Tuesday, February 15, 2011

Montreal Refinery Closure all About the Union

Recently, the Journal de Montreal newspaper ran a series of articles written by Dany Doucet concerning the closure of the Shell refinery in the east end of Montreal. Surprisingly, the stories weren't splashed over in a big way on page two/three spreads, but tucked away rather modestly deeper into the newspaper, where the impact was decidedly more restrained.

Too bad, the story told is one of the most shocking examples of how out-of-control unionism and misguided government policy has cost Quebec thousand upon thousands of high paying manufacturing jobs.

Yesterday I told you how the Gazette writer Janet Bagnall argued for the strengthening of labour laws protecting unions. LINK
Here's what happens when the balance of power between union and management becomes dangerously skewed. When unions hold the ultimate power to close a factory or work site, bosses are blackmailed  into unreasonable concessions that raise the cost of production significantly and it affects company decisions whether to operate, close or move.

Ms. Bagnall is right about one thing, where jobs cannot be transported, such as in government employment or construction, unions can, and do, run roughshod over employers. That's why everything costs more in Quebec, be it the salaries of government and quasi-government employees or the roads we build and the buildings we erect.

But when companies do have the opportunity to move, radical union demands push them to leave. It happens more often than you think and on the flip side, companies choosing where to locate a new factory, shy away from Quebec like the plague.
I'm hard pressed to think of one large enterprise that located to Quebec in the last ten years, without a massive government subsidy or tax break. 

When the Shell refinery in east-end Montreal announced that it was shutting down, the potential loss of almost 1,000 high paying jobs sent shock waves in the local community of Montreal-Est. The local and provincial government launched a furious campaign to convince the company to remain in business or failing that, find another company to take over the factory and continue operations. The direct salary impact would be close to 100 million dollars, and perhaps another 50 million when spinoff jobs are factored in.

Alas Shell, which owned the company seemed entirely disinterested and played a public-relations game as well as it could, considering their real position.
You see Shell had made the irrevocable decision to close and not to sell to competitors. The motive behind the closure was couched in doublespeak with the company clearly unwilling to officially admit the real motive for the closure, which was the out-of-control employee costs and the related lack of productivity.

There's no doubt that the union bargained themselves a pretty good deal at Shell. The company foolishly caved into the unreasonable union demands up until the point that the cumulative effect of union gains made the plant a prime candidate for relocation.

The union's ultimate power to close down the plant, with no right by management to replace workers, led to unfortunate decisions.
Management, still making a lot of money, didn't want to risk closure and so the Prefect Storm was brewing.....

The Journal de Montreal got an incredible scoop when it got the disappointed plant mangers to open after the plant was closed. Their honest assessment and deconstruction of the refinery closing should send shivers down our spine. Ms. Bagnall should pay close attention.

Here's what they said;
"A Coddled and Greedy union; The managers were unanimous in saying that relations at Shell has been rotten for at least ten years. There were over 2,400 outstanding grievances.

"It's okay to make money, but there was abuse. For example, when operators were dissatisfied with a situation, they put out the word to slow down the work of subcontractors costing us $100 an hour. Sometimes we had 40 guys on standby in trailers, waiting for the right to work . They (operators) could delay the issuance of work permits and make us lose considerable sums, it was a common means of pressure which cost us a fortune. "
"In such a work environment, employers no longer believed their employees and vice versa,... "

"We showed the unionized workers that year after year, we ranked in the bottom quarter in terms of productivity compared to other Shell plants. The union responded by saying that figures can be made to say anything."
"Management regularly battled with Local 144 International, which represents all pipefitters and pipe welders in Quebec. .... this union is by far the most powerful of all unions in Quebec.....All major industrial projects in Quebec need the cooperation of local 144 and its president, Gerard Cyr. Despite this power, he is one of the less well known union leaders in Quebec and he keeps a low profile.
Shell used on a daily basis  nearly 300 members of this union through subcontractors, the biggest being Gastier, owned by businessman Tony Accurso. (argh.....)
"Is it normal for an electrician who is changing a pump to be prohibited from loosening the two bolts that hold it in place and that we are obliged to bring in another trade for this specific task?

