When the Company Takes What the Company Wants



Over the highways and over the roads
Over the causeway, stories are told
They tell of the coming and the going away
The cities of Ontario draw me away
And the companies come and the companies go
The Island, Kenzie MacNeil



In October of 2005, Canadian Senator Gerald J. Comeau, Chairman of the federal Standing Senate Committee on Fisheries and Oceans, spoke on the topic of lost jobs:

We have many examples on the East Coast. For example, Canso, which was a fisheries port long before Canada ever became, or even thought of becoming, a country. Canso was a 500-year-old fishing community. There is no fishing coming into the community right now. In Lunenburg, the company decided to move a part of its operation to another town about 50 kilometres further down. That corporation made that decision and it had nothing to do with the community.

In North Sydney last week, Clearwater decided to start doing its surf claim processing in China for cheap labour. It is in the papers. I am not making this up. It is all there. This is a resource. It is right off Nova Scotia's shores. And the corporate decision is that China will do the processing.

About two years later, an adult educator working in North Sydney asked, "How do permanently laid-off or down sized Atlantic Canada fish plant workers cope with the impact of workers in China who make $0.20/hour and produce a similar product?"(pdf).

How indeed? How do they cope with businessmen moving their processing plants to China, hiring Chinese workers to replace them, and then demanding a roll-back in the Atlantic Canadians' wages?

One could wish they coped by working with the authorities to seize and nationalize the assets, put in laws to ensure seafood harvested in Canadian waters was processed in Canadian plants, and erect tariff barriers against the import of cheaper seafood products.

Unfortunately, the government remained on the side of the global businessmen.




This is going to be one of my political-economy posts, and you might want to skip it. Better to take five minutes to go out for a walk or maybe pop in and say a kind word to a co-worker. But if you must read on, I'll give you some background.

Early last week, I saw a NALD alert about a 2009 paper titled "Formal and Informal Training for Workers with Low Literacy: Building an International Dialogue between Canada and the United Kingdom" by Maurice Taylor and Karen Evans (NALD link).

According to the abstract, this was an "exploratory study" looking for common themes in "seven different types of workplace literacy programs in various regions of Canada and... four workplace basic skills programs in the North and South of Greater London, England." It was published in Manchester University Press' Journal of Adult and Continuing Education, 5(1) 37-54, but looks for all the world like a foreshortened version of Taylor's Partnerships In Learning studies published out of Ottawa: "a two year project that was interested in understanding the learning paths of workers with low literacy skills [funded by] the former National Literacy Secretariat, Human Resources and Social Development Canada."

The intro to the Journal piece reads:
The economic well being of countries such as Canada and the United Kingdom (UK) depends on having a skilled workforce ready to meet the demands of the global economy.
Blah, blah, blah... I thought. Here we go again with the hyperbole. It's the same thing that's always being said by Canadian Council on Learning (CCL), based on statements by the OECD (Organisation de coopération et de développement économiques) in Paris and the Economic and Social Council (ECOSOC) of the UN. I think it's hogwash.

Why hogwash? Let's start with some basic economics.

Canadian success in the global economy depends on several things. Chief among these is a trade surplus. Canada needs to export more goods - or, at least, a greater total value of goods - than it imports. It's as simple as that (literally, if all you care about is GDP).

The second important thing is the value of the Canadian dollar in comparison to other currencies. This is related to the so-called money markets (people using one currency to buy another) and also to the rate of inflation. Suppose one Canadian dollar was worth $0.80 American. If someone can produce something in Canada for $50 Canadian and sell it for $50 American, their profit is 20 cents on the dollar, or $10 total, based purely on exchange rates. But if the Canadian dollar strengthens to the point where there is no difference between the currencies, then that source of profit is lost. On the other hand, inflation - the chief cause of a decline in the dollar - can cause the buying power of the Canadian dollar to decline at a faster rate than, say, the buying power the American dollar. That means we pay more for their furniture or potato chips than they pay for ours, tipping the balance of trade against us.

