Magna to lay off 725 at St. Thomas operations
TORONTO - Magna International Inc. (TSX:MG.A) will temporarily lay off 725 workers at its Formet Industries truck-frame plant in St. Thomas, an industrial community in southwestern Ontario already hard hit by job cuts in car and truck factories.
The cuts include both hourly and white-collar employees and are the result of customers temporarily shutting down their full-sized truck plants, Canada's largest auto-parts maker said in a brief statement Monday.
Magna's auto parts division has reduced its workforce substantially over the last year, including 400 layoffs at the St. Thomas plant last September and another 120 in January.
The most recent round of layoffs will begin May 4, and the Toronto-area company said workers will be re-hired once Magna's customers start making trucks again.
The St. Thomas Times-Journal reported that the customer shutdown runs until July 13 and said approximately 200 of more than 1,000 workers will remain on the job.
Magna, which generally operates non-unionized plants, has been closing factories to deal with a slump in its business caused by production cuts at the so-called Detroit Three carmakers -- General Motors, Ford and Chrysler -- the company's major customers.
Recently, the company said it will continue with plans to close a U.S. factory near Syracuse, N.Y., which makes parts for trucks and sport utility vehicles, despite worker concessions aimed at keeping the factory open. That plant employs 1,400 workers.
Magna, which employs about 74,000 people around the world, also recently announced factory closings in Ontario and Atlantic Canada to cope with slumping business, with the loss of hundreds of jobs.
All of the Detroit Three carmakers have been shutting down plants and cutting tens of thousands of jobs as they cope with a battered car market caused by the recession and a credit crunch that makes it harder to finance car purchases.
For example, GM Canada is set to permanently close it its pickup truck plant in Oshawa, Ont., next month, affecting 2,600 jobs.
Towns like St. Thomas have been at the epicentre of the job cuts. St. Thomas alone has already seen the closure of a Sterling heavy truck plant, which employed more than 2,000 people at its peak, and cuts at a Ford Canada car assembly plant.
Meanwhile, Magna has been at the centre of speculation that it's in talks to purchase a large chunk -- some reports say 20 per cent -- of Adam Opel AG, a European arm of GM. Italian automaker and potential Chrysler partner Fiat is also said to be interested in Opel.
Roland Koch, premier of the German state of Hesse where Opel's main plant is located, confirmed that Magna is a potential partner.
"Magna and Fiat are among the possible partners. But it is also clear that there has been no decision yet," Koch said in a statement.
In its most recent financial report, Magna reported a fourth-quarter loss of US$148 million, paring its full-year earnings to a bare $71 million, down 89 per cent from $663 million in 2007.
Magna, which has 240 factories in 25 countries, said annual sales declined nine per cent to US$23.7 billion.
In trading Monday on the TSX, Magna A shares fell C$1.78 to close at $43.22, a drop of nearly four per cent.