"From the North American headquarters in Houston, it may seem a little bizarre  ... "
"At Shell, the average salary of unionized workers approached $100,000 and the employees enjoyed several extraordinary non-salary conditions. A part-time student earned over $20 an hour."
"If Quebec is a distinct nation, its industrial construction industry is also in many respects distinct  from what is happening elsewhere in North America. To build, expand or maintain a plant here is not so simple. Construction is regulated and controlled, especially by powerful unions."
"Nobody is looking in the mirror. In Quebec, it is good to put the blame on others. I am very worried about the economic future of Quebec.."
Of course the union isn't the only culprit, the government which believes it can tax without consequences is as guilty as the union in chasing Shell from Quebec.
The new "green tax" imposed on the industry four years ago was costing the refinery nearly $50 million per year, another good reason to seek friendlier environs.
"Globalization allows for cheaper manufacturing alternatives elsewhere and this is the way that investment decisions are made." 
 It isn't for no reason that Quebec with the highest level of unionization enjoys the poorest economic fortunes of the major Canadian provinces.
If we are poorer in Quebec, thank the greedy unions and the dysfunctional government.

The announcement that Quebec is undertaking the foolhardy construction of a new arena bothered me on many different levels, but most importantly on cost.
The projected price of $400 million dollars is 25% higher than the recently completed arena in Pittsburgh of which the specs and capacity are almost identical. Why will it cost so much more?
The Consul arena was budgeted at $287 million and ballooned to $321 million before it was finished. Is there any reason not believe that the Quebec arena will go over budget as well, perhaps up to $450 million?

Quebeckers should ask themselves why their arena will cost 30%, 40%, or 50% more than the one in Pittsburgh.........The answer is out of control union wages and low productivity.

Does anybody care?....... Not really.

Read:
Six sujets de réflexion
Six sujets de réflexion (suite)

22 comments:

  1. ...and yet another reason for a federalist-only party to support the Real Canada first and Quebec second is introduced...

    The proposed Quebec arena, like the Olympics in 1976 will have enough cost overruns to make the new Aréna René Lévesque or whatever they end up calling the thing another billion dollar boondoggle and don't be surprised if it deteriorates faster and sooner than Madison Square Garden, the NHL's oldest arena.

    If it's not the design that is as faulty as Roger Taillebert's Olympic Stadium was, it'll be the inferior cement containing the minced bodies and blood of Mafia victims whose settlement of accounts went awry. Add to that the way overinflated costs that will be invoiced by outsourced professionals and the equally overinflated union wages. Oh, and of course, there will be the devious double-dippers who come to the work site, punch the clock to start their work day, wander off to another job, come back in time to punch out for the day and collect two shifts of wages for one shift of work. The Quebec taxpayer will foot the bill big-time like the Olympics (and that took 30 years to pay off) unless they could suck the feds in to pick up a piece of the take. My response here in Ontario: Non merci!

    Soooo, Electrolux in Assomption, Shell in Point-aux-Trembles, Hyundai in Bromont, GM in Ste-Thérèse...who's next? Who's going to be next to leave? Will it be Pratt and Whitney on the South Shore? Bell Helicopter? Who?

    Little by little, those who were enticed by big government subsidies to come to Quebec will leave before too long after the subsidies run out. Hyundai sure did! Quebec's unions and language cost too much to the bottom line, and so is it really worth it to invest in Quebec? In the long run, the answer is usually a resounding NO!

    Mark my words about the hockey arena costing a billion. Since Quebec City and the National Assembly are each putting in half, Quebec City is going to be be very hard pressed to pay off the debt, and the dirt cheap housing of today will cost a fortune tomorrow when property taxes skyrocket a bundle to pay for the thing...and there's no promise from the NHL they'll have a team anyway. Bettman's goal when he became President, then changed that to Commissioner, was to expand the League to 30 teams. Mission accomplished! He's doing anything and everything to keep that money pit, the Phoenix Coyotes, right where they are as opposed to another team in Southern Ontario owned by Jim Balsillie or anyone else. Winnipeg is probably next on the list for a transplanted team (not expansion). It would be poetic justice for the Coyotes to go back to Winnipeg since this was how the failing Coyotes were born.

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  2. It's incredible just how abnormally sick and twisted Quebec is compared with the rest of the world, no, make that human civilization.

    If it isn't foaming at the mouth racism and hate enforced by government and its population, it is mistreatment and harming of animals, crumbling infrastructure that is a threat to lives, lack of the most basic medical services (e.g. no paramedics! people left to die waiting in ER's), daily firebombings, school shootings, disregard for human life (e.g. selling of asbestos to the third world), and yes, corruption in unions.

