Happy holidays to you too, General!

Toronto newsmedia began reporting on Sunday evening that General Motors was about to announce the closure of its assembly plant in Oshawa, Ontario (just east of Toronto), with the loss of about 2500 jobs. This morning the company made the closure official, as part of a major corporate cost-cutting exercise that will see it close five plants in North America and a further three in other parts of the world. About 15 percent of the company's hourly workforce will lose their jobs, along with a hefty 25 percent of salaried staff.

A lot of history is being torched here.  The current Oshawa plant has been operating since the late 1950s, but GM has been the biggest employer in the city for much longer than that.  Canada's own auto pioneer, Colonel Sam McLaughlin, set up shop there early in the twentieth century, selling his business to GM's predecessors in 1918.  And on the US side of the border, the plant to be closed in Hamtramck*, MI is the last auto assembly plant within the limits of the city of Detroit, so this is surely the end of an era.

What's behind all this?  It depends on who you ask.

General Motors says it's all about positioning the company for the future.  The list of products that the company is discontinuing is heavy on sedans, from the tiny Chevy Volt to the chunky Buick LaCrosse. Customer demand has shifted abruptly away from this body type towards SUVs in recent years.  Today's move by GM mirrors similar steps taken by Ford earlier this year; that company has effectively withdrawn from the sedan market is North America, apart from the sporty Mustang.**

If you consult the local media, you can find at least one respected business commentator, Eric Reguly at the Globe and Mail (paywall, sorry!) willing to point the finger of blame at Donald Trump.  It's unlikely that GM would be closing a viable operation at Oshawa just to placate Trump, who doesn't seem too happy about all this anyway.  However, the current administration has fed the SUV feeding frenzy through its watering-down of environmental measures, contributing to the demise of the sedan.  Moreover, Trump's steel and aluminum tariffs remain in place despite the recent conclusion of trade negotiations, and GM has spoken of the impact these are having on its cost of doing business.

If you listen to the main Canadian union in the auto industry, Unifor, what we may be seeing here is yet another attempt by GM to shake governments down for more subsidies.  That's also a view you can hear from callers to local talk radio stations.  It's not at all far-fetched: the Oshawa plant has been under threat for many years but has always escaped closure, thanks in part to government money.  Even with today's announcement, the plant is likely to stay open well into 2019, giving plenty of time for the Federal or Ontario governments to step forward with yet more blandishments, as the City of Oshawa (and of course Unifor) are already urging them to do.

One further factor may have sealed Oshawa's fate: its location.  The North American auto industry is highly integrated across borders, with materials and components criss-crossing the border as vehicles are put together. Most of Ontario's auto and parts plants are in the southwest of the province, giving quick and easy access to the US border.  Oshawa, unluckily for it, is on the wrong (i.e. east) side of Toronto. As that city's roads and rails become more and more congested, it must be harder and harder for GM to achieve the just-in-time cross-border deliveries it needs at an acceptable cost.

Talk radio hosts in my neighbouring city of St Catharines, home to a GM powertrain plant, are breathing a sigh of relief today that the 2500 or so jobs there have been spared in this round of cost cutting. It would be unwise to be complacent about that: GM's longer-term strategy clearly involves a shift toward electric vehicles.  The gas-and-diesel, engine-and-transmission assemblies that are St Catharines' forte may not be needed for much longer.   

 * Strictly speaking Hamtramck is a separate municipality, but as it's completely surrounded by Detroit proper, I think the point stands. 

** Initially when I posted this I said the surviving Ford sedan was the Camaro, which is of course a Chevy.  I've never been much of a car guy, but still!