GM to invest $850M in research and development
Published Tuesday, July 24, 2012 3:31PM EDT
Last Updated Tuesday, July 24, 2012 11:11PM EDT
GM Canada announced Tuesday that it will invest $850 million in various research and development projects over the next four years.
The bulk of GM’s investment is said to go toward the development of electric cars and environmental research rather than jobs on the assembly line.
GM director of engineering Matt Crossley said the company has already spent around $100 million and will continue spending around $150 million a year until 2016.
The investment will help fulfill conditions of the 2009 bailout package GM accepted from the federal and provincial government.
Prime Minister Stephen Harper was at the plant when the announcement was made.
Harper welcomed the funding, calling his meeting with the automaker’s president, Ontario Premier Dalton McGuinty and Finance Minister Jim Flaherty a “pleasure.”
Harper reflected on the decision to bail out GM, saying that while it was a difficult one, it was the right one under the circumstances.
Harper said that thanks to the bailout, the company has been able to rebound and make valuable investments in Canada that will enhance the country’s future competitiveness.
“Investment in R&D brings long-term benefits to Canada, drives made-in-Canada innovation, increases our ability to compete internationally and creates high-paying and stable jobs,” Harper said in a statement released after the announcement.
The prime minister praised GM’s new investments, calling them an example of value-added manufacturing which will lead to increased innovation and research at Canadian universities and centres of industry.
“The ripple effects will be felt far and wide,” Harper said. “Research and development, finding better and more efficient ways—that is how we win in a competitive world.”
GM’s plans include a significant investment in the Canadian Engineering Centre in Oshawa. The company said it plans to make the centre a central part of its global engineering network.
The company also said it would focus on developing partnerships with Canadian research institutes, schools, suppliers and manufacturers.
Speaking to reporters, GM Canada president Kevin Williams said that the company “takes nothing for granted,” and that they are thankful for “the incredible support that Canadians provided that gave us this second chance.
“It’s driving us everyday to make this a company that Canadians can be proud of again,” he said.
Williams said the company would focus on three different areas of research: lightweight materials, software and communications.
Williams said GM research in these areas will help create “game-changing technologies for tomorrow’s vehicles.”
GM had promised to invest into research and development projects in Canada in exchange for $10.5-billion received from the government to help the flailing company - which was on the brink of bankruptcy in 2009.
Ontario’s premier also welcomed GM’s announcement.
McGuinty praised the company for its efforts to restructure and make good on its 2009 promise.
“Your engineers, designers and planners are thinking years into the future about vehicles that are safer, more efficient and fun to drive,” he said.
McGuinty specifically praised GM’s efforts to design an electric car which will “help us have a cleaner environment too.”
The premier said GM’s groundbreaking ideas and perseverance are helping the recovery process for Ontario’s auto sector.
While the prime minister and premier celebrated GM’s news, members of the Canadian Auto Workers union received the news cautiously.
CAW local 222 president Chris Buckley told CTV Toronto that there are still important questions that need to be answered.
“Though it is good news that General Motors is looking at redesigning vehicles and developing vehicles, the question is where will those vehicles be produced?” said Buckley.
Buckley said he would have liked to hear commitments from GM about reinvesting in Canadian operations and jobs.
GM says its investments will be spread over the country, with no significant job gains slated for the Oshawa region. However the company maintains that the region will benefit from economic spinoffs.
Anthony Faria, director of the Office of Automotive Research at the University of Windsor, said that GM’s planned investments will likely result in white collar jobs, not assembly line jobs.
Part of GM’s bailout package contained a requirement that the company maintain 16 per cent of its North American assembly in Canada.
Currently the company maintains assembly in Canada at a level higher than 16 per cent, however Faria believes that unless GM brings a new product to Oshawa that level could drop.
In June, GM announced it would start shutting down the last of its consolidated lines at the Oshawa plant. The downsizing will begin this fall and is scheduled to finish by June 2013. The line employs nearly 2,000 people.
Since receiving the bailout package, GM has taken efforts to restructure. It has eliminated all but four of its brands and, as a result, has become a smaller, more profitable company.
In total the company’s Ontario operations employ around 10,000 people. Besides its Oshawa plant, the company also has a plant in Ingersoll and parts plants in St. Catharines.
"Once the GM consolidated line is closed, GM may well be building less than 500,000 vehicles in Canada, so Toyota could be the second-largest auto assembler in Ontario behind Chrysler," Faria said.
Toyota Canada also made an announcement of future investments on Tuesday.
Toyota's Canadian manufacturing arm said it’s investing $100 million in its Cambridge, Ont., plant. The investment will result in 400 new hires, said the company.
In March, Toyota made an $80-million investment in its assembly plant in Woodstock, Ont. That investment also created 400 jobs.
Over the last decade, Ontario has seen automakers GM, Ford and Chrysler cut tens of thousands of jobs as their parent companies underwent immense restructuring in the U.S.
Toyota and Honda have meanwhile expanded their operations in the province.
With a report from CTV Toronto’s Natalie Johnson and The Canadian Press