GM creating jobs, but where is its long-term plan?

08Jun10

Colour me skeptical.

General Motors has announced plans to build a new line of fuel-efficient six-cylinder transmissions at its facility in St. Catherines. Hot on the heels of April’s similar declaration that GM would be building new V8 engines at the plant, this would appear to be great news.

The CAW says the moves will create 500 new jobs at the plant, allowing the factory to remain open for another 15-20 years. This, on the surface, is indeed good news for Ontario’s battered manufacturing sector.

But there are issues that stand in the way of this being slam-dunk great.

For one, GM hasn’t exactly shown it’s learned much from the pounding it has taken over the past few years. Sure, the new Camaro is selling like hot cakes and the company has already paid back its U.S. federal loans — or so it claims.

Sales are on the rise, and the company has posted positive gains in all five months of the new year to date.

But the numbers should have an asterisk beside them. For one thing, GM has offered financing deals the likes of which consumers have never seen before in attempts to woo them. How long can the company keep offering deals that include little-to-no money down, etc?

Also, the Camaro will never be anything more than a niche car. How many Canadians can afford the gas or insurance for a Camaro, let alone the purchase price?

Finally, the announcements for St. Catherines show where GM’s head is still at: building six and eight-cylinder vehicles, when high gas prices and ridiculous insurance rates have many Canadians — Ontarians in particular — buying compacts and sub-compacts in record numbers.

How about putting more effort into building more Chevrolet Aveos and such? Of course, the answer is that the company can’t make much money on these cars due to union wages, hours, etc. So, GM continues to focus on building large and expensive vehicles, despite their lesser sales.

Talk about a chicken and egg scenario. It’s enough to make one wonder if GM is ever going to come up with a sustainable plan for the future.

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