For a second consecutive year, GM’s Oshawa production facilities have received J.D. Power and Associates’ “Gold Plant Quality Award.” The award is given to the production facility with the fewest number of defects per vehicle, as measured by J.D.’s famous “Initial Quality Study.” Oshawa created cars with just 43 defects per 100 vehicles. The industry average was 124. So what do you do if you have the second most productive assembly plant on the continent? If you’re GM, you do the only logical thing possible: you close it.
There’s no question that GM has too much of everything: brands, models, dealers, workers, factories and suits. Although the media hails GM CEO Rick Wagoner for cutting (a.k.a. buying off) production workers and eliminating plant capacity, they’re forgetting that the same stupidity that lead to the cuts could well mean stupid cuts. As GM downsizes its vast empire to match its diminished role in the US automotive market, it runs the risk of making too many cuts in the wrong places. Like Oshawa.
It may be a piercing glimpse into the obvious, but a plant that produces the fewest defects per vehicle is also building your highest quality cars. GM needs higher quality products like a losing football team needs touchdowns. The days when close enough was good enough are long gone. If GM is going to claw their way back against the likes of Toyota, Honda and Nissan, they can only do it with virtually defect-free products. They know this. In fact, they already claim success; continually citing a supposed “perception gap” between old (i.e. crap) and new (i.e. high quality) GM vehicles.
Again, it all seems pretty simple: produce better vehicles at your award-winning plants and reap the rewards, right? Well here's the thing. The vehicles produced at GM’s Oshawa plants are some of GM’s best sellers. Oshawa’s Number 2 Plant produces the Pontiac Grand Prix and Buick LaCrosse. The LaCrosse is the best selling vehicle under the Buick marque, accounting for some 93k units in 2005. The Grand Prix has only just been eclipsed by the G6 at around 120k units. But here’s the rub: GM (literally) has no business making “best-selling” products that drop as low 93,000 units. Their huge dealer network and corporate infrastructure require gigantic hits, regardless of their quality. And yet…
By killing Oshawa, GM is revealing two important defects in its “right sizing” game plan. First, the General’s generals are demonstrating their lack of focus on product quality. Why kill your best plant before your worst, even if that plant’s products aren’t best sellers? If a hockey team doesn’t make the playoffs, you don’t trade your best player, you rebuild around him (unless you’re from Boston). Oshawa builds some of the best-built products in GM’s lineup. Throwing that skill overboard in favor of less capable factories is insane. Which brings us to the second problem: flexibility.
Honda’s American facilities can change the platform-sharing vehicles that a factory produces in a matter of hours, tailoring production to meet changing demand (e.g. Ridgeline pickup to Odyssey minivan). The new, smaller GM will need to follow Japan’s lead, establishing factories that can create more than one product. This trend increases the importance of any given factory’s workers and processes; product changeover is nowhere near as easy as building the same thing day in, day out. Again, it makes sense to use your A-team, not the accidentally successful B, C and D teams.
A recent GM internal report supported the philosophy. It recommended that GM invest $400m in Oshawa to transform and amalgamate the two plants into a single class-leading, platform-sharing production facility. The plan: let the men and women of CAW local 222 produce the upcoming (and day late) rear-wheel drive, mid-size Zeta platform. If implemented, the end result would be a Canadian produced Cadillac DTS, Buick Lucerne and GM’s latest halo, the Chevrolet Camaro. When asked about this report to save the golden egg laying goose, GM Car Czar Bob Lutz scoffed and dismissed its conclusions as “merely speculative’. Speculative because transferring production northwards would require closing the DTS’ and Lucerne’s current Detroit/Hamtramck home. In the UAW-appeasing, YIMBY (Yes In My Back Yard) world of GM, that ain’t gonna happen.
It’s not right. GM should use its Oshawa facilities to their utmost capabilities. The factory has proven that they can produce over 500,000 vehicles annually that rank among the best for fit and finish. The Detroit/Hamtramck plant only cranks out 170,000 vehicles with the same number of employees. GM should consider Darwin’s theory and let the back of the herd die. Right size the right plants, kill the stragglers that keep dragging the brands down and invest in what will ultimately make you a better carmaker. After all, it’s one thing to talk about quality. It’s another to actually build it.
