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April 24, 2014 - No. 47

Quebec Liberals Revive Northern Plan

A Grand Scheme to Pay the Rich

 

Quebec Liberals Revive Northern Plan
A Grand Scheme to Pay the Rich - Normand Fournier
Information on Stornoway and Public Investment 

Steelworkers Organize to Block Nation-Wrecking
U.S. Steel's Politics of Doom - Rolf Gerstenberger
Psychological Warfare Against Steelworkers
The Cynicism of the Carnegie War Against "Costs"
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 funding 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 the Dosco 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 corporation REXFOR.

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 compete 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 the political 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, woodlots, etc.).

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!

(Published in Chantier politique. Translated from original French.)

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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 rate of 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 the 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 Sector

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.)

Company
Investment (millions)
Virginia Mines
Richmont Mines
Stornoway
Midland Exploration
Junex
Nemaska Lithium
Eastmain Ressources
Focus Graphite
Donner Metals
Yorbeau Ressources
$18.1
$11.3
  $7.9
$3.5
$2.3
$2.2
$1.8
$1.7
$1.7
$1.0

Grand total
$51.5

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.

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Steelworkers Organize to Block Nation-Wrecking

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 utilization.

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 lives.

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.

* Rolf Gerstenberger is the President of Local 1005 USW which represents the workers at Hilton Works in Hamilton.

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Psychological Warfare Against Steelworkers

The sixth edition of U.S. Steel's The Carnegie Way Connection newsletter has appeared. Steelworkers are asking what relevance 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 profit."

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 rights.

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 insufficient tools/capabilities."

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 operational improvements."

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 determined resistance.

Note

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.

(Information Update #10, April 17, 2014)

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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."

(Information Update #10, April 17, 2014)

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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 reality.

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."[1]

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 clever PR.

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 agreement!"

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.

Note

1. David S. Kidder & Noah D. Oppenheim, The intellectual devotional American history, New York: Modern Times, 2007.

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