GM: Canada Is World’s Most Expensive Place to Build Cars

General Motors Co.'s auto plants in Canada rate high in productivity and quality, but their future is jeopardized by high manufacturing costs, CEO Dan Akerson declares.

Akerson tells reporters it is now more expensive to build vehicles in Canada than anywhere else in the world, in part because of steep labor costs. As a result, he predicts that the company's contract negotiations with the Canadian Auto Workers union this summer will be contentious.

Akerson says Canadian factories are an important part of GM's North American and global footprint and asserts, "We'd like to keep it that way." But analysts say Canada's future with GM looks bleak. The company said earlier this month it would phase out one of two assembly lines at its Oshawa, Ont., plant by mid-2013, resulting in the loss of 2,000 jobs. GM closed its truck plant in Oshawa in 2009 and a transmission in Windsor, Ont., in 2010.

The CAW is hoping to use Canada's US$9.5 billion bailout financing to GM much of it still not repaid as leverage to prevent plant closings. But Akerson says the company will make capacity decisions based on the business case not because of political strong-arming.