# Trend of things to come in 2012 and beyond?



## carverman (Nov 8, 2010)

Just heard on the news today, that a Caterpillar subsidary in London Ont, has locked out 500 workers because they refuse to accept the company's offer of having their wages reduced 50% as well as benefits (including pension
benefits..I think). The company Electro-motive is putting their final offer on the table..take it or leave it..if you don't ..there is a possibility we will close the plant and go back to the US ....where we will promote "Buy American!"

http://www.thestar.com/news/canada/...llar-locks-out-employees-at-london-plant?bn=1


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## kcowan (Jul 1, 2010)

Sounds like typical American management tactics. It will be interesting to see what the Ontario government does.


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## LondonHomes (Dec 29, 2010)

Electro-Motive is just around the corner from me now and it was certainly not a good morning to be out walking the picket line.

I personally wish them luck and support their cause but my gut tells me that it's going to be a losing battle.

Caterpillar seems to have a strong anti-union rep and they have capacity in their US operations to pick up the London work so it doesn't seem like a long strike is going to impact them much at all.

The reality of the situation is that the $35/hr jobs are gone and the workers need to figure out if they are going to work for $16.50 /hr or have those jobs move to the US. We lost a Sterling Truck plant last year in a similar situation and I bet a lot of those former Sterling worker would jump at $16.50 /hr wages today.

However, the ball is in the Feds court. Harper gave them some tax breaks and the Feds allowed Caterpillar to purchase Electro-Motive last year.

If anything comes out of this it's going to need to be changes to the Foreign Investment act going forwards.


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## Daniel A. (Mar 20, 2011)

Free trade eh


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## carverman (Nov 8, 2010)

LondonHomes said:


> Electro-Motive is just around the corner from me now and it was certainly not a good morning to be out walking the picket line.
> 
> *The reality of the situation is that the $35/hr jobs are gone and the workers need to figure out if they are going to work for $16.50 /hr or have those jobs move to the US.*
> 
> ...


How is changing the foreign investment act going to prevent Canadian jobs from going south? 
GM was going to do that, until the Ontario/Federal gov't stepped in to bail them out. In times of economic unsurety and
where the manufacturing capacity in Canada is not needed anymore, you can bet that American based companies will shrink back the Cdn subsidiaries first to protect American jobs. 

I can't see where any kind of intervention on any level is going to prevent job losses if the parent company determines it has to close a few plants to scale back production with a shrinking economy.


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## Berubeland (Sep 6, 2009)

I read this amazing ten part ? article in Forbes. It really outlines some of the problems with outsourcing and was a very worthy read. 

http://www.forbes.com/sites/stevedenning/2011/08/17/why-amazon-cant-make-a-kindle-in-the-usa/


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## sags (May 15, 2010)

I started working for GM at the Electomotive plant, known as GM Diesel at that time, back in 1978. The "plant" consisted of several other buildings surrounding the main plant and some outlying buildings as well. GM manufactured school buses on one line, Terex earth moving machines on another, articulated coach buses, locomotives and armoured personel carriers. 

The plant was always profitable, but apparently Cat bought it to shut down the competition.

It is another in a long list of lost manufacturing employers.

When we are done allowing the hollowing out of North American manufacturing, we can all sit back and enjoy the bountiful leisure time that "free trade" has bestowed upon us. 

All we have to do is figure out how we are going to pay for it.


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## sags (May 15, 2010)

An excellent article.

A question, first raised here by Kcowan some time ago I believe, was what inpetus will there be to turn the economy around, without a manufacturing base available?

It is a question seldom asked, and often avoided, on the business news circuit. The few times I have heard it asked, has stunned people into incongruous and uncomfortably inane responses, so much so that interviewers avoid asking it.

If the plan is that the economy will pick back up because consumers will pick up their spending again...........it seems a dubious prospect, given that consumers are largely spending someone else's money.

Green energy?.........I don't know.........The Chinese are already manufacturing wind turbine blades, and probably have all the electonics suppliers locked up.

It would be refreshing to hear a politician address this......instead of the usual "lower corporate taxes" and all will be well with the world mantra.


