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October 20, 2014
A New Direction is Needed for
the Economy
The Anti-Union Agenda Behind the
Canada Jobs Grants
 
A
New Direction is Needed for the Economy
• The Anti-Union Agenda Behind the
Canada Jobs Grants - Jim Nugent
• Chaos in Canada's Economy
• U.S. Steel's Phony Bankruptcy
• Workers Protest Resolute Forest
Products Mill Closure in Shawinigan, Quebec
A New Direction is Needed for the Economy
The Anti-Union Agenda Behind the
Canada Jobs Grants
- Jim Nugent -
The federal Minister of Employment and Social
Development, Jason
Kenny, participated in two media events in Edmonton on October 9 to
make announcements about the Canada Jobs Grant program. The program was
brought in as part of the 2013 budget. Through the Canada Jobs Grant
program the Harper
government seized tight control over how funds transferred to the
provinces for skills training and labour market development are
allocated.
The Alberta Minister of Jobs, Skills, Training and
Labour, Richard
McIver also participated in the events. Kenny and McIver announced that
programs under the $34 million Canada Jobs Grant agreement between
Canada and Alberta are now operational. They said employers can begin
submitting applications
for a share of the employer training subsidies being made available
through the program.
 It is significant for
workers and their organizations that the
Christian Labour Alliance of Canada (CLAC) hosted the events where
Kenny and McIver made their Canada Job Grant announcements. At one
event, Kenny presided over a ribbon cutting ceremony for a new CLAC
welder training and certification facility.
The other event was a tour of the "High School to Hard Hats" program at
St. Joseph High School, which is a welding and trades training program
operated as a collaborative project of CLAC and the Edmonton Catholic
School Board.
By connecting CLAC to the Canada Jobs Grant roll-out
Kenny and
McIver have indicated that this program has been loaded with an
anti-union, anti-worker agenda. CLAC poses as an "alternative union"
but in fact is a yellow company union used by construction and other
employers to disorganize the workers'
movement and to put downward pressure on wages and working conditions.
CLAC has been most active in Alberta on bitumen capital projects but is
also making inroads at undermining the organizations of construction
workers in Ontario and other parts of the country. The CLAC connection
with the Canada Jobs
Grant raises the question of what the Harper government is up to with
this program.
The most likely explanation is that the Harper
government has
targeted the worker training system of the building trades unions for
wrecking. It seems to be pushing CLAC forward to challenge the leading
role of the building trade unions in construction worker training and
certification.
Almost all effective construction trades training in
Canada is
organized through the apprenticeship systems of the building trades
unions [1]. The Harper government is
not happy with this situation
because the unions manage their apprenticeship systems in a way that
keeps equilibrium between the number of
workers trained and the jobs available. Maintaining this equilibrium
supports Canadian standard wages in the construction sector which the
Harper government sees as an obstacle to imposing its low-wage agenda
in the sector.
Construction is a sector where the Harper Conservatives
are focusing
their low-wage offensive. This is because the sector has a growing role
in the aspirations of the global monopolies and the rich minority for
further enriching themselves. Construction workers now account for
almost half of industrial wealth
created in the Canadian economy every year. During the recent Canada
Jobs Grant launch Kenny dreamed out loud about possibilities for $350
billion in capital construction projects in resource extraction,
transportation and urban infrastructure over the next few years.
 Destroying equilibrium in
the construction labour market to set up a
downward spiral in construction wages has been one of the targets of
the Harper wreckers in a series of regressive labour market reforms. In
2012 the Harper government repealed the Fair Wage Act which for more
than 70 years had limited
destructive wage competition on federally funded construction projects,
had created some stability in the sector and had supported the building
trades apprentice training systems [2].
Destabilizing
the construction
labour market by flooding it with vulnerable workers was also one of
the objectives of the Harper government's
rapid expansion of temporary foreign workers (TFW) programs and further
dismantling the Employment Insurance (EI) system.
As political cover for its heavy handed manipulation of
the labour
market in favour of global monopolies and the rich minority, the Harper
government created the hoax of a pending crisis over skilled labour
shortages. The skilled labour shortage crisis was also used to justify
the introduction of the Canada Jobs
Grant programs but the way the program is being rolled out exposes the
Harper government's concern about labour shortages as a fraud. If the
Canada Jobs Grant was a genuine response to pending skilled labour
shortages, why would it be rolled out in a way that attempts to
sideline
and disrupt the construction union
training systems which currently provide almost all building trades
training?
