Caterpillar fiasco highlights failure of economic and social policy

Posted on February 14, 2012 in Policy Context

Source: — Authors: – opinion/editorialopinion
Published On Mon Feb 13 2012.   Ken Lewenza

I have likened recent events at Electro-Motive Canada in London, Ont., to an “economic home invasion.” The factory operated profitably and productively for decades. Then suddenly its workers and the whole community were confronted by an uninvited visitor — who barged in, demanded money, and then left, leaving a shuttered plant and immeasurable social despair in its wake.

When someone experiences a real home invasion, they call the police. In this case, however, the relevant authorities failed to protect the citizens of London. Indeed, the federal government’s Investment Canada process invited the invaders in, without so much as a cursory review of the possible effects of Caterpillar’s 2010 takeover of Electro-Motive.

Caterpillar had no sooner digested its new subsidiary, than it began shifting production to Indiana (where new right-to-work laws effectively ban unions) and Mexico (where more straightforward, violent techniques are used to keep workers in line). But moving jobs out of Canada won’t stop Caterpillar from raking in billions in revenue here — including lucrative sales to Canadian mines, oilsands and government-financed infrastructure projects. Rich tax incentives (like corporate tax cuts, special writeoffs for locomotive purchasers, R&D subsidies, and government financing for exports) all sweetened the pie.

Yet nothing was demanded from Caterpillar in return for this largesse; that’s like offering a home invader a home-cooked dinner, while they’re rampaging through. Meanwhile, outdated labour laws gave the company free reign to lock out workers, bargain in bad faith, and ultimately close down entirely, with impunity.

The Electro-Motive debacle reflects an all-round failure of economic and social policy. Perhaps that’s why the issue touched such a chord with average Canadians. Indeed, I cannot recall another labour-management dispute in recent memory that garnered so much public support for the workers’ cause. This is partly because of the offensive nature of the company’s demands: imagine the arrogance of a global company that declares its highest profits in history one week, then demands 50 per cent cutbacks from Canadian workers the next.

But I believe the public spoke out because the Electro-Motive case symbolizes so painfully the negative social and economic trends that are destroying the Canada we love. If those 465 hard-working Canadians can lose everything just because an extremely profitable corporation demands it, then no middle-class Canadian is safe. The dream of inclusive mass prosperity, supposedly a core principle of our society, is very much on the ropes.

A union can fight for a better deal for its members, and for all working people. But a union cannot succeed on its own. Just as homeowners need the police to protect them against aggressive strangers, Canadians need governments to actively assert their authority and protect our interests.

Both the federal and provincial governments must intervene to assist the Electro-Motive workers in this desperate moment, using all the tools at their disposal. We’ve asked the federal government to reveal the specific terms of Caterpillar’s original notification to Investment Canada, and subject that data to independent audit. Ottawa should also utilize strategic trade policy (as other countries do), including the potential application of countervail tariff, in an effort to change Caterpillar’s decision. Federal Finance Minister Jim Flaherty should demand taxpayers’ money back from Caterpillar. Provincial labour officials can intervene, too, to make sure the workers receive a modicum of fairness in their final dealings with this shameless corporation.

But ultimately we need permanent policy changes that respond to the unprecedented flexibility, power, and arrogance of companies like Caterpillar. Foreign investments must be carefully scrutinized to ensure they genuinely benefit Canada. Companies cannot harm Canadians, and still expect unfettered access to our markets. Tax incentives must have genuine strings attached, so we get fair value for our fiscal support to companies. Labour laws must be strengthened and modernized to support fair treatment for unionized and non-union workers alike.

We must equip ourselves as a society to deal with the new power alignments of the global economy, so average people can build decent lives. Otherwise, the tragedy that has befallen 465 hard-working, productive Canadians and their families in London, will be repeated many times over in decent communities across our land.

Ken Lewenza has been national president of the Canadian Auto Workers since 2008.

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