TORONTO - General Motors Canada announced Friday it is recalling more than 700 laid-off workers in Ontario to meet hot demand for two of its most popular vehicles, indicating the company is quickly recovering from its near extinction last year.

In a sign GM has come a long way from a year ago - when it was surviving on government aid and about to file for bankruptcy protection in the U.S. - the company said it will add a third shift at its Oshawa assembly plant and increase production at its CAMI plant in Ingersoll.

To do this, it will recall approximately 600 workers to its Oshawa plant and 110 workers to CAMI. It will also hire 70 new employees at CAMI.

The automaker said the increased production is in response to growing customer demand for the Chevrolet Equinox and GMC Terrain, both crossover utility vehicles that are popular for combining the utility of SUVs with the fuel efficiency of smaller vehicles.

GM Canada spokesman Tony LaRocca said combined sales of the two vehicles are up 100 per cent in Canada and 128 per cent in the U.S. so far this year. More than 90 per cent of the Equinoxes and Terrains produced in Canada are sold south of the border.

The vehicles are currently produced at CAMI, but GM Canada now plans to do some of the finishing work on the Equinox at its main manufacturing location in Oshawa.

The Canadian Auto Workers union was elated at the news. GM has been ramping up production at both CAMI and Oshawa since last fall, but this is the first time the company has announced the hiring new employees since 2002.

"Quite frankly I've got goosebumps today," said CAW president Ken Lewenza.

"We are excited and we are relieved to see actual employment as a result of the hot products General Motors has on the market today."

"I was doing cartwheels in my kitchen" when I heard the news, agreed Chris Buckley, president of CAW Local 222 in Oshawa.

"Today's announcement gives (GM's laid-off workers) a future. It gives them light at the end of the tunnel."

GM's move is timely for workers who have been hit hard by the economic downturn that brought the North American auto industry to its knees last year, Lewenza added, saying most of GM's laid-off workers have nearly exhausted their employment insurance and other social benefits.

Workers in Oshawa welcomed the news that many of their friends and co-workers would be returning to work, but were still skeptical after receiving so much bad news in the past.

Keith Brodie, who has more than 25 years' service with GM, said "it's good for everybody - hopefully."

"Wait and see, that's my look. Wait and see. I don't believe it until it happens."

Oshawa Mayor John Gray said Friday's announcement justifies the billions of dollars in loans provided to GM by the Ontario and federal governments last year.

"To those harsh critics that felt that it was wholly inappropriate for taxpayers to provide loan guarantees: sorry guys, you were wrong. You were absolutely dead wrong," Gray said.

Industry minister Tony Clement said the government welcomed the announcement.

"This is a good day for those 600 men and women who get to go back to work, and it signals that the recovery of the automotive industry is gaining momentum," he said in a statement released Friday evening.

"The government of Canada remains strongly committed to preserving Canada's share of North American production in the highly integrated automotive market," Clement added.

GM's LaRocca said the decision to build vehicles at CAMI and finish them in Oshawa came after the company announced a $90-million investment to expand CAMI's body shop, where finishing touches like paint are put on cars.

"In looking at that body shop expansion, we realized there was the ability to take their capacity up even higher than what the CAMI plant is capable of painting and finishing for a very small incremental cost," he said.

The company also figured it would be far more cost-effective to use the excess capacity in Oshawa's paint shop to finish the vehicles, rather than spending the money to expand CAMI's shop.

"So really, it's quite a flexible approach. It's lower cost and it allows us to adapt our demand and volumes without having created an entirely new plant on a scale that won't sustain itself," LaRocca said.

He emphasized that GM won't go overboard and find itself with too much capacity - a problem the company has struggled with in the past.

"We're going to be disciplined about this, but sales have just been so strong, we need to get more units out there for customers," he said.

One industry analyst described GM's production-sharing plan as an "agile" solution.

"I think this really does speak to the new General Motors and how it thinks, how quickly it acts and how it really focuses on where it can do the biggest good," said Bill Pochiluk, president of industry adviser AutomotiveCompass.

"It's very, very creative and I think, if nothing else, it shows that General Motors really is intent on looking for every advantage."

Pochiluk estimated that the new capacity should result in an additional 60,000 to 75,000 units of production a year.

This additional production will be a tremendous boon to the Canadian auto parts industry, which was hit even harder than the automakers by the recession and the concurrent slowdown in vehicle sales, said Steve Rodgers, president of the Automotive Parts Manufacturers' Association.

"All of that volume, the additional 276 units a day they'll be able to get out of Oshawa, just simply means better business and more attractive volumes overall," Rodgers said.

General Motors and its Canadian subsidiary were nearly felled last year by the economic downturn, which compounded years of losses at the automaker.

Sagging demand for larger, gas-guzzling vehicles hit the company particularly hard, costing thousands of jobs across North America. GM Canada shed about 2,600 jobs with the closure of a truck plant in Oshawa last year. It also announced plans to shut down a transmission plant in the southwestern Ontario city of Windsor this year, affecting more than 1,000 workers.

In October, the company said it would add a third shift at CAMI, re-hiring about 350 workers. Then, late last year, GM said it would invest another $90 million to increase capacity at CAMI, resulting in the recall of another 280 workers.

And in November the company said it would add a second shift in Oshawa in 2011 to support production of the new Buick Regal and Camaro convertible, bringing back 700 workers.

Earlier this month, Kevin Williams took over as the Canadian subsidiary's new president, succeeding Arturo Elias after a nearly four-year stint at the helm.

-With files from Michelle McQuigge and Allison Jones

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