April 24, 2014 - No. 47
Quebec Liberals Revive Northern Plan
A Grand Scheme to Pay the Rich
• A Grand
Scheme to Pay the Rich - Normand Fournier
• Information on Stornoway and Public
• U.S. Steel's Politics of Doom -
• Psychological Warfare Against Steelworkers
• The Cynicism of the Carnegie War Against
• U.S. Steel's Confusion over Its Carnegie Way
- Rolf Gerstenberger
Quebec Liberals Revive Northern Plan
A Grand Scheme to Pay the Rich
Quebec's new Premier Philippe Couillard announced the
revival of Plan Nord on April 9 in Thetford Mines as a major project
"to revive the Quebec economy."
First, nothing has changed in the mining sector to call
this "a major project for economic revival." Before the election, the
factors explaining the decline in activity in the mining sector, the
fall in investment in the field of exploration and lack of new
deposits, are still present today. The unfavourable situation
and the falling price of minerals, which mining companies used to
justify job cuts and mine closures in Quebec, have remained unchanged.
The towns of Fermont, Chibougamau, Sept-Iles and Havre-St-Pierre,
continue to struggle with the same problems, either the abandonment of
plans for expansion of mines and
port facilities, or indefinitely delayed mining projects. Junior
exploration companies are still struggling to find the necessary
funding for their activities. The price of an ounce of gold remains as
low as $1,292. At first glance nothing has really changed!
Immediately following the
April 7 election, mining
companies in the Plan Nord area all renewed their demands to Quebec's
new Premier, calling for new investments in infrastructure, such as
roads and railways, as well as port infrastructure that would allow
them to export Quebec's mineral resources abroad.
Such demands have been made by Tata Steel Minerals, ArcelorMittal and
Cliffs Natural Resources, which report difficulties in obtaining
on the global market.
Since Premier Couillard wants to make mining a major
component of economic stimulus in Quebec, where will he find or from
where will he take the money to fund all these projects to meet the
demands of the mining companies? Will he push anti-social measures even
further and cut funding to education and
social programs? Will he, like his predecessor, increase Quebec's debt
by borrowing from the New York financial market?
The Plan Nord we know doesn't address any of the major
problems in the resource sector, such as the export of raw materials by
and on behalf of international monopolies, the absence of
development in manufacturing as well as regional development, the
violation of the sovereignty of the First
Nations over their territories, the absence of economic protection
against the vagaries of prices of raw materials on world
markets, and particularly the absence of the people's empowerment to
decide what resources will be developed and for whose benefit. Plan
Nord is nothing more than a program to put
public funds in the service of foreign monopolies that retain the power
to decide everything.
Our Resources -- We Decide!
The pressing need in the development of Quebec's natural
resources is to give a new direction to the economy. We must reverse
the current direction of the economy that gears all the natural and
human resources towards meeting the needs of the monopolies. Resources
must serve the public good and their development must be the
responsibility of a public authority, and not in the service of private
interests which usurp the public authority to enrich themselves.
A modern Quebec state must equip itself with a mining
law which recognizes that the people of Quebec and the First Nations as
the owners of the mineral resources. The government must then act
as the trustee of the owners of the mineral resources, not a mere
manager of royalties and "job creation."
In a modern Quebec equipped with such a mining law, why
wouldn't the government adopt a law whereby it would handle the sale
and distribution of minerals? The government could establish the
selling price and thus ensure that the development of natural
resources, including mining, would serve the interests
of the nation and people. Why let private interests take possession of
natural resources if they cannot and do not want to develop them in
their most critical phase, exploration, without public funding?
A Little History
In the 1960s Quebec created government-owned
corporations to oversee the development of natural resources in
Quebec's mining, oil, forestry, agriculture and hydroelectric sectors.
Hydro-Québec was founded in 1962, following the nationalization
of private electricity companies
in 1944-1955, which had maintained prohibitive electricity rates.