The phrase “too stupid to live” rings out in my head. Darwin would be proud. Watching GM is like watching natural selection at work. In a highly competitive environment stupid decisions lead to death. At this point, I don’t care if they die… they deserve whatever they get. It seems like the best we can hope for is that a somewhat viable car company might rise from their grave.
I’ve got to agree with Ayn Rand on this one, only in this case it’s un-american to buy from GM. I’d rather see them rise, passionately, from the ashes than to cling desperately, and pathetically, to their current state of affairs.
…And the drunken giant stumbles yet again.
I work in a factory (aluminum sheet) that has become very successful by being the most flexible plant in the company. It’s disconcerting to see that a principle that we live by (flexibility) can be overlooked by a company as big (and at one time, successful) as GM. Sadly GM isn’t the only manufacturing giant to ignore this, and it’s costing America jobs that it can’t afford to lose at it’s current rate for much longer.
Oh, by the way, i really like the animated overlay when you click on the graphic.. very classy.
Another problem for GM. Just on a lark (since, I’ll NEVER buy another GM product) I thought I’d go to the local “stack ’em high/sell ’em cheap/push like hell/advertise like mad” Chevrolet dealer, and then the Kia dealership next door (owned by the same sleazeballs).
The Chevy dealer probably has 500 trucks and SUVs, and there were maybe 12 Malibus, maybe 15 or 20 Impalas, one Monte Carlo, a few Cobalts and a few other cars. I kid you not.
The base price on the Malibu sedan with automatic and four cylinder was a tad under $17,000 and the car was built in Kansas City.
Well, figuring that GM lost some $2800 per vehicle sold new last year, does that mean the retail price on the Malibu should be more like $19,900, in order to turn some small profit? Possibly. Except, who would buy them, then? They aren’t selling brilliantly well at $17,000.
The KIA Optima (I could only find a slightly up-market car with alloy wheels) with four cylinder engine retailed at $18,400. It’s made in “low wage” South Korea. The KIA dealer claims to be the largest in Michigan. There were tons of all KIA vehicle types, including their biggest SUV (which is only about the size of the Chevrolet Equinox, a so-called compact SUV).
The Chevrolet has a 3 year warrantee (from experience, I can say it is not worth the paper it is printed on) while KIA has a 10 year drivetrain warrantee (as an owner of a Hyundai, I can tell you it probably is going to be honored).
GM? Too many trucks, too many SUVs, yet factories still cranking out the non-selling vehicles like so many sausages. Plus, vehicles priced below production costs. The company is surely doomed.
What a way to run a railroad.
http://email.gmcanada.com/corpdb/cachq/pressrel.nsf/7a15ac9c7647fb7985256790005e5a02/245a7af26b08648f85256fb80063a790?OpenDocument
“Oshawa, Ontario (Wednesday, March 02, 2005) – General Motors of Canada Limited (GMCL) President Michael Grimaldi today announced a $2,500,000,000 reinvestment in GM???s Canadian operations representing the largest and most comprehensive automotive investment in Canadian history. Following agreements with the Ontario and Federal Governments, GM???s ???Beacon Project??? investments will strengthen automotive engineering, R&D and manufacturing capabilities in Canada. The Beacon Project includes the following:
New Vehicle Programs
Flex Manufacturing and Environmental Leadership
Employment and Skills Training
New Canadian Automotive Innovation Network
…”
It’d be nice if they could be consistent from year to year.
Completely off topic…but, since I’m crazy for some puck..
If a hockey team doesn???t make the playoffs, you don???t trade your best player, you rebuild around him (unless you???re from Boston).
Boston is only eclipsed by Chicago as the worst-run team in the sport. They GAVE AWAY a top young goaltender for a completely unproven commodity on Saturday…
You know, Canadians are always getting the short end of the stick. It’s a damn shame. GM should……
Wait a minute. Toyota is building another car plant down the road in Woodstock Ontario.
Never mind.
Chrysler also has a large facility nearby. Ontario is where most manufacturing, but especially autos are concentrated in Canada.
