TORONTO - The impact of the closure of a Ford assembly plant in southwestern Ontario will extend far beyond the plant itself, costing the region thousands of spinoff jobs and millions of dollars in tax revenue, according to union officials and local politicians.
Ford (NYSE:F) announced Friday the plant in St. Thomas, near London, will close in 2011 due to a lack of demand for the full-sized sedans it produces.
The closure of a major manufacturing facility can be disastrous to the region in which it's located, and Canadian Auto Workers president Ken Lewenza estimated that 6,000 spinoff jobs will be lost above and beyond the 1,400 workers directly employed by the plant.
CAW economist Jim Stanford said the number might be even higher than that, estimating that more than 9,000 jobs in total depend on Ford's assembly plant in St. Thomas.
"Given the terrible, terrible conditions in the auto parts sector with dozens of plant closures - we have lost 30,000 auto parts jobs in the last year - losing yet another assembly plant is the last thing anyone can afford," Stanford said.
Bob Hammersley, president and CEO of the St. Thomas and District Chamber of Commerce, said the closure of a plant like Ford's "touches the whole community at every level."
The plant is not the first in the southwestern Ontario community to close in recent months. Earlier this year, Daimler AG said it was ending production at its St. Thomas Sterling truck plant, eliminating more than 700 jobs. The plant employed more than 2,000 people at its peak.
"You look beyond the employees and their families, which is a huge concern, but you start to realize that it touches other families, other employees, other people in several, if not hundreds of other businesses," Hammersley said.
"And then when you reach into the community and look at the broader area of St. Thomas, London, all of southern Ontario, you start to filter it down and look at the impact on everything from how many dollars are available to buy groceries to how many dollars are available to buy the next car."
Hammersley added that the Ford plant currently contributes about $3 million in tax revenue to Southwold Township, where it's located.
At its height, one in four jobs in the region was directly linked to the auto industry, but Stanford said the area has probably been the second-hardest hit in Canada after Windsor, Ont., by the decline in the manufacturing sector.
Many auto parts suppliers in the region are already struggling with declining volumes resulting from the global slump in vehicles sales. For example, seat-maker Lear Corp. is currently operating under Chapter 11 bankruptcy protection in the U.S.
Lear spokesman Mel Stevens said the closure of Ford's plant will affect the supplier, which has a facility in St. Thomas that supplies seats to the Ford plant.
"Obviously a customer closing a facility that we serve has a direct impact on us," Stevens said.
Hammersley said transport companies that carry parts into the assembly plant and cars out of it will also take a hit from the closure.
"At the height of Ford's production, they were spitting out one vehicle every 68 seconds, so if you can imagine how many trucks, how many rail cars, how much vehicle movement there would have been to get their product to its customers, that's the direct impact," he said.
Auto industry analyst Bill Pochiluk said approximately 2,500 jobs could be lost among parts suppliers alone due to the closure of St. Thomas, although not all - or even the majority - of these will come from the St. Thomas region.
"Canadian content for many of these vehicles is well under 50 per cent," said Pochiluk, president of industry adviser AutomotiveCompass.
For example, Ford's stamping plant near Buffalo, N.Y., counts parts for the Crown Victoria and Grand Marquis, both built in St. Thomas, as its biggest products.
Hammersley said it would be great if the St. Thomas region could attract another automaker to the plant once Ford pulls out, but he said companies will often set conditions preventing the sale of their assets to competitors.
"It'd be great if we could look at it and say, 'Hey, Toyota, have we got a deal for you,' but realistically that's probably not going to happen," he said.
In a new labour agreement ratified last weekend by CAW members, Ford has agreed to keep 10 per cent of its total North American manufacturing in Canada. This is down from its current level of 13 per cent. It also agreed to manufacture more vehicles in Canada than it sells here.
The agreement guaranteed two new vehicle programs for Ford's assembly plant in Oakville, just west of Toronto, but will see the St. Thomas plant close once its current program expires in 2011.
Under the agreement, Ford's engine plant in Essex, near Windsor, will also get additional work over the life of the new contract, which expires Sept. 17, 2012.