Using the Canada Jobs Grant program to push CLAC forward
in the
field of trades training indicates a twofold low-wage strategy of the
Harper government in the construction sector: flooding the labour
market to maximize wage competition; disrupting the self-defence
organizations created by construction workers
to limit competition within their ranks. Construction workers, their
organizations and other working people need to confront this
anti-worker, anti-union strategy head on.
Notes
1. The classroom portion of trades
training amounts to 6-8 weeks a year
for each apprentice which may be delivered either by provincial
colleges or union training centres, depending on the trade and the
jurisdiction. Construction unions, however, organize and manage the
overall system, including the recruitment,
on-the-job training, job placement and certification of apprentices.
Non-union apprenticeship programs exist but are not functional.
Completion and certification rates for non-union apprentices are very
low, usually because of inconsistencies in apprentice employment
opportunities. Almost all union apprentices complete
their hours and certification.
2. For analysis of the effect of
repealing the Fair Wage Act
on
construction trades training see the following posts by a
representative of the International Union of Operating Engineers
(IUOE). The IUOE operates Canada's largest facility for training
apprentice crane and heavy equipment operators.
"Repealing
the
Fair Wages Act Goes Against Evidence and Workers' Interests"
"Merit
Canada's
Low-Wage Low-Skills Plan for the Canadian Construction
Industry"
Chaos in Canada's Economy
 More and more people have
concluded that the current direction of
the economy under the control of a handful of global parasites and
speculators and protected by sell-out governments is irrational and
frankly ridiculous. This dictatorship of a privileged few over
Canadians' lives and economy must end. A new
direction for the economy is not only possible but urgently needed.
Neoliberal globalization is in constant crisis. More and
more people
are calling for a new direction, as monopoly right and anarchy in the
production of our basic needs are proving a disaster. Not only are the
unrestricted actions of monopolies disrupting our productive forces,
economy and livelihoods, they are
also threatening our security in retirement. In fact, destroying
Canadians' retirement security is a constant theme of the neoliberal
economy and its retrogressive restructuring. Canadians view this
activity with dismay.
Now U.S. Steel
has applied for bankruptcy protection for its Canadian facilities whose
assets and workers are a valuable productive asset. Meanwhile, Resolute
Forest Products is also closing down productive assets. Why should
these vital productive facilities be
subjected to the speculation and attacks of financial parasites? They
should be under the control of the actual producers and retirees who
have a stake in their well-being and would defend these assets with
their lives. Vital productive facilities that underpin the well-being
of local economies, the current livelihoods
of thousands and retirement security of thousands more, and greatly
contribute to the economy of the country generally should not be
subjected to this constant speculation and manipulation by cartels in
faraway financial centres and tax havens. The Quebec, Ontario and
federal governments are duty bound to defend
the country's productive assets and workers, and restrict monopoly
right from abusing the people and economy.
Working people are fighting for an economy which serves
their
interests, not those of the rich who care for nobody but themselves.
U.S. Steel's Phony Bankruptcy
Local 1005 Steelworkers
protest outside CCAA court hearing in Toronto, October 6, 2014
On September 16, U.S. Steel filed for bankruptcy
protection for its
Canadian operations under the Companies' Creditors Arrangement Act
(CCAA). Information Update, the newsletter of Local 1005
United Steelworkers, questions the assertion that U.S. Steel's Canadian
facilities, called USSC, are bankrupt when they are wholly-owned by the
U.S. parent company and the parent company, USS, is far from
bankrupt. This assertion appears as the main argument for CCAA.
The
factum presented to the court presents no proof of separate ownership
of the Canadian subsidiary. The sole equity ownership remains in the
hands of the U.S. Steel stock
traded as X on the New York Stock Exchange.
The claim is that the Canadian subsidiary is hopelessly
in debt to
the parent company, which is the sole secure creditor. USS demands
reimbursement of the $2 billion debt owed to it by its wholly-owned
subsidiary, which of course comes before the claims of all others
including employees, retirees, suppliers
and the federal and Ontario governments. The restructuring process
under CCAA means that their claims are to be disappeared.
 The accounting methods used
are an important factor in this affair.
In this case, the books are set up in such a manner as to make normal
business transactions within a single company appear as those amongst
separate companies. Cash flow within the company is made to appear as
an exchange of goods and
services and financial transactions between a lender and borrower. In
this way, it is relatively simple to manipulate the situation and cut
off an unwanted part of the company without damaging the whole.
It also appears that when U.S. Steel purchased Stelco in
2007, it
wanted to destroy Stelco as a competitor and restrict steel production
in Canada in an effort to boost steel prices in North America. It would
appear that through CCAA, USS hopes to salvage whatever it can for
itself from the disaster it has created
in Canada.