I wonder if one of the other companies with large plants in the area is going to start bidding for Oshawa.
I’ve never completely understood the reasoning behind thinking the Camaro is hit just waiting to happen. If I remember correctly, Bob Lutz stated that the Camaro, and the Firebird/GTO that will certainly follow, would have to sell between 120K and 150K units just to break even. The Mustang sells a little more than that right now. In 2002, the Camaro sold about 50K units and that was it’s last year. In 2001, less than 30K Camaro’s were produced. So all the sudden, between three and five times as many Camaro’s are now going to be sold and purchased at a consistent rate? And this would be against a Mustang that is selling well and a Dodge Challenger? The rear-wheel drive coupe is a segment that could easily sell 450K units a year (assuming each needs to sell 150K to break even/get a modest profit)? There might be enough buzz to sustain one good sales year at 120-150K units, but I don’t see how that number could be sustained once everyone who wants one, gets one.
I read this article several times….and it says NOTHING! Nowhere does it discuss any details of any plant closures ANYWHERE. Here's a quote: "As GM downsizes its vast empire to match its diminished role in the US automotive market, it runs the risk of making too many cuts in the wrong places. Like Oshawa." GM also runs the risk of the RenCen slipping into the Detroit River. Same facts support both statements. Or, how about this zinger: "By killing Oshawa, GM is revealing two important defects in its "right sizing" game plan." Uh…who said anything about killing Oshawa? In fact, later in this piece we read: "A recent GM internal report supported the philosophy. It recommended that GM invest $400m in Oshawa to transform and amalgamate the two plants into a single class-leading, platform-sharing production facility." "Chanman" noted above the news release disclosing this major investment in the Oshawa plant. So, while Mr. Matthew Neundorf (whose name gets exactly zero hits on Google, hell, even a nobody like me has a few….)may be a leading candidate for the winner of the "Imitation Farago" writing contest, he's impuning GM with absolutely no facts or information to support his contentions. Jeez, Louise, it's not like it's hard to find any,right? Frankly, I think Farago himself wrote that piece, just to see if anyone was actually reading this stuff critically. At least, I'll give the TTAC editorial staff the benefit of the doubt, and choose to believe that they aren't so blinded by the GM Death Watch voodoo that they would publish an inflammatory piece like this which is 180?? away from the published facts. Oh, and congratulations to the "pile on" commenters here. If Bobby told you to go jump off a bridge, would you do that too?
http://www.cbc.ca/story/business/national/2005/11/21/gm-051121.html
And if anyone’s too lazy to click the link, here it is as inline text:
GM cutting 3,900 Ontario jobs, Oshawa and St. Catharines plants to close
Last Updated Wed, 22 Mar 2006 10:17:10 EST
CBC News
General Motors plants in Oshawa and St. Catharines, Ont., will shut down as the automaker announced Monday it will close or cut back 12 North American facilities and slash 30,000 jobs as part of a plan to return to profitability.
GM (NYSE:GM) chairman and CEO Rick Wagoner said the third shift at GM Canada’s Number 1 plant in Oshawa will be cancelled in the second half of 2006, while the Number 2 plant will be closed in 2008.
The Number 1 plant in Oshawa builds the Chevrolet Monte Carlo and Impala models. The Number 2 plant currently builds the Pontiac Grand Prix and the Buick LaCrosse/Allure models, but they are to be phased out in 2008 and GM has not scheduled a new product to be built at the facility.
The closing of the Oshawa Number 2 plant surprised analysts, who noted that recent surveys rank it as the fourth most productive vehicle assembly plant in North America and the best in terms of initial quality.
Speaking in Detroit, Wagoner also said the St. Catharines powertrain plant on Ontario Street will cease production in 2008.
The closures mean about 3,880 jobs will be lost in Canada. The Oshawa Number 2 plant closure will mean 2,750 jobs will go, while 1,000 jobs will be lost with the end of the third shift at Oshawa Number One plant.
Closure of the powertrain plant in St. Catharines will cost about 130 jobs.
General Motors had about 20,000 employees in Canada prior to the latest cuts.