In 1962 the Société générale
de financement (SGF) was created and in 1964 the Lesage government
founded Sidbec (Sidérurgie du Quebec) to process iron ore from
Quebec's North Shore. A huge steel complex was slated to be built in
Bécancour. The project was abandoned in 1968 for the purchase of
mill in Contrecoeur, a company in financial difficulty. Sidbec-Dosco
appeared in 1968, and until the early 1990s, accumulated losses of
nearly $1 billion. In 1965, the Caisse de dépôt et
placement du Québec (CDPQ) was established, which received the
funds paid to the Quebec Pension Plan, the pension fund for
government employees. It acted as the "Bank of Quebec."
In 1965, the mineral exploration corporation SOQUEM was
established, followed by the Quebec oil initiatives corporation
SOQUIP and the forestry exploration, recovery and development
With the exception of Hydro-Québec, all this
development has been phased out in favour of handing over control and
money to private monopolies. All major industrial projects for the
construction of the Quebec nation were destroyed. In the mining sector,
the collective project to develop the steel industry was
abandoned by the Bourassa government under pressure from the monopolies
which stated at the time, "Government-owned corporations should not
with private companies."
Some government corporations have been dismantled or
mothballed (SOQUEM, SOQUIP, Sidbec). REXFOR has been diverted from its
original mandate to become a lifeboat for saw mills in financial
difficulty or that were outright bankrupt, that belong to friends of
parties. This corporation basically served to
qualify forestry workers for employment insurance through the
performance of dubious forestry work, that was heavily criticized by
the public (for example, the devastation of intra-municipal forestry
lots in Eastern Quebec).
All of Sidbec's assets were liquidated in 1999.
Crédit Agricole became the Société
financière agricole du Québec (FAQ), financing production
that has nothing to do with agriculture per se (maple products, cheese
production, vineyards, fish farming, bakeries, meat-processing,
Jean Charest and Philippe Couillard's Plan Nord follows
this tradition of dismantling and it is a cruel joke to present it to
the people of Quebec as a "major project to revive the Quebec economy."
We need to re-establish that natural resources belong to the people and
that it is they who must decide their
development. A new direction for the economy of a modern Quebec is
possible. It can be done! It must be done!
Information on Stornoway and Public Investment
On March 26, right in the thick of the Quebec
election, the Stornoway Diamond Corporation announced it had
received an investment of $220 million from Investissement
Québec, the state-owned investment enterprise. This comprised a
$100 million of equity through a private placement (i.e., sale of
securities to select investors); a $100 million secured loan; and a
promise of a separate $20 million loan for cost overruns. Stornoway
received another $70 million from the Caisse
de dépôt et placement, the agency that administers
Quebec's public pension plans. This $290 million investment will
go toward financing the development and start of production of the
Renard diamond project in the Otish Mountains.
The Renard Project will be the first diamond mine in
Quebec. Open pit production will start in 2016 and underground
production in 2018. Total production over the estimated life of the
mine is 17.6 million
carats, with an annual production of 1.6 million carats. Revenues are
expected to be $5 billion, with an operating cost margin
of 67 per cent.
According to feasibility studies released in March 2013,
the Renard Project has one of the largest undeveloped diamond deposits
in the world. Its actual net value is $683 million, with a 20 per cent
return before taxes and mining royalties. Stornoway's mining reserve
is expected to last at least 11 years. Drilling has confirmed
the presence of diamonds at depth that may extend the mine's life to
more than 20 years.
The Quebec government is one of the Renard Project's
largest shareholders, via the Investissement Québec subsidiary
Diaquem, holding close to 25 per cent of Stornoway's common shares. If
state corporation's non-voting convertible shares are included, the
government holds close to 33 per cent. Diaquem's goal is to
keep its ownership at the same level (33 per cent), because
Stornoway is now
having discussions with other partners. The Renard Project belongs
completely to the Stornoway mining company. It is located in the Otish
Mountains region, 350 km north of Chibougamau.
Other Recent Examples of Public Funding of the Mining
The Caisse de dépôt du Québec has a
fund called SODÉMEX, through which it invests in Quebec's mining
sector. Here's a look at some of these investments as of December 31,
2012. (Statistics for 2013 are not yet available.)
The Stornoway diamond project shows that without
public funding from the state corporations, the vast
majority of junior mining projects will never see the light of
day, or will not be able to develop sufficiently to attract
private capital to get known deposits into production.