The third big-ticket item is the cost of production at home. If we insist on our quaint environmental protections, minimum wage standards, and employer contributions to things like employment insurance and CPP, then the cost of producing things in Canada for sale elsewhere will put us at a disadvantage. Unions only aggravate this situation.

After these big three factors are considered, economists might cast an eye on infrastructure (are there adequate airport and seaport facilities, is the power-grid in good order, etc) and the labour pool (is there an available pool of labour located near production centers, is labour cheap and flexible enough, will it also provide a market for goods produced). And here, at long last, someone might wonder about relative skill levels. But not really. Not seriously.

It's not skill level differences that has sparked an outflow of manufacturing from China to Indonesia (link) - it is the growth of a Chinese middle class that wants more worker and environmental protections. Nor is China's global strength directly related to the skill levels of its workforce. It is related to finance and import-export decisions. The relative strength and weakness of the German and Greek economies, so much in the news these days, is not related to labour skill levels, but to financing decisions arising from the European Economic Community's commitment to near-zero inflation. It was financing choices that supported Ireland's rapid expansion and, more recently, equally spectacular collapse. German's aren't better schooled than Greeks. The Irish didn't learn and then calamitously lose a host of workplace essential skills. (Nor were they under-skilled back in the day - see The Blarney Of Economics And Such.) Economics doesn't work like that.

Here's the lead headline from last Thursday's Telegraph Journal: "Miramichi Project Axed." What project? The plan of a Norwegian company called Umoe Group to build a factory for producing solar panel materials in a New Brunswick city. Why axed? According to the newspaper story, the Canadian dollar is too high when measured against the American dollar and Euro. That means a bit of competitive advantage is lost. High power and construction costs also factored in, but these could be overcome if the dollar weren't so strong. What's not mentioned is an under-skilled workforce.

Thursday's Business section advertised "Housing forecast stable in Atlantic Canada." They say this is based on low interest rates and rising income. It also offered the cheerful news "Moncton, Fredericton top of tax rate report", rejoicing that taxes imposed on businesses have fallen below even such historically "competitive" places as Mexico City. The story doesn't address how long it will be before we have the same level of social services as Mexico City. And, again, it doesn't talk about relative education levels.

Inside this section, you can read about as a trip by our western premiers to Beijing to drum up more business among the Chinese, as well as how Halifax's Clearwater Seafoods is increasing sales as China's middle class grows.

You remember Clearwater, right? That's the company Senator Comeau was talking about.

Clearwater is an Atlantic Canada success story. It was founded in 1976, and has found mild fame for making money while adhering to sustainable fishing practices (except that several fisheries collapsed anyway - go figure). Over time, Clearwater expanded its business on the strength of a weak Canadian dollar, and lost ground when the Canadian dollar increased in value.

Trouble really began for Clearwater around 2002, when the company became publicly traded (though I'm not sure about the cause and effect). The company spent much of the early 2000's trying to work mergers and sell-offs, but was often halted by political controversies surrounding proposed layoffs.

For example, in 2006, hundreds of Cape Bretoners protested a lock-out at Clearwater's Highland Fisheries plant after labour negotiations broke down: Clearwater had been asking for an 18-per-cent wage cut ($2.25 an hour less for production workers and $1.55 an hour less for skilled trades). This would have lowered production wages to $10 per hour - on par with minimum wage in Ontario, but still vastly more than Clearwater was paying workers in its newly opened plants in China. At the same time, Clearwater laid off 40 workers from a North Sydney clam processing plant, and warned of more lay-offs ahead, citing the high cost of fuel and strong Canadian dollar. (And not the skill level of the workforce.)

Still, by mid 2009, Clearwater stopped losing money. According to their own SeafoodSource, "Clearwater said the improvements are a result of higher gross profits and greater productivity in its clam and scallop businesses, which were partially offset by a sales mix of relatively lower margins for shrimp and lobster." The "greater productivity" bit is where the lay-offs and job transfers to the far east came in. Colin MacDonald, CEO for Clearwater, beamed, "Our solid results speak to the success of all our business units and in particular our outstanding and dedicated workforce which continues to seek and find ways to drive innovation in our harvesting, our processing and in building strong relationships with our customers." Not mentioned is the $10 million in financing Clearwater received from the crown corporation Export Development Canada, but let that go for now.