Canadian Auto Workers president Buzz Hargrove called the cuts “devastating”, noting that the fallout will extend to Canadian parts suppliers who feed GM plants.
But he said he was hopeful that early retirement packages and attrition could absorb most or all of the job cuts at GM.
In the United States, the following assembly plants will be closed:
* Oklahoma City, Okla., in early 2006.
* Lansing, Mich., in mid-2006.
* Spring Hill, Tenn., at the end of 2006.
* Doraville, Ga., in 2008.
The third shift at the company’s Moraine, Ohio, assembly plant will be cut in 2006.
Other GM plants affected by the cuts include:
* The Lansing, Mich., metal centre closing in 2006.
* The Pittsburgh, Pa., metal centre ending production in 2007.
* A parts distribution centre in Portland, Ore., shutting in 2006.
* A parts distribution centre in St. Louis, Mo., which will be converting to a collision centre in 2006.
* A parts processing centre in Ypsilanti, Mich., closing in 2007.
* One additional parts processing centre, to be named later, shutting in 2007.
* The Flint, Mich., North 3800 engine facility ceasing production in 2008.
GM facing production glut
Wagoner said the closures and shutdowns will cut the company’s annual production capacity by one million vehicles to 4.2 million unit a year by 2008.
GM’s plants were reported to be operating at 85 per cent capacity, well below the plants of its Asian competitors.
Faced with falling demand and market share, and over-capacity at its manufacturing facilities, Wagoner said GM needed to make cuts.
“These actions are necessary for GM to get its costs in line with our major global competitors,” Wagoner told employees.
“In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible,” he said.
Wagoner said Monday that GM is aiming to cut its costs by about $7 billion US by the end of 2006. That goal is about $1 billion US higher than its previous target.
GM lost almost $4 billion US through the first nine months of this year as it struggled to cope with its myriad of problems, which include high costs for labour, pensions and health care.
The company’s struggles have prompted rumours that GM might file for bankruptcy protection, but Wagoner told employees last week that the company had no such plans.
* FROM Mar. 2, 2005: Ontario, Ottawa commit $435M toward huge GM investment
GM Canada’s $2.5 billion Beacon Project, which is aimed at upgrading its Ontario plants and boosting research, is unaffected by Monday’s announcement.
Shares of GM were off almost 2 per cent on the NYSE, dipping 47 cents to $23.58.
Are you suggesting, Captain Tungsten, that the editorial’s main topic, the closure of GM’s Oshawa 2 plant, is not actually happening?
A quick search for Oshawa GM on http://news.google.com/ brings up several articles from credible news sources about the closure, including this one from the Toronto Star:
Ill-fated plant wins award
June 8, 2006
http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1149717019302
GM, the country’s biggest auto maker, plans to close the Number 2 plant in 2008 and eliminate one of three shifts at the adjacent Number 1 operation in the future as it aligns output with falling demand across the continent. The moves would eliminate about 3,500 jobs.
“The situation regarding plant 2 does not change,” GM spokesperson Stew Low said after the study’s release.
The article goes on to say that GM may be investing more in Oshawa, but then a week later an article came out saying that was in fact not true.
No plans for new Oshawa investments: GM
June 15, 2006
http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1150367949242
General Motors has no plans at this point for new investments at its operations in Oshawa, Ont., and will probably continue to reduce its North American operations, said Bob Lutz, vice-chairman for global product development.
…
Lutz also reaffirmed that plant No. 2 in Oshawa is scheduled to close in 2008. That could wipe out about 2,500 jobs.
…
Lutz said production expenses for GM — including labour — exceed those of its Japanese competitor Toyota by $10 billion.
“If we want to survive, this gap has to be closed,” he said.
…
He said he believes production will move toward Eastern Europe, Mexico or Asia, putting GM closer to prospective customers.
But you’ve got a point about the name “Matthew Neundorf” … how can somebody not be in Google these days? Maybe it’s an alias.
The Truth About Cars does not “fake” by-lines. We are willing to publish authors under a pseudonym upon request, but I can assure you that every byline represents the work of one genuine, honest-to-God individual human being.
