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HomeMy WebLinkAboutADMIN-4-92 REPORT #3 THE CORPORATION OF THE TOWN OF NEWCASTLE REPORT Meeting: COUNCIL Date: FEBRUARY 10 1992 File # (~) (-" . \ ' Res. # '_. .~. )'- i By-Law # Report #: ADMIN. 4-9~le #: Subject: The Announcement of the General Motors Corporation on December 18 1991 regarding the downsizing of its operation in North America Recommendations: It is respectfully recommended that Council approve the following: 1. THAT Report ADMIN. 4 - 92 be received; 2. THAT the recommendation contained in Attachment #3 to Report ADMIN. 4 - 92 be adopted; and 3. THAT a copy of Report ADMIN. 4 - 92 be forwarded to the City of Oshawa and the Regional Municipality of Durham. REPORT: On December 18th 1991, the General Motors Corporation announced that it would be commencing a further down-sizing of its North American operations in order to bring its capacity in line with market share. In this regard the Company will be focusing on the closure of certain plants and facilities, employee reductions and reductions in capital investment within North America. Furthermore, the Company indicated that the effects of down- sizing its operation would be shared in both the United States and Canada. RECVCLEO~PAPIER PAPU1~RECYCLE THIS IS PRINTED ON RECYCLED PAPER ADMIN. 4 - 92 In order to address this extremely significant announcement, the City of Oshawa convened a meeting of the Regional Chairman, the Mayors of the area municipalities within the Region of Durham, the Mayors of the surrounding municipalities and senior staff from those municipalities on Monday, January 27 1992 at the parkwood Estate in the City of Oshawa. As a result of the session a communique was released as it directly related to the Parkwood Conference (refer to Attachment #1). The purpose of the session was to address the recent announcement of General Motors and attempt to compile information related to the potential impact of the announcement. In addition, possible future courses of action that could be taken to maintain the presence and vitality of General Motors within the City of Oshawa were addressed. In this regard it was felt that a co-operative effort co-ordinated through the City of Oshawa would be most beneficial and effective. The City of Oshawa will be co-ordinating a community impact statement with contributions from the participating municipalities for the purpose of presentation to General Motors by February 14th 1992. The respective staff have liaised with City staff in order to provide the most up-to-date information available regarding base data that can be incorporated in the community impact statement (refer to Attachment #2). The intention of this effort will be to indicate to General Motors the significant economic impact that any reduction in production would have on the general area in terms of jobs lost and indirect impacts on industries related to its automotive manufacturing processes in Oshawa. A copy of this impact statement will be made available once it has been finalized by the City of Oshawa. In addition, it was requested that each area municipality pass a resolution lending support to the submission to General Motors emphasizing the Company's importance and significant impact on ADMIN. 4 - 92 the economic climate for the general area. Attachment #3 provides a resolution suitable for adoption by the Council in this regard. Also, it is intended that the municipalities involved at the parkwood Conference co-ordinate their efforts with the provincial and Federal Governments in order to address the serious issue of job loss in the automobile and related manufacturing sectors. Specifically some of the issues that may have to be addressed relate to government expediency in responding to Corporate needs, maintaining competitiveness within the Ontario and Canadian economies and responding to changing economic circumstances, just to mention a few. The vital role of General Motors in the local economy and community is obvious. A co-ordinated effort by the various municipalities affected in trying to address the overall concerns is being undertaken with considerable merit. Accordingly, it is respectfully recommended that the Town Council lend its support as suggested. Respectfully submitted, Lawrence E. Kotseff, Chief Administrative Officer LEK:nof Att. . . The Parkwood Conference Communique ATTACHMENT #1 TO REPURT ADMIN. 