London's Accuride plant closure signals a 'volatile' time for automakers, analyst warns

More than 200 workers will soon be without a job as one of London's long-standing auto parts makers has announced it's permanently shutting down. One industry expert says the closure is a sign of the times for auto manufacturers looking to cut costs. 

Accuride, located on Firestone Boulevard, said it has begun winding down its east London facility because it couldn't find another buyer for it. The U.S., based company makes steel and aluminum wheels for trucks and other commercial vehicles. 

The closure's impact will be devastating for its employees who had a stable, well-paying job with a pension and benefits, said Luis Domingues, the local director for Unifor, which represents 187 staff members at Accuride. 

"This is their livelihood. It's a very difficult situation for them and their families," he said. "We as a union are doing the best we can to try and bargain a closing agreement. It's a very difficult time for folks and we're going to fight like hell for them."

Domingues said the union is currently working on negotiations for severance pay, adding that they make between $24 to upwards of $40 per hour, depending on seniority. 

Last month, the company which has been in London since 1968, filed for bankruptcy protection in the U.S., reorganized in Canada under the Companies' Creditors Arrangement Act (CCAA). It received $30 million in loans from lenders to operate for a few more months.

Tom Venetis, a Toronto-based automotive analyst described Accuride as a "fixture of the London manufacturing scene" that supplied long-term jobs for many people over decades. However, the company closing down is part of a trend of the auto industry scaling back operations, he said. 

"With the continuing inflation that we see both in Canada and the U.S., companies are beginning to try to find ways to reduce their costs so they may be looking at trying to wind down some operations, consolidate some other operations in order to save money going forward," he said. 

The industry's concerns are compounded as U.S. president-elect Donald Trump enters the White House for a second term, raising questions of whether electric vehicle (EV) subsidies will be cut and how the Canada-United States-Mexico Agreement (CUSMA) will be negotiated, Venetis said. 

Trump's proposed 10 per cent tariff on all imported products might create political pressure on U.S. manufacturers to cut back their operations in other countries and bring that back onto American soil, Venetis added. 

The uncertainty in bilateral relations led Ontario's Premier Doug Ford to urge Canada and the U.S., to remove Mexico from the trade pact, calling it a "backdoor for Chinese cars, auto parts and other products into Canadian and American markets, putting Canadian and American workers' livelihoods at risk."

"The automotive manufacturing industry in Ontario is critical for the economic health of the province, so anything that would possibly disrupt it or cause manufacturers to scale back operations will have a significant detrimental impact," said Venetis. 

"It's really volatile right now because we don't know what [Trump's] administration plans to do with the auto pact going forward. Tariffs would impact vehicles manufactured in Canada, so everything is up in the air."

If the Trump administration goes forward with its tariffs it may have some impact on the local supply chain as well and could push other automotive plants to close or scale back, Venetis added.