November 9, 2009 / 3:30 PM / 9 years ago

UPDATE 2-GM spending C$90 mln to boost production in Canada

* GM adding 40,000 vehicles per year to CAMI production

* Recalling about 150 workers to plant

* Retooling to take 7 months

* GM Canada sales likely down in November (Adds details, quotes)

By John McCrank

INGERSOLL, Ontario, Nov 9 (Reuters) - General Motors Co [GM.UL] said on Monday it would invest C$90 million ($85 million) to boost production at a joint venture plant in Canada where it builds two popular crossover utility vehicles.

GM also said it would bring back about 150 laid-off workers to the CAMI Automotive plant in Ingersoll, Ontario, a joint venture with Suzuki Motor Corp (7269.T) that has about 2,000 hourly employees.

The automaker said it would immediately begin to retool the plant — about half way between Toronto and Detroit — to increase production of the Chevrolet Equinox and GMC Terrain crossovers by 40,000 vehicles. The plant now produces 185,000 vehicles a year.

“The plan that we have laid out for GM Canada is still in its early stages, but we are seeing some very encouraging signs, and today is a testament of that,” said Arturo Elias, president of GM Canada.

GM emerged from bankruptcy protection in July with the help of billions of dollars in funding from the governments of the United States, Canada, and the province of Ontario.

At the time, the struggling automaker was bleeding jobs, having just shuttered its truck plant in Oshawa, Ontario, affecting 2,600 workers. It had also just cut four of its brands — Saab, Hummer, Pontiac and Saturn — so that it could focus on core U.S. nameplates: Chevrolet, Cadillac, Buick and GMC.

That refocusing strategy played into CAMI’s favor, and GM recently started a third shift at the 20-year-old plant, recalling about 300 workers there last month. With Monday’s announcement, no remaining CAMI workers will be on layoff.

“We are starting to see the light at the end of the tunnel and it’s not an oncoming train,” Tony Clement, Canada’s minister of industry, said in Ingersoll at the GM announcement.


GM posted its first monthly U.S. sales increase in nearly two years in October, helped by sales of the Equinox and the Terrain. In Canada, however, the company’s sales were down over 30 percent from the previous October.

Elias told Reuters that GM Canada’s November sales would also be down, as the brands that the company culled in North America were stronger sellers in Canada than in the United States.

“In November, they (sales) are less than in the prior years, but that’s expected when you drop all the brands and models, but very much in line with our strategy and that’s where we want to go,” Elias said.

He added that the company is now better able to back up its remaining brands with marketing dollars.

“The proof is in the deeds,” he said. “We just put the third shift here on October 19 and less than a month later we announce a capacity increase.”

Workers at the CAMI plant reached a new collective agreement with GM at the end of September. That deal froze wages and pensions, trimmed benefits, introduced a monthly healthcare contribution and reduced break times.

“We have been through some incredibly hard times in the last four or five months, we have had some very difficult decisions to make, from production smoothing that allows people to share the work, to the recent collective agreement that gave us the opportunity to get this investment,” said Ken Lewenza, president of the Canadian Auto Workers union

“Today we can celebrate a victory.”

GM Canada has about 9,000 employees. ($1=$1.06 Canadian) (Reporting by John McCrank; editing by Rob Wilson)

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