(Corrects current and future production estimates from
AutoForecast in fifth paragraph)
By Allison Martell and Susan Taylor
TORONTO, Sept 22 General Motors Co's
Oshawa plant will do final assembly work on at least 70,000
pick-up trucks a year once investments promised in its Canadian
unit's new labor agreement are complete, according to two
sources close to negotiations.
GM reached a tentative labor deal with Unifor, the union
that represents its Canadian manufacturing workers, early on
Tuesday, saving thousands of jobs at the Oshawa plant, but the
two sides declined to say what new vehicle would be produced
On Wednesday Reuters reported that the plant would do final
assembly of Silverado pick-up trucks using bodies shipped from
the GM plant in Fort Wayne, Indiana, boosting the automaker's
production of the strong-selling model.
But production volume, crucial to staffing levels at the
plant, was not immediately clear. On Thursday, the sources said
Oshawa would finish at least 70,000 of the trucks a year once
necessary investments were made, and perhaps as many as 80,000.
The volume is material to Oshawa. The plant is on track to
produce about 210,000 vehicles this year, according to Joe
McCabe, president of AutoForecast Solutions. Without new
investment, production would have fallen to 130,000 vehicles
Wall Street analysts, citing GM documents filed with U.S.
regulators, say that GM could reap an average profit of about
$13,000 per vehicle on large trucks similar to those to be made
at Oshawa. That would suggest a potential increased profit of
about $900 million a year.
However, building more trucks could lead to oversupply and
lower prices, which cut into profitability.
Another risk for GM is that North American sales will fall,
as most analysts have said they expect. Ford Motor Co also
has said it expects North American sales to decline from last
year's record levels.
Adding to the risk of making more trucks, analysts have
said, is the possibility that gasoline prices will spike.
Gasoline prices have been relatively low during the North
American auto industry's recovery that began in 2010 after the
A General Motors spokesman declined to comment.
(Additional reporting by Bernie Woodall in Detroit; Editing by