Auto sector watching trade talks

A union local representing General Motors Co. workers in Oshawa, Ontario, Canada said their job security could be affected by a 25 percent tariff on Canadian auto imports to the United States.

“We just added a second shift in the truck plant. We finish assembling bodies that are made in (Fort Wayne) Indiana shipped here for paint and final assembly — this could be devastating for our operation here,” Joel Smith, a Unifor Local 222 organizer, told Global News in a videotaped interview last month.

The plant depends heavily on sales of the pickup trucks it ships, which could decline if the product’s price rises because of the tariff. And nothing has happened to alleviate the local’s trade talk concerns since President Trump called for renegotiation of the North American Free Trade Agreement.

The United States and Canada have had tariff-free models in place since U.S. President Lyndon Johnson and Canadian Prime Minister Lester Pearson signed the Auto Pact in 1965, which has “been economically beneficial for both countries,” Smith told Business Weekly in a phone interview.

General Motors Corp. and General Motors of Canada were incorporated 100 years ago by Sam McLaughlin of Oshawa and William Durant of Flint, Mich. to build cars in Canada with U.S. engines, Smith said.

“I don’t think your president understands the complexities in the integration of the auto industry in north America,” he said. “None of this makes sense to Canadians, and it’s not something we expect from our neighbor and friend.”

GM invested $1.2 billion to prepare its Fort Wayne Assembly Plant to make the company’s next-generation pickup trucks, and the facility’s work force has been preparing much of this year to begin production of the 2019 Chevrolet Silverados and GMC Sierras.

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Shipping bodies of the current K2 platform to Oshawa for further work and final assembly allowed that preparation for the new version to take place without slowing down production of the 2018 pickup trucks, said Fort Wayne Assembly Plant spokeswoman Stephanie Jentgen.

The plant near the intersection of U.S. Highway 24 and Interstate 69 in Roanoke has been operating at full capacity and was about two weeks away from starting production on the 2019 models as of July 7, she said.

GM does not plan to make next-generation pickups using the new T1 platform at the plant in Oshawa, which also makes cars. At the Fort Wayne Assembly Plant, “we will continue to produce the K2 trucks for Oshawa Canada for approximately 18 months. This could be extended depending on market demand,” Jentgen said.

The Fort Wayne Assembly Plant employs about 4,000 people, including about 3,800 hourly employees represented by United Auto Workers Local 2209.

GM was not able to say at this point what impact trade negotiations could have on work at the local plant because it was still assessing the full impact of the recent and proposed trade and tariff actions, said Pat Morrissey, GM’s corporate communications director.

“The global automotive supply chain is very complex and integrated,” he said. “We need to assess all of these actions in their entirety — including the announced steel and aluminum tariffs on Mexico, Canada and Europe, country-specific retaliatory actions, NAFTA 2.0, China talks and Section 232 investigation on autos and auto parts.”

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Morrissey claims these actions are inter-related and must be viewed holistically.

“In the meantime, we’ll continue to engage in discussions with government officials on these issues as we better assess any potential impact,” he said.

In Oshawa, Smith’s concerns about the impact of trade negotiations there extended beyond what could happen with job security at the GM plant.

“We have parts makers, we have shipping, we have trucking, we have a whole host of things that rely on the final assembly,” he said. “It’s not just the assembly line itself. It’s all the secondary and tertiary industries that will be affected by any sort of negative tariffs on Canadian-made vehicles.”

U.S. Commerce Secretary Wilbur Ross announced plans in May to investigate whether imports of cars, SUVs, vans and light trucks threaten to impair the national security under Section 232 of the Trade Expansion Act of 1962. Ross said he initiated the investigation following a conversation with President Trump.

“He’s doing it under the guise of national security, and that’s the most insulting part,” Smith said. Some Canadians feel their country’s willingness to fight alongside the United States in armed conflicts has not been appreciated, and have called for boycotts of U.S. products, he said.

A U.S. Chamber of Commerce analysis released early this month showed Indiana exported $648 million in goods to Canada and $151 million in goods to Mexico, which it said were targeted for retaliation. It also said 812,600 Indiana jobs are supported by global trade.


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