Steelworkers Organize to Block
U.S. Steel's Politics of Doom
Since invading Canada in 2007 to seize control of the
Stelco steel complex, U.S. Steel has pushed its politics of doom. It
has preached the futility of steel production in Hamilton and now even
at Lake Erie Works using one phony pretext after another. U.S. Steel
sees the destruction of steel production in Canada
as a means to weaken competition for steel production at its plants in
the United States, which for many years have had low levels of capacity
In Hamilton, Toronto and Ottawa, U.S. Steel has
recruited conciliators with its politics of doom. Instead of helping to
create public opinion in favour of resistance to destruction of the
economy, certain local media outlets have given support to the wrecking
of Stelco with Chicken Little articles bleating the "Sky
Is Falling" such as the recent item, "'Terrible unease' as U.S. Steel
nears freedom from Canada."
Most amazing for steelworkers and their allies in the
region has been the full-throated capitulation to the politics of doom
by the federal and Ontario governments. They have done everything to
facilitate U.S. Steel's wrecking and now are poised to give it complete
"freedom" at the end of 2015 to do whatever
it wants to production and pensions.
What a spectacle to see Prime Minister Harper rampaging
around the world as a "born-again Cold Warrior" sticking his nose into
the affairs of those in West Asia, North Africa and now Ukraine,
screaming about this and that bad guy and enemy of the "West" yet
refusing to lift a finger to protect his own people
who are under attack from the United States. Harper preaches doom as a
religion and way of life, which suits the destructive politics of U.S.
Steel just fine.
Only Hamilton City Council has played a positive role
and found the courage to raise its collective voice against the
politics of doom. In response, U.S. Steel has tried to isolate council
members and refused to meet with them and discuss its intentions.
For active and retired steelworkers, the politics of
doom have never been an option and never will be. We are not doomed
because we are human; we are the actual producers of value, and we are
Canadian. We refuse to be doomed and refuse to accept that our
political leaders can capitulate to this invasion and
destruction of our steel mills and pensions.
If Harper and Premier Wynne do not have the backbone to
stand up to the wreckers from the U.S. then they should be removed from
power to allow Canadians to protect themselves.
Empowered Canadians will defend their rights to
livelihoods and security in retirement and will defend their economy
and means of production. The economy is our collective and individual
life; without control over our economy, we have no control over our
Hamilton steelworkers are disgusted with the federal and
provincial governments' cowardly conciliation with and capitulation to
U.S. Steel's wrecking of our steel production and way of life. Enough!
Either restrict U.S. Steel's politics of doom or get out of the way and
allow Canadians the freedom to take matters
into their own hands.
U.S. Steel and all those who have drunk the Kool-Aid,
watch out! We have had enough! Canadians need a new direction to
politics and new direction to the economy that favours the people and
rejects the politics of doom.
Psychological Warfare Against Steelworkers
The sixth edition of U.S. Steel's The Carnegie Way
Connection newsletter has appeared. Steelworkers are asking what
this material has to their working lives, security and future. In
Canada, the question arises whether the Carnegie Way will
return steel production to Hamilton, ensure
its continuation at Lake Erie Works and assure active and retired
steelworkers and salaried employees of their pensions.
The Connection says, "It is imperative that we
work together with an even greater sense of urgency to accomplish our
Business Plan goals for 2014 and make our company significantly more
profitable. Our disciplined approach will require a relentless focus on
economic profit, our customers, cost
structure, and innovation."
A "relentless focus on economic profit" is prevalent
throughout all the editions of the Connection. The
centrepiece pyramid, which has appeared as huge signs in some
locations, emphasizes "shareholder value-creation strategy" as the road
to building "the iconic corporation." To attain "iconic" status,
the pyramid demands everyone and thing must "drive and sustain
profitable growth" and of course uphold a "relentless focus on economic
The lack of a Company profit for five years and a
falling and now stagnant share price resulted in the firing of former
CEO John Surma, and CFO Gretchen Haggerty and other leading executives.
