Yet more bad news for Ontario's industrial sector
Martinrea said poised to shut Kitchener Frame auto parts plant: 1,200 workers
Mon Feb 11, 4:36 PM
The Canadian Press
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By The Canadian Press
KITCHENER, Ont. - Martinrea International Inc. (TSX: MRE.TO) intends to close the Kitchener Frame Ltd. auto parts plant - with a loss of about 1,200 jobs - unless it finds new work, the Canadian Auto Workers union said Monday.
The closure would eliminate about 750 remaining factory jobs, 50 office positions, and the hopes of roughly 400 people currently on layoff from the heavy-duty stamping plant. The parts factory had about 2,000 workers two years ago before a streamlining effort pared the workforce.
Mike Devine, president of Canadian Auto Workers Local 1451, said the company has informed the union that it plans to shut the plant on April 23, 2009, when the union's current contract with the company expires.
The plant, which produces frames for General Motors (NYSE: GM) sport utility vehicles, was taken over by Martinrea (TSX: MRE.TO) in its 2006 acquisition of the North American vehicle body and chassis operations of ThyssenKrupp Budd.
The plant's production has come under pressure as consumer tastes have moved away from frame-based SUVs in favour of lighter unibody crossover vehicles. The high loonie has also affected the Canadian auto parts sector, making it more expensive for U.S. carmakers to source their parts north of the border.
"There's not much light at the end of the tunnel right now," Devine told the Waterloo Region Record.
Hemi Mitic, assistant to CAW national president Buzz Hargrove, said the plant's problems arise from GM's plan to phase out its mid-size truck-based TrailBlazer and Envoy SUVs by 2010.
GM is the only customer of Kitchener Frame, and "the company has given us one year's notice, as required under the terms of the agreement, that in April of 2009 they're going to close the facility," Mitic said.
"The future of the frame business is not like it used to be - it's really (only) in the big trucks," Mitic said, as mid-size and small SUVs become more car-like to provide better fuel economy, ride and handling.
"It makes it very difficult for us. . . . This is a million-square-foot plant; it's designed to produce quantity, and so you have to have a big-run job."
The prospect of the Martinrea closure is the latest blow to a manufacturing economy staggering under the strong Canadian dollar, weakening U.S. demand and intense foreign competition.
The recent bankruptcy of the Ledco tool and die plant in Kitchener provoked a union protest, and Cambridge Stampings said last week it will close in April.
Martinrea, with 7,000 employees at 30 locations in Canada, the United States, Mexico and Europe, is seeking other work for the plant, and also is said to be demanding deep cuts in unionized wage rates.
The company, founded by former executives of Magna International, more than doubled in size with the US$275-million takeover - $95 million in cash and the rest in assumed liabilities - of the ThyssenKrupp Budd assets, which included 13 plants with 3,500 employees.
In a separate release, Devine noted that the Kitchener area in southwestern Ontario, long tied tied to the auto sector, has lost more than 8,000 manufacturing jobs in the last two years alone.
He repeated the union's call for more help for the troubled manufacturing sector from Ottawa.
"This government must come up with real solutions to address job loss and the de-industrialization of our communities," said Devine. "People cannot be expected to uproot their families and move to another province because the Canadian government is sitting on its hands."
The auto parts sector employs about 90,000 people in Ontario and Quebec, accounting for $30 billion worth of goods and services annually.
Many parts makers have cut jobs or shut down plants in the face of a restructuring by General Motors, Ford Motor (NYSE: F) and Chrysler, which have been their main customers for decades.
Among auto parts companies that have cut production are:
-Seatmaker Lear Corp. (NYSE: LEA), which is shutting down a plant in Windsor, Ont., with the loss of more than 200 jobs.
-GDX International, a Michigan-based company, which plans factory closures that will put about 400 people out of work in Magog, Que., near Sherbrooke.
-ArvinMeritor (NYSE: ARM), which announced last fall it will shut down a 500-employee Toronto factory and shift the work to Mexico.
-The Nemak Essex aluminum plant, a joint venture of Ford and Nemak, is slated to close in spring 2009, eliminating 600 jobs in Windsor. The plant's production of cylinder heads is shifting to Mexico.
Martinrea shares were up 27 cents at $10.60 on the TSX Monday afternoon, with a 52-week range between $19.49 and $9.25.
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