Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

GM axes four SUV and truck plants

with 10 comments

Chevy Suburban

I just heard this on the CBC News, but the BBC News gives a broader perspective.

It is very tough for Oshawa and the workers at the plant, but they did not decide which models to build. As the shareholder in this story notes “Unfortunately, it’s just a sign that once again they’re behind the curve”. Just as they were with the EV and with fighting the California ZEV mandate, and concentr5atin on trying to find ways around the CAFE standards than ways to make more efficient cars or better transportation systems (they got out of buses and trains some years ago).

The big three North American automakers have been out of step with the changing world for years. They preferred lobbying in Washington and fighting court battles to facing up to the inevitable. Petroleum is a finite resource, and demand for it has been escalating, and the smart boys on Wall Street have been making a killing driving up the price. The consumer is naturally responding by turning to vehicles that meet a real need – and also to other modes where they are available. Demand for big trucks and SUVs used for personal transport is dropping fast.

GM has lost a combined $51bn over the past three years. Can you imagine the uproar if that was a public sector organisation? But just as the people of Flint Michigan suffered (and produced Michael Moore) so the people of Oshawa, Ontario, Canada; Moraine, Ohio; Janesville, Wisconsin; and Toluca in Mexico will suffer now. And of course so will the pension funds and other investors who have held on to their GM shares. For this corporation has no conscience. It does not understand the concept of corporate citizenship or social responsibility. And it cannot even be said to understand the expectations of its shareholders either.

Chrysler was the first of the big three to wobble dangerously – and is now back on its own after Mercedes Benz decided it was better off without it. Ford also looks very shaky. I wonder why those corporate raiders who areso keen on bustign up big corportations and selling off the bits have been so reluctant to get involved.

GM used to pretend that “what was good for GM is good for the USA” but that is very obviously no longer the case. And the people who bought their products out of misapplied patriotism have been paying too much for the wrong products. And anyway a lot of Toyotas and Hondas are built in North America these days.

Written by Stephen Rees

June 3, 2008 at 4:35 pm

Posted in Economics

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10 Responses

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  1. In the CBC Radio report of this story yesterday, they noted that while GM and the others of the “Bug Three” have had multiple layoffs and closures in recent months in Ontario, Toyota, Honda and Suzuki have all been hiring in Ontario, and the net auto manufacturing employment is actually UP over the recent period. Now the CAW will not be happy as the Japanese plants are strictly non-union I am lead to believe, but it does show that if you build the right product it need not be a disaster.

    Isn’t this a good example of what would happen if our coal and oil investments were directed to renewables?


    June 4, 2008 at 6:26 am

  2. I think its called direct-overhead, and high salaries exceeding sales.


    June 4, 2008 at 9:18 am

  3. Renewable energy is one possibility, and renewed transportation is another. By perchance are the auto workers of today the train and bus builders of tomorrow?

    That’s the thought I’d be having if I was working for Bombardier, Siemens or Alstom. And given the current lack of federal vision in Canada, it may take a boisterous premier or two, not to mention a new US president, to roll out the track for a huge new market.


    June 4, 2008 at 10:36 am

  4. I owned a 1970 Suburban panel truck for eight years and travelled all over western North America in the beast. It got 6 miles per gallon in the city. I could climb into the engine compartment and change the oil with the lid closed because the straight 6 had no pollution control devices to take up space.

    Though I have fond memories of living in it for weeks at a time in my hippy days (I even installed a Muntz cassette tape deck with 6 speakers and a vast collection of classic rock and jazz tapes), I now also have a sense of guilt thinking about all the CO2 + NO2 still floating around in the high atmosphere from my travels, and the symbol of rampant consumerism Suburbans now represent.

    Good riddance.


    June 4, 2008 at 10:53 am

  5. It’s just a response to market demand – and it’s not like it didn’t happen before (change in demand due to fuel prices). Remember the big gas guzzler cars of the 70s yielding to the smaller fuel efficient imports? Markets change and companies will (should) respond with what the market wants (or can afford or bear).

    Ron C.

    June 4, 2008 at 12:07 pm

  6. I won’t worry about GM too much – in the first 9 months of 2007 GM posted a net income of $481 million in the Asia-Pacific region, $754 million in the Latin America region, a loss of $2.6 billion in Europe, and posted a loss of $34 billion in North American, however, most of the loss was due to a write down of the value of future tax benefits. We the tax payers pick that one up, plus the money the Ontario government loaned GM.

    On the plus side GM sold a million cars vehicles in China – the millionth vehicle according to reports being a Buick Park Avenue, and GM plans to invest $5 billion in China over the next 5 years in anticipation of projected annual car sales of between 9 to 10 million.

    But those straight six engines were a great in the days of innocence.


    June 4, 2008 at 12:23 pm

  7. Ron

    I am not worried about GM – they can go broke for all I care. BUT I do care about the poor people who depend on them for their livelihoods. GM is stupid and arrogant. The world would be better off without it, but the people who work for them now will have to find new jobs. The transition is going to be painful for them – and Canada because governments persist in throwing money at them.

    GM must be criticised – if only because they are so big and overbearing, but also because of their monumental incompetence. Sod the straight six, that’s no achievement considering the damage they have done to the environment.

    Stephen Rees

    June 4, 2008 at 2:11 pm

  8. Stephen

    I agree with you, my point was that even their corporate losses turn into gains thanks to our tax system and government grants. GM could have adapted to the changing market if they were motivated to do so. GM had agreed to build hybrid trucks in Oshawa, or at least told the unions this was their plan. I understand that GM has been planning this move for a long time and that they ran the truck line as long as it could to make as much profit as possible without any reinvestment in Canada. The pattern in Oshawa is very similar to the pattern followed at the Ste. Therese plant in Quebec, milk as many concessions as you can from government, the workers, and unions and then leave town.

    As you rightfully said it is Canadians who are left without the jobs and with limited options for future employment, and Canada as a whole suffers from a failed industrial policy while GM moves on to next more market.


    June 4, 2008 at 4:05 pm


    Not much more to add I’m afraid. It’s the Bitter Hinterlands that suffers from inability the think from GM and the other two.


    June 5, 2008 at 1:28 am

  10. Interesting piece (stumbled upon it via WordPress dashboard).

    I recall hearing on talk radio probably 3 to 5 years ago that of all the automakers, GM was worst positioned in the event of a spike upward in petroleum (motor fuel) prices.

    That didn’t deter me, apparently, as I am currently the owner of two 2007 GM products (An Avalanche – I believe these are built at the Mexico plant – and an Equinox). The Avalanche is equipped with the V4/V8 option which is supposed to deliver highway consumption of about 10 L/100 km (15 L/100 km city); the trick is one has to drive at no more than 100 – 110 km/h to achieve this and therein lies the difficulty.

    I see having to downsize (and downgrade) at some time in the future, though. Unfortunately, the pickle we’re in today with respect to transportation is the result of years of short sightedness and probably the influence of the automakers in the long ago early days of the automobile. I live in a rural setting in Alberta and it’s difficult to get anywhere other than by car/truck.

    Do I need the truck? Sometimes, but probably not enough to justify its daily use. Do I like the truck? Oh, yes. At my age, creature comforts was the overarching reason for selecting the vehicle. Could I do without 4WD? Probably. But, between GM and the dealers out here, you can’t find such a vehicle equipped only with 2WD. Like I said, many reasons for the pickle we’re in.

    @Meredith: I have a 1970 GMC 3/4 ton truck in my driveway (it never really moves, but it could). You’re description of under the hood is pretty accurate.

    Thanks for the discussion.


    June 5, 2008 at 12:26 pm

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