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United States / Analyst Insights
GM Plant Closures Will Disrupt Industries

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by Ediz Ozelkan Analyst, Robert Miles Analyst
Nov 30 2018

As General Motors undergoes a crucial restructuring of its North American operations, five automobile production plants are expected to close. Three assembly plants will close: Oshawa Assembly in Oshawa, Ontario, Canada; Detroit-Hamtramck Assembly in Detroit; Lordstown Assembly in Warren, Ohio. Two propulsion plants will close: Baltimore Operations in White Marsh, Maryland; Warren Transmission Operations in Warren, Michigan. As a result of GM’s key market position, the following industries will be affected: Car and Automobile Manufacturing, SUV and Light Truck Manufacturing, and the Automobile Engine and Parts Manufacturing.


The US Effect


The Detroit location makes the Cadillac CT6, Buick LaCrosse, Chevrolet Impala and Chevrolet Volt. The CT6 and LaCrosse are also made in Jinqiao, China. The Volt is only made in Detroit and the Impala is only also made in the closing Oshawa plant. The Lordstown plant is only responsible for the assembly of the Chevrolet Cruze. However, the Cruze is also made in Ramos Arizpe, Mexico; the closing Gunsan, Korea plant; Hanoi, Vietnam; Shenyang, China; Rosario, Argentina. The closing of the propulsion plants in Warren and Baltimore is directly tied to the reshuffling of assembly operations. Among the products made at the Warren facility, the 6-speed transmissions for cars produced in the Oshawa and Detroit plants were the most important. The Baltimore plant makes the transmission for the Chevrolet Silverado.


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This movement of plant capacity is expected to have significant ramifications on automotive industries in the US. GM is a major company in Car and Automobile Manufacturing, SUV and Light Truck Manufacturing and Automobile Engine and Parts Manufacturing industries. The stated purpose of the restructuring is to reduce plant space allocated to underperforming vehicle lines and increase capacity utilization by doing more at the remaining places. The designs being removed are not high sellers, so it likely will not drastically affect the US landscape. However, it reduces GM’s footprint in car production and increases the industries exposure to import competition. The restructuring is also expected to increase GM’s position in higher margin truck manufacturing, an area of increased focus that has performed well in recent years.


The Canadian Effect


Although the plant closure in Canada is just across Lake Ontario, the effect will be drastically different. The 2019 closure of its Oshawa, ON automobile assembly facility this week, a move that would completely reshape GM’s operations in the Car and Automobile Manufacturing industry in Canada (IBISWorld report 33611aCA). The factory began production in 1953 and currently produces the Cadillac XTS and the Chevrolet Impala while performing final assembly of the GMC Sierra and Chevrolet Silverado. The location currently employs just over 2,500 Canadians. This restructuring effort will drastically alter GM’s Canadian automotive assembly footprint. GM’s Metal Center in Oshawa, the St. Catherine’s Powertrain facility and CAMI Automotive facility in Ingersoll will remain untouched. The CAMI facility produces the Chevrolet Equinox, so unless there is a reshuffling of plant capacity it will be the only vehicle assembled in Canada. Therefore, GM’s comparatively smaller presence in the Automobile Engine and Parts Manufacturing industry (33631CA) and the SUV and Light Truck Manufacturing industry in Canada (33611bCA) will comprise the company’s Canadian presence after 2019, drastically reducing the company’s footprint in the country.

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