The new executive wants to appear to be turning the Company towards
profitability because that is the aim of the
owners of U.S. Steel shares. This aim and "relentless focus on profit"
is simplified to the extreme throughout the Connection. It
can be summed up in the following way: profit is in competition with
costs. Costs are the enemy of profit.
Each U.S. Steel employee
gave rise to $452,571 worth of
steel products in 2013, which is the total company income divided by
the number of employees. The Carnegie logic contends that after costs
are deducted from the $452,571, the remaining amount is the company
profit. From this simplistic one-sided worldview
of the modern economy, the Carnegie Way lashes out at the
enemy -- costs, and a big cost and enemy, according to the Carnegie
logic, are the steelworkers and their thinking, behaviour and
importantly their individual and collective resistance to defend their
The Connection says, "The Change Management
team focuses on Mindsets, Behaviors & Capabilities:
[which] Identifies the way people think, feel, and conduct themselves
in the workplace, individually and collectively; addresses resistance
or insufficient tools/capabilities."
The Change Management team recently concentrated its
psychological warfare on the steelworkers and salaried employees of
Gary Works. It set up "the Gary Works -- Primary Operations Carnegie
Way Transformation Center 'War Room.'" From the War Room, the team
flooded Gary Works with high-sounding
propaganda to overwhelm "the way people think, feel, and conduct
themselves in the workplace" and "address(es) resistance or
The Connection says, the "war room," the
"Process Control Team," "which applies Lean Six Sigma tools to improve
processes and improve profitability ... identified significant cost
savings in the areas of raw materials, fuels, energy, yields, and
Ironically and perhaps embarrassingly, although the Connection
does not mention it, while the Gary Works war room was engaging in
psychological warfare, outside the fantasy world of the Carnegie
Way a crisis erupted in the real world. Steel production ground
almost to a complete
standstill, as just-in-time delivery of iron ore from its mines in
northeastern Minnesota was not on time, "surprisingly" due to ice on
Lake Superior, which the "war room" did not predict.
Meanwhile at the company's Great Lakes Works in
Michigan, two separate accidents causing the death of two workers and
considerable structural damage forced a halt to steelmaking. U.S. Steel
subsequently issued a force majeure, warning customers that
it refuses to accept legal responsibility for
breaking its contractual agreements to supply steel.
The Carnegie Way logic of profit at war
against the world is extremist and dangerous. The narrow focus and
demands of the Carnegie Way line can only lead to
disequilibrium and bigger attacks on steelworkers, salaried employees,
their pensions, and steel production in Canada and various
regions in the United States. Steelworkers and their allies must
strengthen their ranks and face the extremism and psychological warfare
of the Carnegie Way with their own thinking, courage and
Force majeur is a clause in a contract used by
commodity suppliers unable to meet obligations because of circumstances
beyond their control. This was invoked by U.S. Steel, which warned
customers that it may suspend some deliveries after three blast
furnaces at its Great Lakes Works in Michigan
were idled after a roof collapse March 27. A contract worker operating
a crane at the site of the collapse died in an accident April 4. U.S.
Steel's contracting out of maintenance work to cut costs has led to
several deadly accidents. There is nothing "force majeure" about that.
The Cynicism of the Carnegie War Against "Costs"
A recent issue of U.S.
Steel's The Carnegie Way
Connection states that, "several employees in Tubular Operations
experienced hand and finger lacerations as a result of wearing improper
work gloves." It claims that by standardizing safety gloves, U.S. Steel
"will generate a projected savings of
approximately $500,000 per year."
Not only does standardizing protective gear mean a
victory in the company's war on costs but also U.S. Steel is still
basking in the glow of having won its case against Gary Works'
steelworkers in the U.S. Supreme Court that "donning and doffing"
protective clothing is not part of working time. The victory
in the war on costs, which effectively lengthens all steelworkers'
working day without pay, is a vivid demonstration that the Carnegie Way
is a one-sided campaign for equity profit against every other factor in
the production process, in particular the human factor.