As for the similarity of tone, please note that I edit all material submitted to TTAC. I frequently alter the text to suit our house style, which features active sentence construction, a standard paragraph structure and uniformity of length (near-as-dammit 800 words).
I make no apologies for this editing process. Our common goal is to make our articles accurate, well-argued, engaging and entertaining. Foolish consistency may be the hobgoblin of little minds, but well-considered consistency is the latin teacher for homies. Or something like that.
Plant two will not close. It will be retooled as a flex manufacturing plant after GM hits up the provincial and federal govt’s for vast sums of $$ to “save” it.
Camaro will be one of the models… or so my crystal ball tells me…
Word from Oshawa directly. Plant 2, the one to be “closed”, and Plant 1, the one that assembles the Impala/MonteCarlo are in the same building, a part of what GM calls the Autoplex. Plant 2 is right across the aisle from Plant 1. They both produce vehicles based on the same platform, the venerable W car architecture from the late 1980s. The open secret plan here is to amalgamate the two into one huge flex assembly facility that will produce the same number of vehicles in the same spaces with less people ( because more automated). Nothing is gonna close unless the Death Watch comes true. The new flex arrangement will allow, as I understand it, both front and rear wheel drive versions to be assembled on the same “line”. Open secret means that things are already moving though nothing has been formally announced. It takes a heap of planning and preparation to do what GM intends so I would suppose that all of this was in the works for the last five years at least. It should have been. A few years back the relatively lowly Buick Regal was in the competition with the likes of Lexus and BMW for the best JD Power initial quality. GM had their best plants buildng taxi cabs, police cars, and rental fleets.
Rest assured that sources were consulted and as of printing any plans to reinvest in the Oshawa plant, that have been made public knowledge through press release or legitimate ‘leaked’ information still have Plant 2 at Oshawa closing in 2008. The speculation regarding the mentioned report was drummed up shortly after the Toronto media began asking the same questions I raised in my piece. There are rumblings of things to be sure, but nothing has been confirmed, and plenty has been denied.
Oh yeah, Captain Tungsten, I am living and doing fine thanks for your concern…
http://www.cbc.ca/story/business/national/2006/06/23/gm-buyout.html
About 37,000 hourly wage employees at General Motors and auto parts maker Delphi Corp. have accepted buyout offers, according to a newspaper report published Friday.
The Wall Street Journal said the number of people who accepted the offer is potentially bigger than GM had been expecting.
The newspaper said roughly 28,000 GM workers and 9,000 workers at Delphi, a former subsidiary of GM, have opted to take the offers.
Deadline for GM workers to accept the buyout offer is Friday.
In March, GM said it was offering buyouts or early-retirement incentives to all 113,000 of its hourly employees.
The voluntary retirement offers to GM workers could range anywhere from $35,000 US to $140,000 US, depending on an employee’s time with the company.
As part of a restructuring plan, GM is seeking to cut 30,000 jobs and close 12 manufacturing plants and parts operations by 2008.
Canadian workers are not being included in the buyout offers, but the company plans to close an assembly plant in Oshawa, Ont.
GM shares were off by 30 cents at $26.97 US on the NYSE.
Copyright ??2006 Canadian Broadcasting Corporation – All Rights Reserved
Once again the press fails to do their research (this is getting old), so we need to do it for them. The truth is, GM is sutting down Oshawa #2, to be combined with Oshawa #1. Its surprising that Oshawa #1 or #2 are not mentioned in this article. And this is a car site?
GM has already announced plans to spend $400 milion to upgrad Oshawa.
If you read impartial’s post, you’ll see that as of June 15th, 2006, Bob Lutz said no new investments were being made at the Oshawa plant.
Lutz said in an interview Thursday that a published report saying GM may soon approve a $400-million investment in Oshawa is ‘pure speculation.”?
I have a world cars book 2005-2006 which states (under the GM-SAIC section) that the Buick Century (old style car) being manufactured in China will be replaced by the updated Buick later – the assumption being after 2006 (since the book is highly consistent in making statements elsewhere such as “production is planned for summer 2006” and so forth). That leads me to believe the LaCrosse/Allure will be the replacement car. The DOHC 3.6 liter GM V6 is already built in China, now, for the Chevrolet Equinox / Pontiac Torrent (assembled in Canada under contract by Suzuki), and the Buick Rendezvous (Mexico sourced).