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## ddkay (Nov 20, 2010)

I spend the majority of my services money south of the border. Between government sanctioned oligopolies and noncompetitive state conditioned into the majority of people in this country, I'm surprised we are making any progress at all.

If an American company wants to divest in Canada there is really no one to blame but ourselves. We should not need to rely on contract manufacturing from one multinational for the next 300 years. If we didn't have the oil sands I bet we wouldn't look much different than Nicaragua less arable land. You are not going to compete with China in manufacturing unless you fully automate your assembly line with robots or employ lots of people willing to accept a fraction of their previous wages.

Germany just posted its lowest UE number in 20 years. To get there they've heavily subsidised minimum wage for the private sector with Hartz legislation. Many companies that used to produce stuff in the neighbouring countries of Eastern Europe moved to Germany instead because of cheaper labour. 

McGuinty's plan to bring high tech manufacturing here is not is such a bad idea. If anything we need more of these foundries. He shouldn't be the one brokering the deals though. This all goes back to Canadian syndrome and brain drain, the smart people we do have often have and continue to leave the country because there is still too little access to capital and our workforce generally does not accommodate entrepreneurs after failed experiments, at least in Silicon Valley there is a larger community and they can stick around for a second, third, or fourth shot.


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## LondonHomes (Dec 29, 2010)

carverman said:


> How is changing the foreign investment act going to prevent Canadian jobs from going south?


How about just adding reason to deny if it is considered likely that the new owner will close the facility or transfer the business elsewhere? Or require that any new owner keep the facility open for a minimum time period.

In London we have had a number of local businesses purchased by US companies and closed within a very short period after.


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## carverman (Nov 8, 2010)

sags said:


> A question, first raised here by Kcowan some time ago I believe, was what inpetus will there be to turn the economy around, without a manufacturing base available?


Excellent statement. A good growing economy more than the mediocre 2% growth forecast for this year... (sounds about the same as what you get when you put your money into shrinking savings plans that most banks offer these days...
put your money with us..and watch it rot in terms of savings growth vs REAL INFLATION.

It also depends on employment and lots of good paying jobs. A worker who has lost his/her production line job because the plant closed, forced to apply for EI or even welfare..isn't about to spend a lot of money on consumer goods.
This will impact the peripheral businesses, will also see a decline in consumer spending as a result, forcing them to scale back as well. 




> It is a question seldom asked, and often avoided, on the business news circuit. The few times I have heard it asked, has stunned people into incongruous and uncomfortably inane responses, so much so that interviewers avoid asking it.


Canada has lost a huge amount of manufacturing base in recent years.

What do we make these days besides reverting back to the old days of "hewers of wood and "drawers" of oil?)..
electronics?... NO
Appliances? (very few..most are US made or now even China)
Vehicles?.. (only because of free trade and ONLY if the current economic climate favours the US based manufacturers/or foreign car companies)..otherwise they just close plants and pull back production to US based plants..shipping the
goods up here..so we can buy them..on borrowed money. 

So realitically, all we have left now is the service industry...

...and maybe

Construction..well at least so far..that is one area that is still being done here..carpenters, electricians, plumbers and heavy equipment operators..but not every body coming out of school can work in this industry. 



> If the plan is that the economy will pick back up because consumers will pick up their spending again...........it seems a dubious prospect, given that consumers are largely spending someone else's money.


Consumer spending, where they just run up huge personal debt isn't going to solve the unemployment situation nor creating any additional jobs, if we just import more than what we produce. This kind of consumer spending only creates a temporary spike in the economy which is very flat right now, and cannot be sustained long term. 



> Green energy?.........I don't know.........The Chinese are already manufacturing wind turbine blades, and probably have all the electonics suppliers locked up.


The Chinese produce just about everything..except anything that the Western nations military need for defense
purposes..against the Chinese/North Koreans. They also produce cars..once those cars are approved for sale here..
we can probably kiss the last bastion of North American enterprise goodbye...forever..
because the Chinese made cars will be so much cheaper to buy..this will may happen within the next 10 years.



> It would be refreshing to hear a politician address this......instead of the usual "lower corporate taxes" and all will be well with the world mantra.