    There literally isn't a day that goes by where I'm not fuming over something Quebec-related on the news. The other day it was Louise Beaudoin proclaiming Quebec, unlike Canada, opposes multiculturalism, all while banning a specific people (based solely on ethnicity!) from the National Assembly. Oh, but cover it with a bullshit excuse, much like racist language laws and preventing access to English education, and it's all good and fair. A few days before that it was Charest announcing the building of the half-billion stadium with no tentant using our tax dollars, yet we apparently have no money for hospitals, doctors, schools, roads, etc (to the point just weeks ago he announced we have to pay $200 extra dollars per person, come income tax time, to fund medical services). Oh, and like clockwork, this...

    http://www.montrealgazette.com/news/Concrete+slab+strikes/4281955/story.html

    Yep, someone was almost killed today when a chunk of concrete broke off an overpass and smashed through their car window.

    I may be going off on a tangent ranting about all these unrelated topics, but are they? How is it possible all these things are they way they are, including union corruption? Is it just coincidence, or is there an obvious connection here? We should exam why these things are going on, and better yet, why no one is stepping in to stop any of it.

    Quebec is like a sick person on illegal drugs, abusing not only itself, but eventually everyone and everything around them.

    I'm impressed with the editor. There are so many stories of corruption and wrong doing in this province, trying to keep up by reporting each one is practically a 24/7 job!

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  3. I don't know if you saw the news. Philipps is leaving too. Soon there will be only mom and pop shops.

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  4. Nothing new and nothing ever changes in Quebec. MacCleans reported on this very situation about 3 years ago (Brother,Can You Spare a Dime). The Fraser insitute ranks Quebec 9th out of 10 provinces in Canada with regards to investement climate, due to union issues and government regulations.

    Companies leaving for greener pastures will at the end of the day erode the Quebec tax base which will force property and income taxes higher to pay for the ever increasing bloat of government largesse and union manipulation as the editor indicates in ths post.

    Couple this with the fact that the have provinces in the ROC are starting to wise up and demanding changes to the equalization and transfer formulaes. (A common issue between both Morton of the Conservatives and Daniel Smith of the Wild Rose Party in Alberta). We see Duceppe asking for more money from Ottawa to assist Quebec (he refers to it as fairness..sic) for an economy he knows himself is failing.

    If the transfers would be ended tomorrow Quebec would see a shortfall of provincial revenue of clost to 15% which would mean 15% higher taxes overnight. This would cause an exodus of high income earners out of the province to protect themselves from excessive taxation. Corporation would protect themselves either off shore or in more hospitable territories in Canada.

    The death spiral has been in effect for some time and would appear to be accelerating at this point in time. Where it ends one can only speculate but it is doubtful that the ROC will pay much longer for Quebec's ineffiency and low productivity.

    But of course, we are lead to believe, that Quebec is a distinct nation in Canada and the language and culture must be protected at any cost. NOT. (300 Billion plus spent on the OLA with absolutely no results- Thanks PET)

    When the federal parties such as Conservatives realize that further pandering to Quebec will result in losses of votes elswhere they may well abandon the few seats they have in Quebec as not worth the effort. I believe the first sign of this might be the Quebec City Arena, where the feds have simply sat on the fence and so far have said no to demands for funding.

    Contrary to what others have said , Harper has Duceppe on the ropes. Duceppe has threatened Harper with an election if Ottawa does not provide Quebec with more money and concessions ( in this case a mere 5 Billion plus). Should Duceppe proceed with this planned blackmail he will be the one seen as triggering a federal election, which by poll is not popular. This will create even more animosity towards Quebec within the ROC, perhaps an election, and worse for Quebec a backlash that could result in a majority federal government.

    Quebec has made their bed and will have to lay in it without a partner who is steadily becoming aware that beauty is only skin deep and in fact her performance does not mitigate the cost of her expensive cosmetics and wardrobe.

    There is no doubt that Reed Scowen is dead on the money with his book (Time to Say Good bye) and conclusions that Canada would be a much better country without the money pit that Quebec has chosen to become through their own volition.

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  5. On the subject of Quebec City arena:

    There was an interesting interview with a marketing professor from Laval University on CTV yesterday. He said that on per-seat basis, Quebec City arena would be the second most expensive sports venue in North America. The most expensive is the New Yankee Stadium.

    Of course, the Yankee Stadium has the New York Yankees while the QC arena? Pee-wee hockey.

    Come to think of it, if on per-seat basis the arena would be the second most expensive this means that it would even be more expensive than the Cowboys Stadium, currently the marvel in the world of sporting venues.

