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UPDATE: CAW Sees GM Cars Beyond Camaro At Oshawa Plant
08/21 4:05 am (ON)
Story 0418 (DCX, F, GM, NSANY)

By John D. Stoll Of DOW JONES NEWSWIRES

DETROIT -(Dow Jones)- The president of the Canadian Auto Workers on Monday said he expects General Motors Corp. (GM) to build additional models beyond the Camaro muscle car at its Oshawa, Ontario, plant after the manufacturing complex is reconfigured in 2008.

GM on Monday announced it will build its new Chevrolet Camaro at the 53 -year-old Oshawa Car Assembly Plant starting in late 2008. The vehicle goes on sale in early 2009 and the auto maker is expected to make 100,000 Camaros annually - a low number for a plant with significantly higher capacity, said CAW President Buzz Hargrove.

"This has to be followed by some other product," Hargrove said during a phone interview Monday. He insisted that the Oshawa plant will have to produce more than 100,000 vehicles annually in order to be a viable operation, and said that the CAW is "going to start working immediately" with GM in an effort to firm up additional products.

Separately, GM spokeswoman Adria MacKenzie said Monday that GM will continue running three shifts at one of its car assembly lines in Oshawa despite the company's earlier decision to remove a shift due to slower sales of certain models. GM in November said it would remove the third shift in the second half of 2006 under a broader North American capacity reduction scheme. However, strong demand for the company's Chevrolet Impala has the company reversing the decision and it will run the third shift for the indefinite future, MacKenzie said.

As for future plans for the plant, MacKenzie said the company could launch additional models at the Oshawa plant to accompany the forthcoming Camaro.

GM currently is in the midst of reviving its product lineup for North America in response to its falling market share and increased competition from Asian competitors. The company has increased its capital spending levels in recent years in order to fund that push. In a note to investors Monday, Wachovia auto analyst Rich Kwas said GM's vehicle launch plans for the next year are rivaled by only Nissan Motor Co. (NSANY).

"We estimate that approximately 29% of GM's U.S. volume will be comprised of new or redesigned product over the next year," Kwas said. Analysts have often criticized GM for not having a consistent flow of innovative product, but GM executives insist the company has turned a corner and point to the Camaro as evidence of its change.

The Camaro, which has been on hiatus since the early part of the decade, will return to the GM lineup as a rear-wheel drive car capable of competing with Ford Motor Co.'s (F) popular Mustang coupe.

GM is formulating an entirely new rear-drive architecture for the Camaro, and analysts expect GM to announce at least two additional products that will be built off that architecture. The Camaro siblings could include a sporty Pontiac car and a Chevrolet car capable of taking on DaimlerChrysler AG's (DCX) Chrysler 300 sedan.

Hargrove expects those vehicles will also be built in Oshawa. If the move happens, it would be a "big win" for the top Canadian auto union, CAW Local 222 President Chris Buckley said in an interview. Buckley, who oversees union activities at the 5,600 hourly worker plant, said GM's future plans will be based "purely on market demand."

Currently, the Oshawa plant is capable of building more than 500,000 vehicles annually at two separate facilities, one of which continues to run on a three-shift schedule and one that runs on a two-shift schedule. The plant produces only front-wheel drive models that are sold in GM's domestic brand lineups. The current body style for those cars, including the Pontiac Grand Prix and Chevrolet Monte Carlo, are due to be phased out in 2009, Buckley said.

Hargrove said GM plans to consolidate the two Oshawa facilities into one building in order to facilitate production of the Camaro and other, not-yet-announced products. GM plans to spend C$740 million (US$658 million) to consolidate operations at Oshawa, the company said Monday in a press release.

GM's updated plant in Oshawa will be considered "flexible," according to Buckley, and capable of building both front-wheel and rear-wheel drive vehicles. The reconfiguration of the plan will do away with the need for two separate car-making facilities and will likely cut the production capacity of the plant.

MacKenzie said GM hopes to utilize three shifts in order to build the Camaro and its potential siblings once the car begins its production run in two years.

GM first announced its plan to shutter one of the Oshawa buildings in November, when it outlined the North American capacity-reduction scheme for the region. By 2008, GM is looking to shutter 12 plants. In 2006, the company worked with the United Auto Workers to pull ahead by two years its goal of shaving 30,000 hourly jobs.

Hargrove called the newly announced investment "a good start," but insisted "there still is another decision to be made." He said the CAW has proposed that GM set up two assembly lines in the revamped facility, but the auto maker has not yet given firm details.

No matter what happens, the consolidation of operations into one facility will result in job losses, Buckley said. The CAW expects most of the job reduction to take place via natural attrition.

(END) Dow Jones Newswires 08 -21 -06 1605ET
Copyright (c) 2006 Dow Jones & Company, Inc.