I want to say more about Clearwater, but let's finish with the newspaper.

Friday's T.J. Business section celebrated "Payroll rebates" - a.k.a. taxpayer's money being spent on private profit - for an I.T. firm, government investments in a forestry company, and stability in the unionized labour market for pulp and paper companies. This last came too late, apparently, for one of AbitibiBowater's newsprint mills, which succumbed to debt and high labour costs - though, as far as I can tell, the workers were good at their jobs.

There was also some financial good news about pension plans and a rising Canadian stock market (I'm not sure it's really good news, but let that go for now), and a couple of bits about oil and off-shore drilling.

So... where in all this is that "skilled workforce ready to meet the demands of the global economy?" What does the loss of 800 forestry jobs in Quebec have to do with adult learning? Are there no education stories amidst all this economic news?

Well, yes there is. On Friday's front page we read "NBers get better at life-long learning." Yay! So, who says this? Let's see... oh. Rats. It's the CCL. They say things is better.

And there you see the isolated echo chamber. An adult learning group - or, in this case, a super-group - talks up the merit of adult learning by referencing the economic rational for literacy and adult basic education work.

Meanwhile, back on Cape Breton, Martin Kennedy was asking,

How do permanently laid-off or down sized Atlantic Canada fish plant workers cope with the impact of workers in China who make $0.20/hour and produce a similar product? This stark reality was recently compounded by a rising Canadian dollar which made our domestic imports less competitive as well as chronic over fishing practices which resulted in the diminishment of stocks. The decision of our workers to engage in simultaneous formal and informal workplace training was their response. This decision has provided the opportunity of examining the specific interplay that occurred between informal and formal training. In this case study, I shall attempt to describe some real learning paths of these workers, what triggers prompted their engagement in both formal and informal learning strategies, and also to examine their decision making processes and actual engagement in such training. I begin with a short description of the formal training program which was the catalyst for the learning path of these fish plant workers.

Since 2005, the Clearwater Fish Plant in North Sydney, Nova Scotia has been downsizing its operations. This is consistent with the trend experienced in almost all of Atlantic Canada’s fish plants who continue to face mounting problems in their attempt to compete with an escalation of overseas’ operations. A response was required for a significant permanent layoff of approximately fifty workers. This was compounded by the anticipation of a complete plant closure. As a result, the Northside Entrepreneurial Centre, in conjunction with the Northside Economic Development Association Corporation, organized a program to assist the laid-off and soon to be laid-off workers which would enhance their essential skills in an effort to secure alternative employment.

Fourteen students commenced 80 hours of classroom training in early 2006 at the Clansman Motel which was also situated in North Sydney. Two classes (each three hours in length) were held twice every week on Tuesday evenings from 7:00 p.m. until 10:00 p.m. and Saturday afternoons from noon until 3:00 p.m. Three additional individuals from the local community joined the 11 laidoff and soon to be laid-off Clearwater employees as all of them planned to write their General Education Development (GED) Grade 12 Equivalency examinations following the completion of the course. During each class, we used our primary resource which was a comprehensive GED Preparation Manual. Group discussion and interaction, as promoted by myself as facilitator, was the primary teaching approach. Self-assessment was encouraged but, since all of the workers planned to write the GED examinations at the end of the program, the real evaluation was acknowledged to be their success in that endeavor.
There are three stories the author details. Though passing the GED was the real measure of success or failure, Kennedy notes the tremendous value of the informal learning and the workers' growing self confidence in helping these people find work.

The learner Barb, laid off from the fish plant, was doing a short-term placement at a nursing home, working toward her GED and setting her sights on jobs requiring that certificate.

The learner Lisa, in the process of being laid-off was working part-time at a Bingo Hall as well as volunteer bar-tending, besides working toward her GED. Lisa was still looking around for a different position with Clearwater, but seemed keen on building up her bar-tending skills as well. (Presumably, with more lay-offs coming, she saw bar-tending as a growth market.) Then, apparently, just as her plant job was ending, she picked up a job with the coast guard - at $13 an hour, pre-2006 Clearwater wages.

