UPDATE 2-GM Canada to finish 70,000 or more trucks a year after deal - sources

Thu Sep 22, 2016 5:22pm EDT
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(Adds analyst comment)

By Allison Martell and Susan Taylor

TORONTO, Sept 22 (Reuters) - General Motors Co's Oshawa plant will do final assembly work on at least 70,000 pickup trucks a year once investments promised in its Canadian unit's new labor agreement are complete, according to two sources close to negotiations.

GM reached a tentative labor deal with Unifor, the union that represents its Canadian manufacturing workers, early on Tuesday, saving thousands of jobs at the Oshawa plant, but the two sides declined to say what new vehicle would be produced there.

On Wednesday Reuters reported that the plant would do final assembly of Silverado pickup trucks using bodies shipped from the GM plant in Fort Wayne, Indiana, boosting production of the strong-selling model.

But production volume, crucial to staffing levels at the plant, was not immediately clear. On Thursday, the sources said Oshawa would finish at least 70,000 of the trucks a year once necessary investments were made, and perhaps as many as 80,000.

The volume is material to Oshawa. The plant is on track to produce about 210,000 vehicles this year, according to Joe McCabe, president of AutoForecast Solutions. Without new investment, production would have fallen to 130,000 vehicles next year.

Brian Johnson, auto industry analyst for Barclays, said that if GM makes the reported investments in Oshawa it would allow the company to gain share in the lucrative North American pickup truck market. But the company would have to be careful that it does not risk a price war that could threaten profits, he said.

"Right now, the good news is there is price skirmishing (among) pickup trucks (competitors), but no one has enough capacity to do anything stupid," he said.   Continued...