GM cuts will be painful, but better now than during a recession: Don Pittis

"It could have been worse" will be of no comfort to those affected by the shutdown and job lossesatGeneral Motors. It has been a shock to affected familiesand to the communities where plants are closing.

"It's going to affect the province, it's going to affect the region," said Oshawa, Ont., mayor John Henry after hearing that the historic Ontario GM plant that his community hashosted and supported for more than a century will be closing. Thousands of workers will be laidoff.

"If you look out the window right now and look at the weather, that's the mood in the city of Oshawa," Henry told CBC Torontoradio host Matt Galloway on an overcast Monday, shortly before GM's official announcement.

Silver lining

Despite the devastating impact on individual lives, the stormy grey clouds may have a silver lining. For the economy as a whole, the GM layoffs both in Canada and the U.S.could hardly have come at a better time.

For employees who are able and willing to move, experts in worker compensation saidmany people who are losing their jobs will be able to command good wages in an economy where manyskills are in short supply.

"Canadian employers are indicatingthat labour shortages are becoming a growing issue," saidBrendon Bernard, economist at online job search company Indeed Canada.

While the automotive sector has been shrinking in Ontario over the last decade, and there will inevitably be damaging spillover effects on an already weakenedregional economy,there is still strong demand for skilled manufacturing workers, especially in Quebec and British Columbia.

While previouslayoffs have come in waves during recessions, General Motors has made their move not at the bottom of an economic cycle but near the top. And that will make a big difference.

"Recessions are an especially bad time to lose a job," saidBernard. Right now, unemployment remains at multi-year lows and the number of available skilled workers is actually shrinking.

"In bothCanada and the U.S., the share of population reaching retirement age is rising," he said.

Too cheery?

While GM's news release may have been too cheeryconsidering the lives of their employees at stake, there is no question that initiating changesnow makes the best of something that could have been much worse.

"We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success," said GM CEO MaryBarra.

Making such changes can be dangerous for a company. But continuing to dothe same thing in an effort to preserve existing jobs has also proven dangerous, as happened in the U.K. when a failure to modernize led to the domestic auto industry'sdownfall.

The theory of creative destruction insists that a strong economy must always be in turmoil, with vigorous companies stealing the workforce of those that are weakening.

One example comes from the early days of the Ottawa-basedonline retailer Shopify,when the company, hungry for experienced talent, brazenly scooped laid-offemployees right off the front lawn of IBM's Ottawa headquarters, Shopify founder and CEO TobiLutkerecalledin a 2013 interview.

"Why don't we get some people out to the [IBM]office and put a recruiting booth out," heremembers saying.

That's exactly what they did, and when they were chased off the property by IBM, "luckily there was a government owned sidewalk nearby," saidLutke.

Facing competition

In fact, with the increasing computerization of cars,the GM transition is part of a continuing move from metal bashing tosomething closer to what Shopify and IBM do, saidKatie Bardaro, chief economist atPayScale, a company that monitors wages in the U.S. and Canada.

Based in Seattle, hometown of Amazon and Microsoft, she knows thatGM in its quest to create automated and electric poweredvehicles will be competingfor expensive software and engineering talent.

But she saidlaid-off workers also have good prospects in the current tight labour market. WhileCanada's unionized automotiveemployeesare well paid, they are not your grandmother's kind ofautomotive factory worker. Instead, she said, they areskilled in such things as safety compliance, electronics and the management ofcomputerized machinery.

"There are a largenumber ofskills that are far above nut tightening," saidBardaro.

The current economy is also hungry for experienced white collar workers with a wide range of back office experience including lower level managers,accountants,andengineers who can transfer their skills to other businesses, she said.

"Research has shown that for certain jobs, you actually see a bigger pay increase if you leave your job and move to another job, regardless of whether you left from your choice or you were laid off."

That's small consolation for workersnow contemplating the uncertaintyof losing well-paying jobs they thought were nowhere near an end point. Butit'sbetter than if the news had come a few years from nowwhen the job market isn't sostrong.

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