to seven per cent," he said.
CAW president Ken Lewenza said the union has already provided $900 million in concessions to GM, Ford and Chrysler by agreeing to a three-year wage freeze last spring that expires in 2011.
The union will begin negotiations with all three U.S. carmakers soon and has said will do what it must to ensure Canadian labour costs remain competitive.
"We're reviewing what we can as they come up to make sure we're fully in a position to maintain our existing investments in Canada and future investment in Canada in terms of future product lines," Lewenza told a news conference.
Later Friday, Chrysler Canada provided the Canadian and Ontario governments the same plan its parent company gave to the U.S. government Tuesday, with the addition of a cover letter to the Ontario and federal industry ministers noting the company's operations are integrated in both countries.
"Discussions will follow on the heels of this," one government official said.
Industry analyst Dennis DesRosiers called the Chrysler plan "quite disappointing."
"It's really unfortunate because Canada has a much higher exposure to Chrysler than General Motors. Over 25 per cent of Chrysler is in Canada versus 17 per cent of General Motors, and Chrysler's the most vulnerable of the two," DesRosiers said.
Federal Industry Minister Tony Clement welcomed the GM proposal and said it's a good first step towards a successful restructuring of Canada's largest carmaker.
"I'm encouraged by their goal of no further GM Canada plant closures," the minister told a news conference in Toronto. "We still need to have the opportunity to review their plans in detail, but I would have to say that this is a good first step."
Clement's provincial counterpart, Ontario Economic Development Minister Michael Bryant, said the plan is "positive," though there are no guarantees that there won't be further layoffs.
The GM plan doesn't include a specific dollar figure for additional bailout funds from the federal and Ontario governments.
Paterson said the number will be larger than the $3 billion offered to the company by the two governments in December, but wouldn't give a specific amount.
"The number will depend on first how much we can reduce our costs so we can be more competitive, and the more that we can reduce our costs, the less that we'll need to seek in assistance," he said.
Bill Pochiluk, president of industry adviser AutomotiveCompass, said any agreement between GM Canada and the two levels of government is beholden to what happens in the United States.
"The ball is in the court of (U.S. President Barack Obama's) automotive advisory group, and I think they're largely going to determine the answer at this point," Pochiluk said.
If the United States provides the full US$30 billion requested by GM and Chrysler, the proportionate Canadian figure would be about C$7 billion or $8 billion.
The company has set a March 31 deadline to finalize its agreements with the federal and Ontario governments and the CAW.
In its plan, GM Canada said the company will maintain Canada's share of production, expected to range between 17 per cent and 20 per cent between 2009 and 2014.
The company is closing a pickup-truck plant this spring in Oshawa, its main assembly operation in Ontario, with the loss of 2,600 jobs. It will also close a transmission plant by 2010 in the southwestern Ontario border city of Windsor, with the loss of another 1,400 jobs.
The carmaker also said it would reduce the number of Canadian dealerships by about a third, from 700 to between 450 and 500 by 2014.
GM said its plan will ensure the launch of five new vehicles in Oshawa and its Suzuki joint-venture CAMI plant in Ingersoll, Ont. The plan also commits to new flexible transmission production in St. Catharines, a Niagara parts operation that has been cut heavily in recent years.
The plan will also boost research into electric cars.