4 - 92 For Immediate Release The announcement by General Motors Corporation on December 18, 1991, that a major restructuring of the corporation is underway, possibly leading to the closure of certain facilities in Oshawa, is serious cause for concern in the City of Oshawa, the Region of Durham and the surrounding municipalities. Today, Mayor Nancy Diamond of the City of Oshawa convened a meeting of the Chairman and eight Mayors of the Regional Municipality of Durham, as well as the Mayors of surrounding municipalities at the "Parkwood Estate". The meeting at Parkwood, the ancestral home of the founder of General Motors of Canada Limited, Colonel R. S. "Sam" McLaughlin, was indeed a fitting venue. Set within stunning landscaped grounds, Park wood is a magnificent historical reminder of Oshawa's strong and continuing association with automobile production. Since that day in 1908 when the first car rolled out of the McLaughlin Motor Car Company plant, Oshawa's destiny with vehicle manufacturing was forged. From those 154 stately vehicles of 1908 to the state-of-the-art methanol burning Luminas of the 1990's, Oshawa and the GM Mark of Excellence have been happily married. The Mayors met to discuss and develop a common strategy to convince General Motors of the benefits of retaining full employment at its Oshawa Plants and of the vital role General Motors plays in the life-blood of their communities. The conference was chaired by Dr. R. J. Vincent of Durham College of Applied Arts and Technology with the main presentation given by Mr. Ted Goodchild, Director of Planning and Development for the City of Oshawa. Mr. Goodchild highlighted the - 2 - importance of General Motors and the automotive sector in the economic and community life of Oshawa, Durham Region and the surrounding area. It was noted that, over 40 percent of manufacturing employment in Durham Region and surrounding municipalities is in the automotive sector. Industry experts estimate that for every car assembly job, three jobs are created in the auto parts industry and related firms elsewhere. Indirect employment in service and retail sectors count for thousands of additional jobs. Ramifications of job losses at General Motors would be immediate and far reaching in every community. Information presented revealed that in Durham Region and surrounding municipalities, there are approximately 110 automotive related firms employing an estimated 9,300 people. Further information presented clearly demonstrated that General Motors employees live throughout the Region of Durham and surrounding counties. Any future plant closures would have measured impacts on these communities, emphasizing the need for a coordinated inter-municipal approach to this potential problem. Emphasizing the positive business climate that the industrial heartland is famous for, the Mayors were united in delivering a clear, unequivocal message to Detroit that General Motors is vital to the health of the local communities. Today a consensus has been reached on a number of items. First, the Mayors recognize that it is not their role to become involved in General Motors and the C.A.W,'s internal negotiations, however, they are unanimous in their strong support of General Motors and its employees during the coming months. Secondly, the need to work cooperatively to prepare a community impact evaluation of a potential plant closure in Oshawa is critical. There is a need to convey to General Motors the vital role that it plays in the local economy and the community. This evaluation will make - 3 - the most powerful case possible for keeping all General Motors plants operating in Oshawa. Thirdly, it was agreed that there is a need to seek innovative and workable municipal actions to assist General Motors in maintaining its present operation and employment levels. Fourth, a concerted municipal effort is necessary in order to initiate decisive action by both the Provincial and Federal governments who have the means to affect General Motors' decision making. Mayor Nancy Diamond of Os haw a said, <<<We are united in our belief that the quality of our people and the competitive advantage of doing business in our communities will convince General Motors to continue their long and proud history of producing quality vehicles in Oshawa." January 27,1992 Conference Participants Present at the conference were Mayor Nancy Diamond of the City of Oshawa; Gary Herrema, Chairman of Durham Regional Council; Mayor Tom Edwards of the Town of Whitby; Mayor Diane Hamre of the Town of Newcastle; Councillor Roger Anderson of the Town of Ajax; Mayor Don Hadden of the Township of Brock; Councillor Maurice Brenner of the Town of Pickering; Mayor Howard Hall of the Township of Scugog; Mayor Gerri Lynn O'Connor of the Townshi p of U xbridge; Mayor Jack Doris of the City of Peteborough; Mayor Angus Read of the Town of Cobourg; Mayor Max Radiff of the Town of Lindsay; Representatives of the City of Trenton; Mayor Cathy Redden of the Town of Campbellford; and Mayor Donald Chalmers, Town of Port Hope. ATTACHMENT #2 TO REPORT ADMIN. 