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U.S. parts suppliers likely to take biggest hit from GM job cuts: observers

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TORONTO (CP) _ While Canadian suppliers may suffer from General Motors' move to cut 1,200 jobs at an Ontario truck plant, U.S. companies are likely to take a bigger hit because they provide many parts used in assembling pickup trucks, analysts said Friday.

``It would be on the auto parts side of the equation where you'd see the most significant changes, and most of that has American implications,'' said Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc.

GM Canada ``imports most of the parts (for the pickup trucks) from the U.S.,'' he said, adding that any impact would be very specific to each supplier company's exposure to GM pickup trucks.

The GM closure affects the Chevrolet Silverado and GMC Sierra pickup trucks, but follows thousands of cuts already scheduled as the company pares its operations under earlier streamlining efforts.

``There's a good chance that most of the major suppliers in Canada have some exposure to GM,'' he said, but added that ``if there's going to be a fallout in the parts sector, it's going to be the American supplier that will be hurt primarily.''

The Silverado and Sierra trucks are GM's best-selling products, with one of every four vehicles GM produces being a pickup truck. The redesigned trucks are built in Oshawa and assembled or slated for assembly at plants in Fort Wayne, Ind., Michigan factories at Pontiac and Flint and in Silao, Mexico.

The Canadian Auto Workers union estimates that the cutting of the third shift at GM's Oshawa truck plant east of Toronto will result in a loss of 8,000 jobs, citing a spinoff effect for related businesses.

``Economic research over the years has shown that the spinoff effects in total add up to about 7.5 jobs,'' said CAW economist Jim Stanford.

``You have the job itself in the major auto plant, like Oshawa, then you have about three jobs that are in the various supply industries ... and then you have another 3.5 jobs that are called downstream effects. Those are in the various consumer goods industries that depend on the spending power of the first four jobs.''

That means local doughnut shops, restaurants and home building businesses may take a hit from the shift reduction _ and will likely be hit harder than auto parts suppliers because the automotive companies tend to produce parts for more than one vehicle.

``There are literary hundreds of companies that supply that facility,'' Stanford said.

But ``with all the cross-border trade, it's hard to separate exactly where those 7.5 jobs will be.''

The CAW is still working to figure out the full impact for suppliers, but said Lear Seating in Ajax, Ont., is among the most likely companies to be affected.

The parts maker builds interior parts solely for the Oshawa truck plant.

Woodbridge Foam Corp. in Whitby, Ont., is also likely to take a hit, since it ships about 20 per cent of its output to the Oshawa truck plant, said Chris Buckley, president of CAW Local 22 in Oshawa.

AGS Automotive has a small degree of chrome bumper work for the Silverado trucks, while U.S.-based Johnson Controls is also a supplier.

AGS spokeswoman Lisa Boulton said it's too early for the company to tell what impact the GM reductions will have on its business.

``We found about it (Thursday) the same way most people found out about it,'' she said.

``We ship (bumpers for) Silverados not just into Oshawa but to several other assembly plants in the United States and we need to understand the overall impact and we haven't gotten that information from GM yet.''

The layoffs are part of GM's plan to keep its inventory in line with production and offset some of the value that was lost as a result of incentive plans.

They come as tighter credit markets in the U.S. are making it more difficult for American consumers to finance truck purchases, and the slumping housing market in many U.S. states causes fewer housing starts and a weakening construction industry _ a key buyer of GM trucks for the job site.

GM Canada parent General Motors Corp. had announced plans to cut more than 3,600 jobs in Ontario by 2008, as it worked to close nine North American plants and eliminate 30,000 jobs over three years, most in the United States.

As of the end of June, Canada's auto assembly employment was just over 49,000, according the Statistics Canada.

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U.S. parts suppliers likely to take biggest hit from GM job cuts: observers
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