Canadian union turning up the heat on GM after plant closure announcement, 4,000 GM employees expected to lose their jobs, Brexit contributes to Nissan cutting X-Trail from UK production plans, MIT professors suing Ford and more in The Morning Shift for February 4, 2019.
1st Gear: Canadian Union Super Bowl Ad Calls Out GM
The Canadian trade union Unifor is pissed that GM is shutting down the Oshawa Assembly Plant, which has a long and rich history spanning over 100 years. GM says on its website that the facility—which now builds the Cadillac XTS, Chevy Impala, Chevy Silverado, and GMC Sierra—has been open since 1953, but that before that, it built McLaughlin Buicks and Chevrolets prior to The Bowtie merging with GM in 1918.
Despite all of that history, in 2018, GM announced plans to close the historic manufacturing site. Shortly thereafter, workers walked out in protest, and the president of Unifor, the trade union representing the plant workers, voiced his displeasure, saying “They are not closing our damn plant without one hell of a fight,” per CTV News.
But last night, during the Super Bowl, the battle between Unifor and GM got heated, with the former unleashing this commercial in Canada:
The commercial is scathing, mentioning how Canada helped GM with the bailout last decade, and criticizing the company’s expansion into Mexico. “GM, you may have forgotten our generosity,” the commercial concludes, “but we’ll never forget your greed. If you want to sell here, build here.”
According to the Detroit News, GM wasn’t thrilled, and even threatened legal action:
On Friday, General Motors’ lawyers wrote to demand that Unifor “cease and desist from any further communication of the advertisement.”
GM told the Detroit News that the ad is false and misleading, with the news site writing:
“While GM respects Unifor’s rights to protest, we cannot condone purposely misleading the Canadian public,” GM said in a statement Sunday. “Unifor knows that GM Canada repaid its 2009 loans in full, and that the restructured GM fulfilled all the terms of its agreements with the Canadian government many years ago. Since 2009, GM Canada has contributed over $100 billion to the Canadian economy including $8 billion invested into worker pensions.”
Seems like Canadian workers are not going without a fight.
Update Feb 5, 2019 8:40 A.M. ET: General Motors has responded to Jalopnik’s request for statement on the cease and desist letter related to the commercial:
“While GM respects Unifor’s rights to protest, we cannot condone purposely misleading the Canadian public. The new Unifor advertisement scheduled to air during the Super Bowl is misleading and inaccurate. In response, GM can confirm its lawyers lodged a formal demand to Unifor to cease any and all publication of the ad.
Unifor knows that GM Canada repaid its 2009 loans in full, and that the restructured GM fulfilled all the terms of its agreements with the Canadian government many years ago. Since 2009, GM Canada has contributed over $100 billion to the Canadian economy including $8 billion invested into worker pensions.”
Now that the ad has run, GM has more to say:
“We continue to believe that the advertisement is misleading, and we will continue to evaluate our options if publication continues.”
2nd Gear: Today Is a Dark Day for GM
The plant closure in Canada is just the start, as there is more PR nightmare—and more importantly, a loss of jobs—expected, with GM preparing to lay off over 4,000 employees. And it’s supposed to start today.
In November, GM announced plans to cut 15 percent of its 54,000 salaried employees in North America including slashing global executives by 25 percent. The announcement followed 2,250 white-collar employees agreeing to voluntary buyouts — below the company’s target of roughly 8,000.
The automaker, which previously said the layoffs would occur in the first quarter, started cutting some white-collar contract workers in November. The cuts to contract workers, according to one source, were around 1,500 — bringing the total number of employees who have already left the company to 3,750. That leaves GM with roughly 4,250 additional positions that still need to be cut.
Automotive News’ sources say GM will start the cuts today, though GM, in a statement to the news site and to other outlets, said it would not confirm when the layoffs were planned. From GM:
“We are not confirming timing. Our employees are our priority. We will communicate with them first.”
Days like these are the ones that employees—whether they’re laid off, or their friends are—will never forget. Some are calling it Black Monday. Understandably so; is a dark day for GM.
Update Feb. 4, 2019 2 P.M. ET: GM has responded to Jalopnik’s request for statement, writing in an email:
GM Statement on Salaried Staffing Reductions
“This is the implementation of the salaried actions announced late last year. These actions are necessary to secure the future of the company, including preserving thousands of jobs in the U.S. and globally. We are taking action now while the overall economy and job market are strong, increasing the ability of impacted employees to continue to advance in their careers, should they choose to do so.
“Our focus now is on working with each individual employee on providing severance packages and transition support through job placement services.”
A company representative continued, saying:
Also – with the overall strong economy and job market, many Fortune 500 companies and other employers have reached out to us expressing interest in hiring our impacted team members. These companies are eager to begin the interview process and fill openings. We will be providing that information to our employees through the job placement services.
3rd Gear: Nissan Cites Brexit as a Reason for Killing Plans to Build SUV in the UK
Not long after Britain’s Brexit vote in 2016, Nissan announced that it planned to build its X-Trail SUV in Sunderland, England, where the Juke, Qashqai, Leaf, Infiniti Q30, and Infiniti QX30 are built. This was a move that, according to Automotive News Europe, was “seen as a key indicator of whether international firms would continue to invest in Britain following the Brexit vote.”