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  6. "If it isn't foaming at the mouth racism and hate enforced by government and its population, it is mistreatment and harming of animals, crumbling infrastructure that is a threat to lives, lack of the most basic medical services (e.g. no paramedics! people left to die waiting in ER's), daily firebombings, school shootings, disregard for human life (e.g. selling of asbestos to the third world), and yes, corruption in unions."

    K this is a little blown out of proportion. Daily firebombings? Comon now...

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  7. "Couple this with the fact that the have provinces in the ROC are starting to wise up and demanding changes to the equalization and transfer formulaes."

    Here is an article about equalization payments that appeared today:

    http://www.ottawacitizen.com/news/Fight+equalization+chamber+urges/4283740/story.html


    The way things are going with many companies leaving Quebec, the government will have to pass draconian laws forbidding them from doing so (or didn't they already do that with Air Canada?).

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  8. An excellent article on the subject in The Gazette.

    "Quebec can ill afford its culture of entitlement"

    http://www.montrealgazette.com/news/todays-paper/Quebec+afford+culture+entitlement/4283642/story.html

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  9. Thanks to Editor for raising this important topic.

    Unions are necessary for sure, but the delicate balance between employee and employer interests must be vigilantly maintained. That balance has been lost in Quebec. Excessively powerful unions have been a problem in Quebec for a very long time, and have contributed to the sense of entitlement and political instability that pervades Quebec.

    The question is what can be done to correct the situation? For the foreseeable future, I think the answer is nothing. The unions have a strangle hold on Quebec politicians. All of Quebec’s political parties cater to unions in order to gain their support. No politician will stand up for change of this kind. To do so would mean political suicide, and would run counter to Quebec’s cherished (unsustainable) socialist agenda.

    There is no way in hell Quebec’s union members will ever agree to pay cuts. Nothing will change until Quebec hits that proverbial economic wall that looms in the near future, and the economy starts to fail.

    Nationalism and socialism (unions) = Quebec’s demise.

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  10. "An excellent article on the subject in The Gazette."

    An excellent link. The article was concise and to the point. Quebec is on the edge of the cliff with extreme levels of debt, unions wagging the heads, organized crime, crooked politicians etc etc. I wonder how many more companies and organizations will have to pick up a leave before the people in Quebec and their legislators "get the picture".

    The warning signs have been up for years but no one is listening or heeding the signs apparent.

    Might be too late.

    Of course the separatistes will just use the anglos and ethnics as scapegoate for their provinces shortcomings and demand more money from Ottawa to bridge the gap. This might prove more difficult than they think considering the sentiment beginning to rise in the ROC with respect to Quebec.

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  11. Adski, thanks for the heads-up on the Gazette article. No doubt about it. Quebec's equalization payments should be butchered--emiminated, really. First of all, I live in Ontario now so I care much more about Ontario affairs than Quebec's; furthermore, Quebec has only itself to blame, but of course they won't, and as long as they maintain this blaming the Anglos and whoever else they can for all their woes, the black vortex destroying Quebec's business environment will continue, and probably get stronger.

    As Editor has pointed out in other articles, Quebec's role in Canada and the world is deteriorating, and deserves to continue to do so. There is no population growth as the days of la revenche des berceaux has exhausted and domestic babies aren't being cranked out the way they used to be. The population in Quebec is being kept at bay thanks (or no thanks) to immigration, and I don't mean of the «pur laine» ilk that buys into "Quebec is getting the short end of the deal" on everthing programming.

    Quebec's sacred cow is the 75 federal constituencies, but instead of shrinking the number of MPs (due to stupid constitutional "guarantees" to Quebec), the rest of us have to overload the boat called Parliament through diluting Quebec's percentage by adding constituencies where the population is growing: Ontario (underrepresented for a long, long time), Alberta and BC.

    Mulroney offered Quebec a gift of "guaranteeing" its 25% representation no matter how the demographics change, but the dung headed politicians in Quebec didn't accept it. THANK GOD! Quebec's status is deteriorating and will continue to do so as these well-paid jobs go elsewhere and they won't attract new ones unless Quebec makes great costly concessions to attract business and put the screws to the taxpayers.

    Quebec has shot itself in the foot--AGAIN!

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  12. @ Mississauga Guy

    The economy in Ontario isn't going well at all. Ontario lost more jobs in the past 4 years compared to Quebec.

    BTW, GM in Ste-Therese didn't received any federal help. Did the Ontarian car industry got a lot of help during the past few years?

    That is another injustice for Quebec.

