GM to close Ontario transmission plant in 2010

General Motors Corp. plans to close its Windsor, Ontario, transmission factory in the second quarter of 2010, the automaker said Monday.

Company spokesman Stew Low said about 1,400 hourly and salaried employees work at the facility making four-speed automatic transmissions for front-wheel-drive vehicles.

But GM and other automakers are shifting from four-speed automatic transmissions to more fuel efficient six-speed gearboxes.

The strong Canadian dollar and higher labor costs in Canada also contributed to GM's decision, Low said.

"Certainly new investment in Canada is challenging. For a lot of different reasons, primarily cost," Low said. "Certain business cases here are challenging."

But in the end, Low said GM just didn't have a new product for the plant, which supplies transmissions to vehicles such as the Chevrolet Cobalt, Pontiac G5, Chevrolet HHR and Saturn Vue and to three mid-sized hybrids, the Saturn Aura and Vue and the Chevrolet Malibu.

"It really comes down to availability of product. There really just isn't anything in the portfolio at this time," he said.

Plant employees will get a chance to move to openings at other GM facilities in Canada, and they will receive income security, which generally amounts to 65 percent of their gross pay for three years after the plant closes, Low said.

GM officials told Canadian Auto Workers President Buzz Hargrove about the closure plans in contract talks, Low said. Hargrove wanted to tell employees of the plans as soon as possible, according to Low.

Hargrove said at a press conference in Toronto that he was angry and frustrated by the closure but conceded there's no new product for the factory.

"This is devastating news, not just for our members and their families, but the city of Windsor," Hargrove said "It will mean for the first time since 1963 that General Motors will have nobody producing anything in the city of Windsor."

Most of the employees are close to retirement and the union is negotiating buyout packages, Hargrove said.

"If they accept our proposal it would cover most of the people," said Hargrove, who added they may have to strike to get a closeout agreement.

Hargrove is meeting GM officials this week in an attempt to get an agreement to a new three-year labor deal with all GM workers in Canada. CAW workers ratified a new labor deal with Ford earlier this month.

Hargrove said if they don't have a deal with GM by 6 p.m. EDT on Wednesday they'll push back negotiations to September and set a strike deadline.

The union is hoping GM and Chrysler will agree to a deal that is similar to the Ford one. The surprise deal with Ford, reached months before the CAW's national auto contracts expire in September, keeps the company's labor costs essentially the same as they are now, the union said.

Hargrove said Monday GM hasn't met the Ford pattern in some areas.

The union also started meetings with Chrysler on Monday.

Canada's manufacturing sector, centered in Ontario, has been hit hard by a higher Canadian dollar and the economic slowdown in the U.S.

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AP Auto Writer Tom Krisher in Detroit contributed to this report.