General Motors Closing Down

The news of GM closing down the Oshawa plant is hard because it hits close to home, I personally know people who will be directly affected by this. I feel for all of the families who will be losing a job that was thought to be secured.

This was a business decision that makes sense to me, and other investors as the stock is up 6% on the news. As investors we do the same thing, we want low cost workers, high paying tenants to generate a profit. If that doesn’t happen something has to change, in GMs case they are deciding to ‘sell their property’ because they can not lower expenses or generate enough profit to sustain operations. People want to play the blame game but you have to realize General Motors is a publicly traded company and has to do whatever it needs to, to generate a profit.

The writing has been on the wall for a long time, each year GM has been slowly pulling out of Oshawa. In the 70s they employed 35,000 people with multiple plants, and numerous types of cars being built. Just two years ago GM employed 25,000 people, that number is now down to 2,500. Don’t get me wrong, its never good when jobs are being lost and that 2500 number will be more like 17,000-20,000 with the ripple effect GM will have. 

The good news is Oshawa has been preparing for this, bringing in different companies to redefine Oshawa. We are not just a GM town anymore and although this will negatively impact the City in the short term, will not cripple us long term.

I still believe in the fundamentals that makes Oshawa a great investment. Will house prices drop because of this? Probably, will vacancy come up a bit, probably. Oshawa is not a one trick pony though, we are now considered a University town with UOIT and Durham College growing rapidly, the Ministry of finance, Lakeridge Health, Ontario Power Generation, and above all that we are still within commuting distance to Toronto with 407 expansion and GO train expansion set to happen.

There is still a lot of uncertainty with what will happen to the plant, the very valuable land the plant sits on. Maybe this will be a blessing for south Oshawa? Lots of consider over the next months as things unfold.

This is just more motivation to build multiple income streams, nothing is for certain and when times are good, that is when you should be preparing for the worst by investing. I couldn’t imagine losing my only source of income at age 60 with no backup plan, no investments, and no other streams of income. My goals have always been to be making more money heading into retirement, not less. 

It’s important to own good quality cash flowing properties that yield a high return. As Warren Buffet says, you need to be greedy when others are fearful, and fearful when others are greedy.