To qualify for bankruptcy protection, the company
claimed that in
order to maintain operations in Canada, USSC relied on funding provided
by USS totaling approximately $3.9 billion, consisting of $1.6 billion
of debt and $2.3 billion of equity, since the acquisition in 2007.
However, U.S. Steel has not declared a profit from any
of its
operations since 2009. Why would it single out two facilities in Canada
for special mention, especially since production at those two
operations has been deliberately curtailed by USS itself through
layoffs, lockouts and the closure of the steel-making
department at Hamilton Works? USS has relied on borrowing to keep its
operations going during these years of not making a profit.
USSC says its principal liabilities as at August 31,
2014 include
the following: (a) USS secured loan of $204.1 million principal and
$5.3 million accrued interest; (b) USS unsecured loan of $1.419 billion
and $438.2 million accrued interest; (c) Province of Ontario Loan of
$150 million and $0.6 million accrued
interest; (d) Pension plan liabilities of $372.5 million (on a
financial accounting basis) or $838.7 million (on a solvency funding
basis) (e) Other post-employment benefits ("OPEBs") of $787.9 million;
and, (f) Trade payables of $363.7 million (of which $189.9 million are
third party trade payables and $174.8 million
are USS intercompany trade payables).
The pension plans and OPEBs cannot be considered a claim
on fixed
assets unless USS stops producing. They are negotiated claims on the
value workers produce. The claims are paid from the realized value USS
workers produce anywhere in its global operations. They could only
become claims on existing assets
if USS stopped producing altogether and sold off all its means of
production.
"Intercompany trade payables" is a term used by global
monopolies.
The term implies that the one monopoly consists of separate and even
competing companies. The accounts are kept in this way to move around
money, goods and services to reduce corporate taxes and to stage events
such as the filing for bankruptcy
protection of one or more "companies" within the global monopoly so it
does not have to take responsibility for its actions. In the extreme, a
global monopoly is registered as a holding company in a tax haven such
as the Cayman Islands.
 USS accounts for steel sent
from one of its mills to another to be
transformed into a product. Lake Erie Works (LEW) sends steel to
Hamilton Works (HW) for finishing. An account is kept of this shipment
but this does not become a debt in the sense of a trade payable to
another company for supplies. It means
simply that an account is made of the value of the intra-company
transaction and the value of the final realized product reflects the
intra-company transaction and the portion moved from one division,
facility or section to another is returned at least in the accounts.
Despite this, USSC claims it is insolvent. Information
Update
writes: "An interest payment of approximately $162.5 million due to USS
is the catalyst for the bankruptcy in Canada. My left hand owes my
right hand a million dollars and cannot pay the interest therefore my
left hand is bankrupt while my right hand merrily carries on. What a
joke!"
It adds: "Besides, if U.S. mills of USS are filling
Canadian and
other orders for steel that could be supplied from Canada, it is
completely deceitful to now say the Canadian mills owe USS a debt for
having had their orders taken from them and their productive capacity
restricted and even permanently shuttered
such as the Hamilton blast furnace."
Local 1005 also decries the USSC claim that it qualifies
for
bankruptcy protection because it has implemented "cost-saving measures"
to no avail. "Cost-saving measures," Information Update points
out,
do not generate additional income. They do nothing to renew
production. USS has consistently
wrecked the production of value in Canada and has the nerve to call it
"cost-saving measures."
The fact is that US Steel is merely looking for a way to
get rid of
"debt, pension and retirement obligations -- particularly in the face
of
challenging steel market conditions."
USS has shown no interest in having the former Stelco
survive as a
viable business. It has consistently wrecked production and the means
of production and is now wrecking it further in the name of acquiring
what it calls "breathing room."
Local 1005 is appealing to the Court of Public Opinion
to make sure
monopolies such as U.S. Steel cannot restructure on the backs of the
workers. Information Update writes: "If the intention is to
shut the facilities down and sell them off, it must use the assets to
pay off its claimants starting by
making the pension plans whole, paying its suppliers, repaying the
Ontario government and all other legitimate claimants and forget about
its so-called 'intercompany' debts."
As it stands, "the only beneficiary of CCAA is USS,
which controls
the process and is appealing to the court to avoid its financial and
other responsibilities. If it truly wanted to benefit its stakeholders,
it could do so outside CCAA in an open and respectful manner meeting
all its obligations and responsibilities.
It could in particular renew production at Stelco and make it a viable
and profitable operation as it has been for over a century."
"USS is not insolvent and should deal with its
wholly-owned
subsidiary in an open and businesslike fashion without resorting to
going into CCAA which permits it to renege on the deal it signed, its
commitments and obligations," Information Update points out.
