As factories flee Ontario, politicians offer bribes
TheStar.com – News / Queen’s Park – The Unilever plant closing is a reminder that no party has a coherent remedy for Ontario’s economic decline.
May 09 2014. By: Thomas Walkom, National Affairs
Ontario. As the politicians search for votes, the factories keep closing.
The latest is Unilever’s Brampton plant. Currently, its 280 workers make dry soup mixes under the Lipton and Knorr brands.
But in two years, these jobs will be gone. Unilever is moving Brampton’s product lines to Missouri.
It is joining other multinationals, from Heinz to Kellogg to Novartis, that are shifting out of the province.
Why? Press reports point out that Missouri offers some tax advantages.
But the real reasons go deeper. The North American economy is being put through a wringer, in a wrenching process that began with free trade.
Before free trade, multinationals that wanted to sell in Canada had to produce here. Trade barriers may have been inefficient. But they kept people employed.
Indeed, it is only thanks to a trade barrier — the still-extant requirement that Canadian tomato juice be made from fresh tomatoes — that 250 of the 740 jobs slated for destruction at Leamington’s H.J. Heinz Co. plant are being saved
Immediately after the first free trade pact was inked, multinationals began to rationalize their North American operations. Many decided to keep their Ontario branch plants open. But instead of manufacturing a full range of products, these plants would concentrate on specific product lines that could be sold continent-wide.
For Ontario this meant that many jobs stayed.
But now, under competitive pressures aggravated by the slump, North America is undergoing stage two of globalization. In order to radically reduce costs, multinationals are centralizing all North American production in a handful of large plants.
Not surprisingly, they are choosing to situate these large plants in the U.S. rather than Canada.
The U.S. is a bigger market. Equally important, its politicians can be persuaded to support protectionist measures such as Buy America campaigns.
Unilever understands perfectly well the flak it would get in the U.S. Congress if it closed a Missouri plant and shifted production to Ontario.
Conversely, it knows it can suspend any of its Canadian operations without penalty.
No major political party is going to suggest that consumers boycott Lipton soup to protest the Brampton plant closure.
What they suggest instead is that government bribe employers to create jobs. The Liberals, New Democrats and Conservatives agree on this. They differ only on the type of bribe.
Kathleen Wynne’s Liberals focus on the overt handout — offering subsidies to companies willing to produce in Ontario. Wynne boasts that her subsidy scheme has already attracted the high-tech firm Cisco Systems Inc. to set up shop.
Andrea Horwath’s New Democrats offer the classic tax incentive. They would give companies tax breaks to invest in new machinery. Horwath argues, not entirely convincingly, that if businesses put in place more machinery, jobs will result.
The NDP would also offer wage subsidies of up to $5,000 per new worker hired in order to persuade companies to employ more people.
Progressive Conservative Leader Tim Hudak’s solution is more 19th century. He has flirted with labour law changes aimed at reducing whatever union power remains in Ontario. That would be his bribe to employers.
But the Tory leader’s real focus is on balancing the budget. To that end, he proposes axing 100,000 public servants, including teachers. The net gain from firing these 100,000 people, he insists will be one million new private sector jobs.
It is an optimistic calculation based entirely on faith. Think of it as human sacrifice.
None of these schemes will stop Unilever from closing its Brampton plant. When pressed, the governing Liberals usually say that such jobs will be replaced by jobs of the future. To underscore that point, Wynne visited a robotics plant Friday.
What are the jobs of the future? If the recent past is any indication, they will fall into two categories.
A small number of lucky people will have highly paid jobs in areas like speculative finance.
A large number of less lucky people — the so-called precariat — will be left to depend on low-wage, part-time and short-term work.
But the robots should do OK.
< http://www.thestar.com/news/queenspark/2014/05/09/as_factories_flee_ontario_politicians_offer_bribes_walkom.html >