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.

Le Québec a perdu la raffinerie Shell{fr}

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.

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