The learner Martha, at risk of being laid off, was also working toward her GED, as well as becoming a complete subversive - showing up at union meetings, researching company shenanigans online, asking questions. She was also looking for new, more stable positions within the plant.

There's a lot to commend in Mr. Kennedy's work and the courage and stamina of these adult learners. (Can you imagine a class from 7 to 10 in the evening, after working all day?) I'm glad they had each other.

But there's also a lot to be concerned about, in a grown-up way, with how Mr. Kennedy frames his case study. For example, these fish plant workers are not coping with "the impact of workers in China" - they're coping with being laid off. They are coping with what the company did to them, coldly and deliberately. The "stark reality" is that the company made a company decision, and now the jobs are gone. Nor are they making an "attempt to compete with an escalation of overseas operations." Those operations belong to Clearwater, and Clearwater is making its decisions based, as Mr. Kennedy's first two sentences tell us, on the strength of the Canadian dollar and the promise of low-wages. Since the North Sydney workers can't do much about the dollar, their only real option was to work for a much lower hourly wage - which is what those 2006 protests were about. Failing that, they had to find other employment.

As well, there are some people missing from the story. We're told "approximately fifty workers" were laid-off, but only fourteen adults "commenced 80 hours of classroom training." Were there more in other programs? If not, why not? What happen to the other two-thirds? I don't know, and the paper doesn't say. We're told the fourteen learners "planned to write their General Education Development (GED)" and used "a comprehensive GED Preparation Manual" as a primary resource. Why only 80 hours (14 weeks)? Don't know. Will there be jobs for 50 (or 80, or 100) workers, however well trained? Don't know. What's happening with North Sydney's over-all economy? Don't know.

Fourteen people getting their GED is great. But it is not an adequate response to a plant closure in North Sydney. if we're going to talk about basic adult education and skills training in the context of the global economy, we'd better also talk about the real causes of job-loss and community devolution.

I know, I know. Mr. Taylor and Mr. Kennedy don't really want to talk about economics or global competitiveness or things of that sort. Prof. Taylor was just warming up, just setting the stage, using fashionable language in an... inexact manner. And Mr. Kennedy was just trying to paint in a bit of context for us. But I'm silly sensitive about hyperbole and loose talk about why Atlantic Canadians may or may not be poor and under-employed. And since they started it, maybe they really should talk about economic and political facts.

Maybe they should start their essays and case studies with the bold assertion that the Canadian economy is not suffering from a scarcity of skilled labour, but rather from inadequate demand for its products and services, and an over-strong dollar that discourages foreign investment. They might also state, clearly, that it's suffering from policies designed to help Canadian businessmen employ labour in, and gain access to, foreign markets even at the expense of Canadian workers. (If they're not sure of this, I'm sure Barb or Lisa or Martha could straighten them out.) Maybe they should talk frankly about how wealth is generated, about the ownership of the means of production, and the relative powerlessness of workers even within a democracy.

In the late 1980s, Brian Mulroney printed money, keeping our dollar low compared to the American dollar, and cut taxes and social spending to encourage foreign investment and promote more trade with the U.S. The balance of trade shifted, as production costs and currency weaknesses worked to the advantage of exporters, and the economies strengthened in the short term. (Thank goodness the Americans spent 15 years doubling-down on their debt load to pay for our exports). As the economies grew - even more so as the financial markets accelerated through the late 1990s based on credit and gimmicks - there was even a resurgence of interest in social spending; albeit in the new form of private public partnerships. But then the game collapsed around 2007, and it'll be harder than ever to pull us out of this latest dip. Such is the fate of those who put their trust in transnational capital.

"Our outstanding and dedicated workforce" Colin MacDonald said, though it's not clear which workers he meant. If the Chinese plants close in favour of plants in Indonesia, will they also get 80 hours toward a GED.

Don't know.

Maybe someone should find out.

And some have sailed from a distant shore
And the company takes what the company wants
Blue Sky Mine, Midnight Oil


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