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  13. There we go Quebec's problem us someone else, typical seppies moronic comment, Ontario lost more jobs, because they have a manufacturing base. Quebec has barely any, and when 60% of your economy us government driven you lose less jobs, but get more debt and the beauty if it all, they also get salary increases. Now to ano 5.43 YOU and YOUR type are the reason of this mess. You hit rock bottom and you just started digging, socialist seppie moron that u are.

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  14. @anon 5:43

    IF GM and Chrysler went under and the Ontario unemployment rate doubled due to parts plants and components manufacturers going under, Quebec would have lost alot of parts plants. More then that Quebec would have lost so much of its equalization pie.

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  15. Anonymous 5:43pm said: That is another injustice for Quebec.
    Jeez. Stop crying and go wipe your nose. If you guys ever separate you should adopt Warren Zevon's song "Poor, Poor, Pitiful Me" as your national anthem.

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  16. "BTW, GM in Ste-Therese didn't received any federal help. Did the Ontarian car industry got a lot of help during the past few years?"

    Check out the facts and the federal aid and tax abatements to secure the plant in the first place. Why would GM continue with a plant which was inherently lacking productivity.

    Ask yourself one question. Has Quebec ever contributed to equalization payments on the plus side. Seems to me over the years they have received far more than the one time bailout (loan) to the auto industry in Ontario. Not too mention the agricultural subsidies and other progams favoring Quebec.

    Give your head a shake!!!!

    There is no injustice to Quebec. In fact it is Quebec who has done the injustice to the ROC by continued whining, demanding welfare (just like Duceppe last week), blackmail (just like Duceppe last week)and providing numerous problems in Canada such as the FLQ and the October crisis.

    Don't give me the wounded angel scenariou. Simply do not buy it anymore once the facts are presented. Quebec is the author of their own misery.


    Westerner

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  17. Here is an interestin link quite topical for todays post by the editor.

    Please look at the comments to Pratte's article in the G&M for the typical attitudes toward Quebec in the ROC.

    http://www.theglobeandmail.com/news/opinions/opinion/its-not-always-quebecs-turn/article1906921/

    Pratte is right.

    Problem is...he is excusing Quebecers as for the most part becoming disenchanted and not agreeing with Duceppe. My question, why then, are the BQ still there. Someone has to vote for him and his band of separatistes. Lets face it Quebecers are for the most part self absorbed and are only interested in their own welfare as the unions as discussed in the editors post. If not, then I suspect they would not vote for Duceppe and the BQ.

    On the harmonized sales tax. pure BS on Duceppes part. A ruse. You still have to remit taxes direct to Quebec as well as the feds. If it was harmonized as in other provinces there is only one place to send your money. I know well, as our company is registered with Quebec Revenue and I know well where the PST goes. As I said, pure BS.

    Westerner

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  18. Good for Quebecois!

    While always wanted more, they get nothing at all. Same thing happen with the flop of NB Power. Jean Charest wanted too much, and at the end, well, Quebecois win nothing at all. and at the end, Quebecois had what they deserved. That's the price to pay for voting Gilles Duceppe and wanted to have a country of your own.

    Stupid people, stupid politic, no business with anyone, Shell or New Brunswick NB Power. NONE.

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  19. Air Canada has contingecy plans in the event of a YES vote to seperate or if Bill 101 is applied to Federally chartered companies in the province of Quebec (the BQ and NDP are pushing it) and it involves a change in Area codes. The move has already begun.

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  20. "...While always wanted more, they get nothing at all. Same thing happen with the flop of NB Power. Jean Charest wanted too much, and at the end, well, Quebecois win nothing at all. and at the end, Quebecois had what they deserved. That's the price to pay for voting Gilles Duceppe and wanted to have a country of your own."

    Hein?!?!
    Un autre petit génie en sciences politiques.

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  21. I don't understand why Air Canada still has its headquarters in Quebec. Did a search and found this new article from 2004...

    http://www.uniondues.ca/forums/showthread.php?t=120

    So they were forced by law, against their will, to keep their head office in the shit-hole-province-of-Quebec? And while here, have had to follow Quebec language laws which hurts profits?

    Why on earth would Air Canada choose to stay in Montreal even another minute?

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  22. Present day facts do not support the suppothesis that the unions behavior closed the plant. At this time there are 10 refineries closed or forsale east of the mississippi river in the USA.The closures have more to do with the spread in price between Brent crude and west Texas international and secondly the desire for multinationals to open plants in China, India, Thailand, which are areas that lets say do not have such strict environmental controls and no protections for their workers.
    Trust me the day will come when there is no gas available from these overseas refineries for geopolitical reasons and the people will wish the Shell refinery and others were still open.

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