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Cablegate: Planned Gm Plant Closures Provoke Furious Reaction

VZCZCXRO2501
RR RUEHGA RUEHHA RUEHQU RUEHVC
DE RUEHON #0175/01 1572046
ZNR UUUUU ZZH
R 052046Z JUN 08
FM AMCONSUL TORONTO
TO RUEHC/SECSTATE WASHDC 2515
INFO RUCNCAN/ALCAN COLLECTIVE
RUEHME/AMEMBASSY MEXICO 0148
RUEHKO/AMEMBASSY TOKYO 0079
RUEHUL/AMEMBASSY SEOUL 0046
RUEHBJ/AMEMBASSY BEIJING 0085
RUEHOK/AMCONSUL OSAKA KOBE 0020
RUCPDOC/USDOC WASHDC
RUEAHLC/HOMELAND SECURITY CENTER WASHDC
RUEHC/DEPT OF LABOR WASHDC

UNCLAS SECTION 01 OF 02 TORONTO 000175

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ETRD ELAB PGOV SENV CA
SUBJECT: PLANNED GM PLANT CLOSURES PROVOKE FURIOUS REACTION

Ref: Toronto 134 and previous

Sensitive But Unclassified - Please Protect Accordingly.

1. (U) SUMMARY: General Motors' (GM) June 3 announcement to close
its pickup truck plant in Oshawa, Ontario, in 2009 provoked a
blockade of the company's headquarters by Canadian Auto Workers
(CAW) union members on June 4 and 5. Criticism of GM's decision from
provincial and federal governments was swift and intense. GM blames
the planned closure on the combined effects of rising gasoline
prices in North America, and turbulence in the U.S. housing market.
The CAW called the plant shutdown a "betrayal" of their recently
signed collective agreement with GM and continues to pressure GM for
a commitment to keep the plant open until newer, more fuel efficient
trucks can be lined up for production in Oshawa. On June 4, the
federal Minister of Finance Jim Flaherty offered to release part of
the Canadian government's C$250 million Automotive Innovation Fund
to GM as an incentive to produce a more vehicles at GM's Oshawa auto
plant. END SUMMARY.

----------
"Betrayal"
----------

2. (U) On June 3, General Motors (GM) announced the closing of four
North American plants after the third quarter of 2009. The planned
closures include the Oshawa, Ontario truck plant where 2,600 jobs
will be lost. GM pinned the blame on reduced demand for larger
vehicles due to higher North American gasoline prices and turbulence
in the U.S. housing market. In GM's analysis the reduction in demand
represents a long term realignment of the North American market, and
not a temporary reduction.

3. (U) The planned closure was immediately condemned by the Canadian
Auto Workers (CAW) union, which barricaded GM's Canadian head office
in Oshawa. CAW officials are particularly aggravated that the
decision came weeks after the company and GM agreed on a collective
bargaining agreement (CBA) that preserved jobs in exchange for a
three-year wage freeze and numerous cost-saving provisions.
(Reftels)

4. (U) On June 4, CAW picketers prevented vehicles from entering the
Oshawa headquarters. Union members said they will continue the
blockade until the company reverses its decision to close the plant.
Under the terms of the recently signed CBA, GM was to produce its
next-generation version of pickup trucks in Oshawa truck facility,
beginning in 2011-2012. Production of these new models reportedly
will be moved to Mexico. The union has threatened wildcat strikes
and a CAW Local 222 member said "they have nothing to lose."

--------------------------------------------- -------
Another Blow to Canadian Labor, Pleas for Government Assistance
--------------------------------------------- -------

5. (U) GM's decision was the latest and most severe blow to Canada's
auto manufacturing sector, particularly in Oshawa. Until January
2008, the Oshawa pickup truck plant had been running at its full
capacity of three shifts per day. After the cut of one shift in
January, the CAW and GM managed to avoid the removal of another
shift through collective bargaining. If the decision to close the
plant stands, nearly 2600 jobs will be lost permanently.

6. (U) CAW leader Buzz Hargrove is calling on the provincial and
federal governments to press GM to retain at least one shift of
employment at the plant beyond the third quarter of 2009, as a
stopgap until production of next generation pickups begin. Union
officials are scheduled

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