Dispatches From North Of The Border

Cohn: How Canada let Caterpillar strip a plant clean


U.S. heavy equipment maker Caterpillar Inc. announced Friday it was closing its Electro-Motive Canada plant in London, Ont., a month after it locked out about 450 workers.

By Martin Regg Cohn Queen's Park Columnist
This article was first published in TheStar on February 5, 2012

Ask yourself this: Why did Caterpillar buy a plant only to destroy it?

The labour dispute at a London locomotive factory was nasty, brutish and short — a depressingly Hobbesian scenario in which brute strength prevailed over civilized rules of conduct.

There were no strikebreakers wielding clubs at Electro-Motive Canada, because there was no strike to break — the union was locked out on New Year’s Day. There were no replacement workers to bust the union, because the union was merely invited to slit its own wrists — by halving most wages from $34 to $16.50 an hour.

The U.S.-based owner, multinational giant Caterpillar Inc., didn’t so much humiliate 460 skilled workers as ignore them. It started and ended this negotiation with a carefully choreographed plan to pack up, shut down and leave town.

Clever multinationals — and this is one cunning Caterpillar — don’t spend hundreds of millions of dollars to buy a factory only to shutter it. So what was the plan?

Never mind Caterpillar’s cold-hearted tactics. Its clear-eyed strategy exposes our own blindness.

The big bad Americans saw past our myopia — beyond the cash value of the plant’s physical property to size up and seize the company’s intellectual property: the innovation, trade secrets, manufacturing processes and R&D residing in London.

It won’t just relocate the heavy equipment on the factory floor, but harvest the technological know-how subsidized with government incentives and writeoffs. This wasn’t bullying, it was highway robbery — with our politicians watching from the sidelines.

Caterpillar kicked those workers in the teeth, but we should be kicking ourselves for letting it acquire the legal right to do it as it pleased when purchasing the old locomotive plant. There has been much hand-wringing that foreign investment safeguards weren’t triggered, failing to ensure a net benefit to Canada with explicit job guarantees after the takeover.

But lost jobs aren’t our only loss. Be it Nortel or RIM, we need to value the technology and patents in play when foreigners start kicking the tires. The buyers are just as likely to be scavengers as investors. And if their primary goal is to spirit away our intellectual property, they will treat the ancillary human resources as an expendable asset to be stripped away, bargained down or locked out.

The $4.5 billion auction of Nortel patents last year made a mockery of the more modest valuations that the bankrupt company had put on its own treasure trove of intellectual property, nurtured by our tax dollars. Canadians always sell themselves short.

So the first lesson of the London massacre: Ottawa must be vigilant about vetting foreign investment and retaining jobs, but also mindful of valuing — and anchoring — our homegrown intellectual property. Why underwrite our companies if we willingly sell off our embedded brainpower to foreign bidders who leave Canada cash-rich, patent poor and jobless?

If RIM is one day placed in the shop window, are we ready for a fire sale of its technology? What if Bombardier — which also builds locomotives — ever goes on the auction block, patents aplenty?

Another lesson: When it comes to the economy, empathy isn’t enough. Premier Dalton McGuinty adopted a reflexively tepid tone from the start, expressing the vain hope that both sides would come to their senses. Belatedly last week, he ratcheted up the rhetoric by exhorting the plant’s owners to play fair.

But he never picked up the phone to the employer. Nor did he reach out to Prime Minister Stephen Harper to forge a non-partisan common front. When a company treats its workers like dirt, a premier should leave no stone unturned.

McGuinty and Harper must conduct a post-mortem. More Caterpillars are coming, and they will metamorphose into a plague on our intellectual property if we don’t start using our heads. I’ve argued before that globalization can bring benefits, but only if we’re smart enough to play defence as well as offence.

It’s too late to save the jobs in London. Caterpillar has closed a plant and cashiered its workers, but it has opened our eyes: it’s not just the jobs on the factory floor that are lost, but the technology that buttresses them.

A locomotive factory is gone. Now the tech train is leaving the station — with a free pass from our politicians.

Martin Regg Cohn’s provincial affairs column appears Tuesday, Thursday and Sunday in TheStar
(http://www.thestar.com)


mcohn@thestar.ca

twitter.com/reggcohn

This article was first published in TheStar on February 5, 2012 (Toronto, Ontario Canada)

(http://www.thestar.com/news/article/1126357--cohn-how-canada-let-caterpillar-strip-a-plant-clean?bn=1)

ONE of the memes being thrown around over the past few years by advocates of reducing the power of public-sector unions has been the claim that public-sector workers are overpaid in comparison to their private-sector counterparts. I've always considered this an odd claim to hear, as I've been in the labour market for quite a long time and can't recall ever hearing anyone say they were going to work for a government bureaucracy because they wanted to make a lot of money. At crucial career-making junctures in life, people who want to get rich tend to enter corporate law rather than join the District Attorney's office, to work for internet companies rather than teach math in public high schools, and so forth.

All of this is coming up now because Wisconsin has become the showdown state for the public-sector union controversy, and Scott Walker, the governor, is claiming he needs to destroy the state's public-sector unions' ability to negotiate in order to deal with its budget shortfall. State workers, he says, are paid too much. But the Economic Policy Institute tells us that, in Wisconsin, public-sector workers are not in fact paid more than their private-sector counterparts. They're paid less. You can only make it appear that public-sector workers earn more by ignoring the fact that "both nationally and within Wisconsin, public sector workers are significantly more educated than their private sector counterparts."

