Oshawa, GM and Antifragility

This week my hometown got some jarring news. After many decades, Oshawa, Ontario, Canada is going to lose its General Motors plant.

Both of my grandfathers and a great aunt worked for GM in Oshawa their whole career. When I grew up in Oshawa, around 30 years ago, you could see the impact of GM everywhere. The fabrication plant was there, another factory building over there, a warehouse here and there. A common refrain was if GM ever left Oshawa, the city would die.

Fast forward to today. When I return to the ‘shwa to visit, I don’t see much impact from GM. Their factories in the city center were demolished long ago when a new plant was built on the outskirts of town. Vacant lots remained for a long time, but now vast swaths of big box plazas stand in those once empty spaces. Every other year it seemed that as GM automated, fewer and fewer people worked there.

Instead of making most of the component parts for vehicles, GM began to outsource. Some parts are made overseas and shipped in. A few local factories make parts for the GM plant in Oshawa.

One time I got to tour the GM plant. I was impressed by how everything was timed for the specific car that was being assembled.* There is very little warehouse space. Parts are delivered almost exactly when they are needed.

I’m currently reading Antifragile by Nassim Nicholas Taleb. One of his important ideas is the spectrum of fragility. Most people think of it this way:

Fragile ———————————————-Robust

Taleb sees it like this:

Fragile —————————————Robust————————————Antifragile

Fragile things are harmed by change, so they thrive on stability. Robustness is being able to ride out the waves. A robust entity has enough protection to ride out the change and survive. Being antifragile means thriving on change and instability.

I heard the news of GM leaving Oshawa through this lens of fragile-robust-antifragile. Oshawa is in a better state today to handle the departure of GM than when I was growing up. I read that at GM’s peak, it employed 40,000 people in Oshawa. Now it is closer to 2,500. I’m not sure how many work in the secondary industries, but is nowhere near the 37,500 person difference. More than that, the city has adapted over the years to ensure that it is not as dependent on GM. Oshawa has made itself less fragile.

General Motors has had a rough ride for at least the last 10 years or so. They would have gone under in 2008 if not for both the US and Canadian governments bailouts. They’ve been behind the curve for a very long time in automotive innovation and development. GM appears to be a fragile corporation. I’m skeptical of the corporate press releases that make up the news today, as the company only states what it wants people to know. Current news stories make it appear that GM leadership knows that it must innovate or die, and these factory closures in North America are part of their solution. They are trying to make GM less fragile.

The final part of this drama is my brother. He works for one of the secondary companies that make the parts used in the Oshawa GM plant. I haven’t had a chance to speak with him since the closure was announced but, like Oshawa, he saw the fragility of his situation years ago when he was temporarily laid off due to slow sales. He learned several skills and did some side work while laid off. Several years ago he got his real estate license and now does that on the side. He’s made his career less fragile.

A big change like this can happen to cities, states, companies, or people. Each type of entity makes decisions that make them more or less fragile. Those who become or stay fragile will get wiped out when (not if) change happens. Entities that become less fragile and more robust will be able to weather storms for longer and possibly ride them out. Those who are antifragile welcome the storms and come out the other side better and stronger.

I have a sense that both the city of Oshawa and my bother will be okay without GM. I’m not so sure about the future of GM.

What lesson can we take away from this? We in the US have been riding a big economic wave for a long time. At some point, this wave will crest and decline. Are you making your life more robust or even antifragile so that you benefit and thrive when the next big change occurs? If so, let me know how in the comments below. If not, I hope you start.

*I deliberately use the word assembled. At least in Oshawa, GM no longer “built” cars. They ordered specific parts from all over and the factory in Oshawa put them together.