Fast forward 27 months, and Nissan has canceled those plans, citing Brexit as part of the reason why, with Reuters writing:
“While we have taken this decision for business reasons, the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future,” Nissan Europe Chairman Gianluca de Ficchy said in a statement on Sunday.
Nissan has decided to only build the X-Trail in Kyushu, Japan, and Greg Clark, the UK’s Secretary of State for Business, Energy and Industrial Strategy, was unsurprisingly not thrilled, saying the move was a “blow to the [British] sector and the region.”
The story also mentions that production at Sunderland dropped over 10 percent last year, and that Nissan “cut hundreds of jobs at the plant in response to declining demand for diesel models.” This, Financial Times writes, may have actually been a bigger factor in the decision than Brexit, with the news site saying:
While Britain’s impending exit from the EU has caused uncertainty for the Sunderland plant, which exports roughly half its cars, the decline of diesel across the continent was a more significant factor, according to people familiar with the company’s thinking.
The X-Trail is a large sport utility vehicle, the biggest passenger vehicle made by the Japanese group, and it had planned to make diesel models in the UK.
However, the company struggled to make the new diesel cars compliant with the latest emission rules using diesel engines that it buys from Renault, according to one person, and fears of an accelerating decline of the fuel source among the public coloured its decision.
In addition to alleged issues with emissions compliance, the story goes on to say that Nissan has already promised to get rid of diesels from its lineup, and that, to make gas X-Trails in Sunderland would “require shipping engines from Japan, something the business considered commercially unviable,” the news site attributes to an unnamed source.
Dieselgate. Brexit. They’re both silly names, but their effects on the automotive industry are anything but.
4th Gear: MIT Professors Are Suing Ford for Allegedly Infringing Upon Dual Port and Direct Injection Tech
If you’re a mechanical engineer, there’s a good chance you’ve heard of John B. Heywood, the MIT professor who wrote the ubiquitous Internal Combustion Engines Fundamentals text.
Now his name, as well as the name of two other renowned professors, Dr. Bromberg and Dr. Cohn, is on the front of another document, but it’s not a textbook: it’s a legal document accusing Ford of patent infringement.
The lawsuit involves The Blue Oval and Ethanol Boosting Systems, LLC, a company created by the three aforementioned scientists, who assign their inventions to MIT, but license them out through the company.
The lawsuit alleges that Ford infringed upon four patents, including this one, this one, this one, and this one—all of which have to do with dual port and direct injection, a technology that Ford has mentioned a number of times in advertising, and which we’ve written about multiple times.
The patent infringement complaint describes the patents in further detail, stating:
...each of the Asserted Patents recites ways in which an engine or fuel management system employs both port and direct injection such that, at certain torque values, the engines are fueled by both simultaneously. Further, in some embodiments, the fraction of fueling provided by direct injection decreases with decreasing torque.
Further, in other embodiments, port fueling alone is utilized when torque is below a certain value.
The court document goes on to describe the benefits of the tech, stating:
Such inventions improve over the prior art by, for example, permitting an increase in engine efficiency and reducing emissions as described in their common specification— providing the advantages of port fuel injection, which allows for better fuel/air mixing and combustion stability than direct injection, while also providing the engine knock suppression advantage associated with direct injection.
Check out Bloomberg’s story on the lawsuit, which includes the description of an alleged exchange between the professors and a Ford representative in which the latter reportedly asked the profs whether they were “greedy inventors.”
5th Gear: Weather, Government Shutdown Factors in Slow January Car Sales
January is, generally, not a great month for car sales as it is, but this past month’s numbers are in, and they were worse than last year’s January figures, Automotive News reports. The news site cites high interest rates, cold weather, higher sticker prices, and the government shutdown as reasons why sales dropped by one percent compared to January of last year.
From the story:
The average interest rate on new vehicles rose last month to 6.19 percent — the second highest in 10 years — from 4.99 percent a year ago, according to Edmunds. And Kelley Blue Book said the industry’s average transaction price rose 4.2 percent to $37,149. Combined, those factors mean a big jump in the monthly payment for many consumers interested in trading up.
That potential for sticker shock, along with extreme cold weather and uncertainty created by the 35-day partial federal government shutdown, helped push sales down 1 percent in January.
The bit about the government shutdown affecting sales is interesting, and it’s something that—along with a negative effect of the cold weather—Automotive News attributes to “several automakers.”
It’s not all bad though, as the story does point out that fuel prices are low, unemployment is down, and that the Federal reserve gas “signaled that it would be patient with additional [interest rate] hikes.”
We’ll see how it goes. We’ve been hearing about sales declines for a long time; who knows when the steep cliff is coming.
Reverse: Ford Buys Lincoln in 1922 For a Cool $8 Million
On February 4, 1922, the Ford Motor Company acquires the failing luxury automaker Lincoln Motor Company for $8 million.
The acquisition came at a time when Ford, founded in 1903, was losing market share to its competitor General Motors, which offered a range of automobiles while Ford continued to focus on its utilitarian Model T.
Neutral: Which of the Above Gears Concerns You Most?
Nobody likes bad news, but all five of the gears above are fairly negative. There are people getting sued, folks losing their jobs, plant closures—it’s bleak. Of the gears, which one worries you most, and why?
This story has been updated with GM’s response to Jalopnik’s inquiry about planned layoffs and the Unifor commercial.