Shuttered Canadian Plants May Help Big Three Ease Projected Capacity Crunch

A study commissioned by Canada’s federal government suggests that Canada could be in a position to benefit from strong auto sales from the Big Three OEMs, and a lack of capacity could lead to more manufacturing jobs for Canada, including the revival of mothballed factories.

The Globe and Mail article quotes a study, done by CAR (Center for Automotive Research) an industry think-tank in Ann Arbor, Michigan, as stating that capacity shortages will be a major issue by 2018. 2.6 milion units of capacity were eliminated during the 2008-2011 era, and with auto sales projected to rise for the Big Three through 2018, it’s likely that they’ll be scrambling for places to churb out vehicles.

The shortage will cause the Big Three to scramble for capacity, and make it difficult for the OEMs to coerce Canadian governments into subsidizing their operations with threats of closing plants and moving production to cheaper locales . The study claims that GM may be at risk of losing market share as early as 2015, if sales rise and production capacity remains constrained, leaving GM and Chrysler unable to meet demand and sell trucks to consumers.

Ford had previously threatened to close their Oakville plant unless they received a $1 billion investment from governments, but the Ontario plant, which builds crossovers like the Ford Edge, would be a poor candidate for closure as production constraints and demand for the Edge and other crossovers continues to rise. But The Globe notes that some kind of government assistance and concessions from the unions would be required to help keep the plant running.

For its part, the CAW would also be left in a stronger position during labor talks, since automakers would be averse to jeopardizing their already shaky situation with a work stoppage brought on by a strike. The Globe cited Chrysler’s Bramalea, Ontario plant as one target where a strike would be disastrous. The Chrysler 300, Dodge Charger and Dodge Challenger have seen booming sales in 2012, and a strike that affected production of these cars would be disastrous for Chrysler.

As for the shuttered plants? The article suggests that GM’s Oshawa truck plant is a candidate for having production re-started, or converted to build unibody cars. No mention was made of the Ford St. Thomas plant, spiritual home of the Panther platform. Keep dreaming, B&B.