Nationally, 54% of full-time state and local public sector workers hold at least a four-year college degree, compared with 35% of full-time private sector workers. In Wisconsin, the difference is even greater: 59% of full-time Wisconsin public sector workers hold at least a four-year college degree, compared with 30% of full-time private sector workers

....Public employees receive substantially lower wages, but much better benefits than their private sector counterparts. Wisconsin state and local governments pay public employees 14.2% lower annual wages than comparable private sector employees. On an hourly basis, they earn 10.7% less in wages. College-educated employees earn on average 28% less in wages and 25% less in total compensation in the public sector than in the private sector.

The EPI study does find there's a class of public-sector workers who earn a bit more than their private-sector counterparts: those without high-school degrees. In other words, district attorneys earn less than corporate lawyers, but janitors at the district attorney's office may earn more than janitors at a corporate law office—provided the government hasn't outsourced its facilities staff to the same private company the law office uses, which it may have, since governments have been targeting low-skilled workers for outsourcing precisely because that's how they can save money.

For most people who work for the government, however, the expectation is that your year-to-year salary will be lower, but your benefits will be better, in particular your pension. It turns out, however, that state governments won't have the money to pay a lot of those pensions. They're likely to renege on their promises, and Republicans in Congress want to allow them to declare bankruptcy in order to do so. (Funnily enough, this may be the one area in which labour unions and Wall Street are in alliance: neither one wants states to be allowed to declare bankruptcy.) In other words, as Ezra Klein points out, the public-sector employees got rooked: they accepted lower pay in exchange for retirement benefits, and now the retirement benefits look unlikely to come through.

Now, how can we explain the fact that public-sector employees are paid less than private-sector employees? After all, public-sector employees are heavily unionised, while private-sector employees aren't. Shouldn't those unions be winning public-sector employees better wages? Well, I don't really know; perhaps the fact that the government is a monopoly employer with staggering market power has something to do with it. But try considering how employees' wage negotiations with the government might look if there were no public-sector unions. In most lines of work, individuals' power to negotiate higher wages with large organisations is very limited. In government employment, individuals' power to negotiate higher wages is utterly non-existent. An individual teacher who bargains with a private school for a higher wage than her peers is going to have a tough negotiation on her hands; an individual teacher who tries to bargain with the City of Milwaukee for a higher wage than her peers is going to be laughed out of the superintendent's office. In his initial post on this subject, my colleague ventured that civil servants would constitute a powerful bloc able to protect their wages even without unions. I'm not really sure what this means. Through what mechanism are civil servants supposed to bargain for wage increases if they don't have unions? Who's supposed to do the bargaining?

Originally posted in The Economist Feb 21st 2011, 14:55 by M.S.

As we are gripped in cold and snow Black Walnut Lane Farm was tweeting about the farm being in the middle of the spring lambing season. It made me feel that spring really is not that far away. We are still in for more winter but soon all of us will be in the middle of April showers and then May flowers.

If you are looking for locally grown foods then I would suggest that you get yourself out to Black Walnut Lane Farm in Millgrove, Ontario and start enjoying and supporting locally grown produce.

Black Walnut Lane Farm

Local Farm Food Worth The Premium

Words have consequences! This is an understatement.

The shooting of Congresswoman Gabrielle Giffords and the death of six other innocent individuals in Tucson, Arizona on Jan 8, 2011 must give rise to change in the United States of America. The youngest person shot and killed was Christina Taylor Green, age 9, who was ther e to witness democracy in action. There are also an unconfirmed number of others shot. Reports have numbers as high as 19 persons wounded or dead.

I would urge everyone regardless of where they live in our world to embrace Gary Hart's statement on words having consequences. The United States of America has been wounded and the fix is not more rhetoric.

Gary Hart

Scholar in Residence at the University of Colorado

Posted: January 8, 2011 04:52 PM

Words Have Consequences

Over time, political rhetoric used by politicians and the media has become more inflamatory. The degree to which violent words and phrases are considered commonplace is striking. Candidates are "targeted". An opponent is "in the crosshairs". Liberals have to be "eliminated". Opponents are "enemies". This kind of language eminates largely from those who claim to defend American democracy against those who would destroy it, who are evil, and who want to "take away our freedoms".

Today we have seen the results of this rhetoric. Those with a megaphone, whether provided by public office or a media outlet, have responsibilities. They cannot avoid the consequences of their blatant efforts to inflame, anger, and outrage. We all know that there are unstable and potentially dangerous people among us. To repeatedly appeal to their basest instincts is to invite and welcome their predictable violence.

So long as we all tolerate this kind of irresponsible and dangerous rhetoric or, in the case of some commentators, treat it with delight, reward it, and consider it cute, so long will we place all those in public life, whom the provocateurs dislike, in the crosshairs of danger.

This is carried out, and often rewarded, in the name of the Constitution, democratic rights and liberties, and patriotism is a mockery of all this nation claims to believe and almost all of us continue to struggle to preserve. America is better than this