General Motors plans to significantly increase the production of its highly profitable pickups by investing up to $ 1 billion in its Canadian operations.
The investment is part of a tentative deal with the Canadian union Unifor, GM CEO Mary Barra told investors Thursday during the company's third-quarter earnings call. The investment is still pending until union members are ratified in the coming days.
"We can't build enough," Barra said to the trucks. "We will move forward very quickly. We expect construction of the new body shop and flexible assembly module in Oshawa to begin immediately after ratification."
GM expects a "significant increase" in its full-size pickup capacity when the plant goes live in January 2022, Barra said. She declined to reveal other details prior to the expected ratification of the deal.
The investment is $ 1 to 1.3 billion Canadian ($ 767 to $ 997 million) at the Oshawa, Ontario assembly plant with the expected hiring of 1,400 to 1,700 hourly workers. CA $ 109 million at its St. Catharines powertrain facility; and CA $ 500,000 in a parts distribution center.
Barra told reporters early this morning that GM expects demand for pickups and SUVs to continue to rise as U.S. vehicle sales continue to recover from the coronavirus pandemic.
"We keep seeing the demand for trucks keep growing. It's permanent," she said during a media call. "When the market recovers we will see strong truck growth, as well as strong truck demand and market share. That definitely drives our business."
Sales of such vehicles largely helped GM beat Wall Street earnings expectations in the third quarter, including a 15% operating profit margin in North America – the highest of Detroit automakers.
The profits from the truck sales allow GM to invest in emerging but unprofitable segments like autonomous and all-electric vehicles. The company is currently investing $ 20 billion in the segments through 2025.
The plant in Oshawa acted as a parts supplier for other GM plants after vehicle production ended in December 2019. The plant previously assembled passenger cars and helped produce partial production of earlier generations of GM's Chevrolet Silverado and GMC Sierra pickup trucks.