General Motors Company (GM) announced that it will close one of the two assembly lines at its Oshawa, Ontario plant by June 1, 2013 leaving the future of 2,000 workers uncertain and leading to a loss of an additional 18,000 spin-off jobs.
The Oshawa plant manufactures Chevrolet Impala and Chevrolet Equinox. The assembly line was initially expected to cease production in 2008 as a part of GM’s North American restructuring plan of scaling back of overall operations in Canada under its bankruptcy court protection. However, the plant was kept on operation beyond that time in order to meet demand for Chevrolet Impala and Chevrolet Equinox crossover.
GM informed the Canadian Auto Workers employees that it will remove one of three shifts on the consolidated line in the fourth quarter of 2012 and the second one in the first quarter of 2013.
After the closure, GM will shift the production of the next-generation Chevrolet Impala to Oshawa’s second assembly line that produces Chevrolet Camaro, Camaro Convertible, Buick Regal and Cadillac XTS. Meanwhile, GM will build the Equinox at its former Saturn plant in Spring Hill, TN, which was shut down in 2009 (except an engine plant that remained in operation).
GM’s restructuring plan already cost many jobs at its Canadian and U.S. operations with the closure of several plants. In Canada, the company has already shut down a truck plant in Oshawa and a transmission factory in Windsor, Ontario.
Currently, GM employs more than 10,000 people in Canada. Before bankruptcy, the automaker operated major operations in Oshawa, Windsor and St. Catharines, Ontario.
GM, a Zacks #3 Rank (Hold) company, reported a $100 million fall in profits to $1.6 billion in the first quarter of 2012 from $1.7 billion in the same quarter of 2011, before special items, due to lower profits from its European operations.
On per share basis, adjusted profits were 93 cents during the quarter, down 2 cents from the first quarter of 2011. However, it exceeded the Zacks Consensus Estimate of 84 cents. Adjusted earnings before interest and taxes (EBIT) dipped to $2.2 billion in the quarter from $2.0 billion in the year-ago quarter.
GM’s main competitor Ford Motor Co. (F) has also disappointed by posting a sharp 20% fall in profits to $1.6 billion in the first quarter of the year from $2.0 billion in the same quarter of 2011. Including special items, the decline in profits were much more pronounced. It was 45% to $1.4 billion from $2.6 billion a year ago.
On per share basis, profits ebbed 17% to 39 cents from 47 cents in the first quarter of 2011. Nevertheless, it was higher than the Zacks Consensus Estimate of 35 cents.
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GENERAL MOTORS (GM): Free Stock Analysis Report
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