An excerpt from the sidebar in The Connection #6
states: "Carnegie Way Improvement Leads to Work-Glove Safety Standards
and Cost Savings at U. S. Steel Tubular Products
"[...] Recently, several employees in Tubular Operations
experienced hand and finger lacerations as a result of wearing improper
work gloves. A team created to review the glove selection process
discovered that many of the work gloves did not meet U.S. Steel
standards for cut-protection levels. To simplify the
glove selection process, the team standardized all glove types and
eliminated gloves that failed to meet U.S. Steel safety requirements.
In addition to ensuring that gloves now meet internal standards and
provide the necessary level of protection for our employees, the
standardization process will generate a projected
savings of approximately $500,000 per year."
U.S. Steel's Confusion over Its Carnegie Way
In U.S. Steel's Connection newsletter touting
the "Carnegie Way," the Company seems to confuse Andrew Carnegie (steel
monopolist: 1835-1919) with the famous motivational writer, Dale
Carnegie (1888-1955) -- "How to Win Friends and Influence People"
(1936). Or possibly the executives in
charge of the Carnegie Way want a combination of the two:
ruthless exploiter and motivational PR writer who takes our mind off
Dale Carnegie was one of
the first motivational writers
to promote individual success, now commonplace on TV and in books. He
rose to fame during the terrible economic crises of the 1930s.
Andrew Carnegie was the owner of Carnegie Steel Company
who squeezed steelworkers so brutally he amassed a personal fortune of
$300-billion, if calculated in today's money. Andrew Carnegie merged
his industrial capital from the Carnegie Steel Company with the banking
capital of J.P. Morgan to form
the U.S. Steel Company in 1901.
A brief excerpt from a history of Carnegie Steel
indicates the single-minded cruelty of Andrew Carnegie and his
executives: "Carnegie was also famous for keeping wages low and
suppressing union activity among his workers, most famously at the
violent Homestead Strike in 1892. There, agents of the Pinkerton
Detective Agency, who were hired by Carnegie's business partner Henry
Clay Frick (1849-1919) to quell the protest, killed a number of workers
who had gone on strike. Carnegie, who was in Scotland during the
episode, stayed silently uninvolved."
The rise of Dale Carnegie-type TV motivational speakers
and faddish managerial techniques reflect a habit of trying to make the
real world disappear in a sea of platitudes. The monopolies organize
their own companies to the hilt and try to motivate workers but come up
against the broad socialized economy
that they cannot organize without compulsion or extortion, and the
reality that their anti-worker view of steelworkers' claim on the value
they produce as a "cost" puts them at loggerheads with their own
employees. Real problems require real solutions but U.S. Steel has none
except wrecking our mills and attacking
workers as a cost, so bring in Dale to lift our spirits with some
The Carnegie Way is full of trite rather silly TV-style
motivational lines such as the coloured karate belts (Lean Six Sigma)
that workers gain as part of the fight for productivity and to
eliminate waste and lower costs, which presumably includes their wages,
benefits and pensions. "We'll take away your defined-benefit
pension and its indexation and give you a coloured belt for your
Some confusion or rather frustration is evident, as no
matter what the executives do, they cannot turn the Company around and
stumble from one disaster to another. Last year, disgruntled
shareholders forced the Board of Directors to fire leading executives,
including the CEO and CFO but the first quarter 2014
is reportedly still not good so the departures continue with
Vice-President Anthony R. Bridge, 59, the latest to leave taking "early
retirement" or so they say.
Since the beginning of the year, two workers have been
killed in separate tragic incidents while working at U.S. Steel's Great
Lakes Works in Ecorse, Michigan. If that were not bad enough,
production was halted there on March 27, because of a breakdown of
pollution control equipment. Now Gary Works in
Indiana is down because their just-in-time transportation of iron ore
hit ice on the Great Lakes, or so they say. Can you imagine? Ice on
Lake Superior in winter, how unusual!
To counter the disasters in the real world of Andrew
Carnegie, there appears the make-believe world of Dale and his Carnegie
Way with flashy PR and words to motivate us even amidst the misery of
yesterday's Great Depression and today's continuing crises and attacks.
Andrew locks out workers, oversees
death, disasters and wrecking of mills while Dale makes it all feel
better with fancy graphics and coloured belts.
1. David S. Kidder & Noah D. Oppenheim, The
intellectual devotional American history, New York: Modern Times,
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