Camaro Move To Michigan Touches Bigger Issues for Canada Auto Manufacturing

It should not be all that surprising to the Canadian Auto Workers that General Motors will shift production of the Chevrolet Camaro to its Lansing, MI, plant.

For one thing, rumors have been swirling for years that GM would make that move when the next-generation Camaro is unfurled, because the new version reportedly goes from its current Zeta platform  to the Alpha-based architecture used by the Lansing-built Cadillac ATS and revamped CTS that bows next year.

Furthermore, the rear-wheel-drive Camaro sticks out like a sore thumb at Oshawa, Ont. It’s good that GM can build a muscle car in the same facility as a front-wheel-drive sedan, but it’s likely still more economical to consolidate single-platform, rear-drive car production at one location. It also guarantees the Lansing plant will run full capacity on two shifts, possibly with some overtime thrown in.

The Camaro move touches on the bigger question of Canada’s future as a car and truck producer, especially for the Detroit 3 and their union-represented factories, which this year account for 62% of the country’s light-vehicle output.

If the Detroit 3 believe Canada will remain a high-cost place to manufacture, as some execs and analysts now say, those with a vested interest better stay on their toes if they want to prevent the manufacturing base’s further decline.  

Based on WardsAuto’s forecasts, each of the Detroit 3 will have flexibility to move production elsewhere (though that does not mean that each auto maker believes it will).

The critical point will be 2016 when current national contracts with the CAW are up – and coincidentally when the Camaro probably is changing plants.

Around that timeframe, in 2015 and 2016, several of the cars and trucks built in Canada will be undergoing overhauls to next-generation versions. Re-tooling for new products is a good time to make a plant change if you are going to make one.

GM also has an advantage that its Canada-built vehicles, or the platforms they’re based on, are shared with plants in the U.S. and Mexico, which means if the capacity is free, the auto maker can more easily move production out of Canada if it chooses to do so.

There are several plausible scenarios at GM if it decides to move product. An obvious one is the Oshawa-built Cadillac XTS and, coming in early 2013, new Chevrolet Impala, both based on the Epsilon platform. Vehicles off that platform also are built at two U.S. plants. One of them, Hamtramck, also will be assembling the Impala, and will have capacity to do more.  If GM wants to go the 3-shift route there, it could easily add XTS to the mix as well.

Further out, there is a good chance the front-drive XTS will be a one-generation product if Cadillac decides to completely transition all its cars to rear-drive, performance-oriented platforms.  That would eliminate a Canada-sourced product.

Other scenarios as for GM could involve U.S.-built small cars shifting to Mexico freeing up more U.S. capacity and improving plant utilization in Mexico.

Ford’s flexibility is more hampered by capacity constraints than GM’s. But future products built at its lone Canada plant in Oakville, ON, will be on platforms similar to those spawning vehicles at U.S. plants. Based on our outlook, there would be opportunities to add products at the Chicago and Flat Rock, MI, plants in three years.

By the end of 2015, Chrysler will be producing cars and CUVs off its Fiat C-EVO platform at three plants in the U.S. and one in Mexico, which could be more capacity than its needs for those vehicles. That could lead to some consolidation that brings a Canada-built platform – possibly the minivan architecture -- to the U.S. or Mexico.

With the current political and economic chaos around the world, it could be that current trends such as exchange rates and other factors labeling Canada an expensive place to build cars could swing back to the country’s advantage, again.

Mostly, future health of the Canadian auto industry ultimately depends on the manufacturers’ own assessments of future conditions there.