Here’s a tidbit out of chanman’s entry above: “The Number 2 plant currently builds the Pontiac Grand Prix and the Buick LaCrosse/Allure models, but they are to be phased out in 2008 and GM has not scheduled a new product to be built at the facility.”
So, will GM just import Buick LaCrosse/Allure models from SAIC in China? I wonder. As for the Pontiac Grand Prix, will Pontiac division even exist in 2008?
For that matter, will GM even exist in 2008?
SAIC just bought 45% of SsangYong of South Korea, so who knows, maybe the next Buick for China will have its basis in the SsangYong Chairman luxury car, which is based upon the old S-class Mercedes.
At least it is rear wheel drive.
Wow, it boggles the mind. Could the 2009 Buick “Chairman” be sourced from South Korea and/or China, by a Chinese owned GM, built on the basis of a 20 year old Mercedes, with a 3.2 liter inline six of Mercedes design?!
Surely, Billy Durant (the founder of GM) must be rotating at high speed in his grave.
Here’s a thought…when GM does, finally bend to the inevitable pressures and file for bankruptcy, I vote we all nominate the corporation, it’s unions, it’s board of directors and suppliers for the Darwin Award (given yearly to someone who does something both incredibly stupid and decidedly fatal). In fact, I think GM should earn a Darwin Lifetime Achievement Award.
Sic Semper GM.
I too wonder if the Camaro will be the hit GM needs. Just look at the SSR and T-bird. two cars with tons of buzz but disappointing sales. both are dead, or will be in the next year.
I think the reason they failed is that they cost too much. Just look how many non-GT mustangs are being sold. I still can’t believe how great the new Mustang looks. (I’m biased: the 69-70 fastbacks were always my favorites.) but GM needs the Camaro to consistently outsell the Mustang to be worthwhile? I’m sorry, but that’s gonna be hard to pull off.
maybe Honda will buy Oshawa.
impartial:
June 26th, 2006 at 10:02 pm
“Are you suggesting, Captain Tungsten, that the editorial???s main topic, the closure of GM???s Oshawa 2 plant, is not actually happening?”
Not at all. But Oshawa #2 is one of two car assembly plants, one truck assembly plant and one metal stamping plant that make up the Oshawa manufacturing complex. Mr. Neundorf says GM is “killing Oshawa”. Mr Neundorf is incorrect. Given the magnitude of this error, the rest of his argument, though smartly written, carries little credibility.
And GM (or any of the auto companies) will never confirm an investment in any of its facilities until it publically announces it.
# Robert Farago:
June 26th, 2006 at 10:03 pm
“The Truth About Cars … Or something like that.”
Thank you for that clarification.
Matthew Neundorf:
June 27th, 2006 at 7:51 am
“Rest assured that sources were consulted”
Rest assured? It’s the internet. Trust no one. Demand proof.
“any plans to reinvest in the Oshawa plant, that have been made public “knowledge through press release or legitimate ???leaked??? information still have Plant 2 at Oshawa closing in 2008.”
That’s a far cry from “killing Oshawa”. Given the size of the Oshawa complex, the scale of the downsizing at GM, and the fact that such decisions have many more factors than simply starting at the bottom and killing the lowest quality plants (though I hope that’s at least part of the criteria…) I don’t find it surprising that Oshawa is losing some jobs.
“Oh yeah, Captain Tungsten, I am living and doing fine thanks for your concern???”
I’m pleased to hear that. I didn’t consider the pseudonym possibility. Silly me.
One question about this article: Now we believe JD Power?
https://www.thetruthaboutcars.com/?p=1592
Key comment: “Should those seeking trouble-free wheels be sure to buy one of J.D.???s winners? Hardly.”
Kind of makes this article worthless…
Bobby/Redwing: if you haven’t noticed, there appears to be some HTML problem with the posts… at least for me viewing this page with WXP/Firefox 1.5.0.4 some apostrophes are displayed as triple question marks.