Workers Protest Resolute Forest Products Mill
Closure in Shawinigan, Quebec
More than 2,000 workers demonstrated in the streets of
Shawinigan on
Saturday, September 27, to protest the closure of the Laurentide Mill
owned by the monopoly Resolute Forest Products (RFP). They expressed a
lot of anger at the wrecking and impunity of Resolute's management and
also denounced the
total irresponsibility of the Liberal government regarding the impact
of this closure on the region's economy.
The people in Shawinigan refuse to take such abuse lying
down. The
march is proof positive that the workers are defending Quebec's
interests. The desire to save their city and their region is leading
the way to sustainable solutions. Quebec workers want to find
alternatives to the destruction of the manufacturing
sector and do not intend to let the narrow interests of the rich
dictate their future. This resistance is the way
forward for viable solutions to the manufacturing crisis.
Shawinigan has always been considered one of the cradles
of Quebec
industrialization and its population has always contributed to economic
development, particularly in manufacturing. Resolute's management must
reconsider its arbitrary decision to close the plant and be held to
account by the population of the
Mauricie for its decisions. The Liberal government must also respond to
demands for economic diversification from the region's workers,
beginning with the mayor's minimal demand for a $20 million fund for
that purpose, as well as the demand for the reconversion of other
closed
plants in the city, including the
Laurentide Mill. It must also ensure that Resolute ceases its
antisocial activities that put it in contempt of society.
On September 2, Resolute Forest Products announced the
October 15 closure of the Laurentide Paper Mill in Shawinigan with the
loss of 275 jobs. The
Laurentide Mill produces 191,000 metric tons of commercial printing
papers annually. The factory had been
operating with only one machine since the summer of 2012 when Resolute
closed the second machine in operation and permanently laid-off 111
workers. The closure of the Laurentide Mill accentuates the destruction
of manufacturing jobs in Shawinigan and more widely in the
Mauricie/Centre-du-Québec area. In
Shawinigan alone, the city saw the closure of the Belgo Plant in 2007
by AbitibiBowater (now Resolute Forest Products) that resulted in the
loss of 550 jobs and the closure of the Rio Tinto Smelter, to be
completed at the end of 2014, which will eliminate 425 jobs. In an
attempt to justify the Laurentide Mill closure
Resolute Forest Products invoked the 2012 restarting, with government
funding, of a plant in Nova Scotia that produces the same type of
paper, the high cost of fiber and high transport and fuel costs.
With this latest closure, Resolute Forest Products has
demonstrated
once again that it is acting in contempt of society and refuses to take
any responsibility whatsoever for the workers and the communities where
it operates. In fact, Resolute is in perpetual closing mode. Closure
and threats of closure are part of
its modus operandi. Here are a few examples that do not even begin to
paint a complete picture of Resolute's activities:
- Placing itself under bankruptcy protection. In 2010,
AbitibiBowater (now Resolute) emerged by closing facilities, selling
dams that are supposed to be an integral part of its production
activities, obtaining concessions from active workers and subjecting
pensioners to shameful blackmail by having to place themselves under to
the Quebec Pension Plan and lose up to 30% of their
pensions or stay with Resolute and risk losing even more if it again
went under bankruptcy protection.
- Refusing to invest without government subsidies. The
closure of the
Laurentide Mill is linked to the monopoly's refusal to modernize pulp
production in the plant that employs older technology that is energy
intensive. Government grants do not mean that the plants remain open.
The Laurentide Mill received
government assistance regarding the costs of electricity and wood
supply and will be closing nonetheless. For years, the workers and the
community of Shawinigan have been demanding that Resolute invest in
products other than commercial papers but Resolute refused because its
goal was to close either that plant
or another.
- Implementing a One Mill One Machine Policy. The
Laurentide,
Kénogami and other
mills have been reduced to a single-machine plant, in other words the
plant's fixed costs are measured against reduced minimal production,
with the plant remaining on the brink of closure.
- Playing factories, communities and workers against
one another
under threat of closure. In 2012 RFP demanded changes to the collective
agreement for workers in the Laurentide Mill, including multiple
concessions under threat of closure and the reopening of other closed
factories and even went so far as
to temporarily close the only machine still in operation until the
workers accepted concessions. The company tried to get wood for the
Laurentide Mill from other factories and communities under threat of
closure.
The list of examples could go on for pages.
The workers' demand that Resolute should not be
permitted to dismantle or abandon the plant or prevent it from being
sold to others who want to keep it in operation is entirely just. The
renewal of the forestry industry is more pressing than ever.
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