4 - 92 GENERAL MOTORS - PLANT CLOSURES PROJECTED IMPACT ON THE TOWN OF NEWCASTLE Effect on Local Industries Existing Industries 4 industries currently located in the Town of Newcastle supply materials to the GM Oshawa Operation GM Oshawa is the primary customer for only one of these companies accounts for 60-70% of business employment of 56 represents approximately 7% of the industrial labour force in the Town (excluding Ontario Hydro) at the other three companies, GM Oshawa accounts for between 1% and 10% of business Potential Industrial Investment the Town has a significant amount of vacant land and vacant building space in existing Industrial parks reduction in scale of operation at G.M. Oshawa will make it more difficult for the Town to market industrial land and space for businesses oriented to G.M. Municipal Assessment the Town's assessment base is currently 86% residential/14% industrial commercial the reduction or loss of existing industries would aggravate this imbalance Effect of Lost Waaes Existing Residents approximately 2815 residents of the Town are currently employed at the GM Oshawa Operation 2365 residents in plant operations (15% of total G.M. plant workforce) 450 office staff (20% of total G.M. office staff) Newcastle can expect to bear a proportional share of job losses at the G.M. Oshawa Operation for example, assuming Car Plant No. 2 (with 3600 workers) is closed represents 24% of total plant workers 24% of 2365 Newcastle plant workers = 567 assuming the loss in office staff would be 12% (half that of plant losses) 12% of 450 Newcastle office workers = 54 567 + 54 = 621 expect to have terminated) (total Newcastle residents who could their employment at G.M. Oshawa Increase In Welfare Costs 621 residents represents approximately 565 households assumes that in 10% of households, more than one member is employed at GM Oshawa 565 households represents approximately 3.5 % of households in the Town assuming 50% of affected Newcastle households would not find alternative employment by the time their Unemployment Insurance benifits expire 50% of 565 families = 283 families could potentially require welfare welfare costs for a family of three is a maximum of $1307.00 per month $l307.00 x 283 families = $370,000.00 per month additional welfare costs would be borne by residents of Durham Region, including the Town, through their municipal tax assessment Reduced Expenditures on Retail and Personal Service Items reduced discretionary income as the result of lost wages impacts local merchants this impact however, cannot be quantified Potential New Residents the Town has an oversupply of vacant residential land * 1428 unbuilt residential units in registered subdivisions (1.25 year supply)** 4,566 residential units in draft approved subdivisions (4 year supply)** 11,389 residential units. applied for (10 year supply)** reduction of employment at GM Oshawa would further soften the demand * based on average annual absorption for the period 1987 to 1991 ** (based on the average annual absorption for the period 1987- 1991) ATTACHMENT #3 TO REPORT ADMIN. 4 - 92 ADMIN. 4 - 92 WHEREAS the General Motors Corporation has recently announced that it would be commencing a further down-sizing of its North American operations in order to bring its capacity in line with market share; WHEREAS the Company will focus the closure of certain operations, employee reductions and reductions in capital investment within North America which may detrimentally affect the City of Oshawa, the Regional Municipality of Durham and the surrounding area municipalities; WHEREAS the importance of the General Motors Corporation in the Regional Municipality of Durham and the surrounding municipalities is of critical importance to the economic health and well-being of the general area; WHEREAS there is significant dependence of residents of the area, in particular in the Town of Newcastle, on employment opportunities in the automobile and related industries by the operation of General Motors in the City of Oshawa and the Regional Municipality of Durham; and WHEREAS it is critical that all affected municipalities co- ordinate their efforts in order to maintain the economic well- being in the general area; NOW THEREFORE BE IT RESOLVED BY THE COUNCIL OF THE CORPORATION OF THE TOWN OF NEWCASTLE: 1. THAT Council endorse the efforts of the City of Oshawa in co-ordinating and submitting a community impact statement to the General Motors Corporation indicating the economic importance of the Company in the general area; and , ~ ADMIN. 4 - 92 2. THAT the City of Oshawa and the Regional Municipality of Durham co-ordinate efforts at the provincial and Federal Government levels in order to explore ways and means that employers such as the General Motors Corporation can improve their economic competitiveness within the Ontario and Canadian economies.