Politicians haven't got a clue what is happening with the current state of the economy here, which is now part of the world based economy.
They can't offer any solutions to restore a manufacturing base..lost forever!

If we didn't have the mines, softwood lumber, and oil/nat gas..we would be joining, Greece, Ireland, Spain and a host of the other EU countries where their economies are in severe trouble.


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## kcowan (Jul 1, 2010)

carverman said:


> If we didn't have the mines, softwood lumber, and oil/nat gas..we would be joining, Greece, Ireland, Spain and a host of the other EU countries where their economies are in severe trouble.


ISTR that financial services were held out as the new basis for growth! How did that end? Now it seems that investment bankers rank below lawyers in the public eye. And probably rightly too.


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## financialnoob (Feb 26, 2011)

Berubeland said:


> I read this amazing ten part ? article in Forbes. It really outlines some of the problems with outsourcing and was a very worthy read.
> 
> http://www.forbes.com/sites/stevedenning/2011/08/17/why-amazon-cant-make-a-kindle-in-the-usa/


Thanks for this link. It was a very worthy read. 

I think it really comes down to the short-term view vs. the long-term view. All these short-sighted decisions will eventually catch up with a company, or even a country.


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## carverman (Nov 8, 2010)

financialnoob said:


> Thanks for this link. It was a very worthy read.
> 
> I think it really comes down to the short-term view vs. the long-term view. All these short-sighted decisions will eventually catch up with a company, or even a country.


*I scanned through much of it, but these statements do seem to stand out:*

a) Pres Obama mentioned: We need to continue creating jobs of the future.

b) American firms must innovate rapidly if they are going to compete. 

c) Chinese gov't invests billions in Chinese firms in 2010.

and there lies the fundamental difference, my forum friends, from the
western capitalist way of doing business and the Chinese way of doing
business.

*So...Lets, use the construction industry and constructing a house as an example:*

In NA (US/Canada) right now:
the wood is sourced here..ok, the lumber mills machine the wood and truck it to distribution points (lumber yards across the country) and the builders, who hire local carpenters, plumbers, electricians, concrete foundation makers, excavators..drywallers, painters, finish carpenters, cabinet makers..and the list goes on..LOCALLy, so that stimulates jobs, the local economy and the gov'ts on all 3 levels profit from taxation...
1. HST on raw materials/goods to finish the house
2. Taxes on wages earned by the various building industry workers
3. Real estate taxes on the finished products (houses).

The bank lend mortgage money for consumers (who must have some kind of employment to afford the mortgage payments..and all other expenses that owning a house requires (taxes, utilities, maintenance etc).
Grocery chains/hardware chain stores locate locally in the new development.

So everyone benefits from the local economy that is the house construction industry..the butcher, the baker and the candlestick maker..ok maybe not the candlestick maker these days  ..but you get the idea..that stimulating
the local economy is the way to go.

Now..lets say that the building industry because of profit margins, wants to outsource the subassemblies/components of a house to asia and ship it back here in container ships.

Who benefits from the house construction industry at that point?
1A..the Chinese factory owners/workers

1. Local NA carpenters..well they are involved to some degree of assembling the subcomponents in a day or two instead of a month or more to build a house from scratch.
2.Local NA electricians (to some degree) because they, don't have to run the wires in a prefab house..just connect them up (2 days instead of a week or two)
3Local plumbers (the same..just connect glue the pipes built into the walls with presupplied glue/fastners

4.Local foundation constructors....they still have a job, because the land cannot be moved to China and the foundation has to be poured cement.

But 50 to 60% of the time and labour to construct that very same house has been exported to Chinese factories, employing , cheap Chinese labour and who profits in the end from all thiis outsourcing?

1. Builders (increase their profit margins)
2. Governments on taxes for imported goods
3. Bankers for local financing
4. Maybe the foundation workers still can make a living?

but what about the other trades?
carpentry, electrical, plumbing, cabinet making etc...
those jobs, while not drying up, involve less effort on their part (therefore less wages collected) and less income taxes paid to the gov't..
which requires more EI being paid out, because the job base is shrinking and more and more are becoming unemployed as a result of the outsourcing.


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