Economy Thread

[manny_santos]

Originally Posted by Wharn

London Life is still here. Even though they're a branch of Great-West Life, it still counts, right? To be honest, the drive to move to Toronto has always perplexed me, because it is a very high-cost environment. Taxes are high, salaries are high (to make up for a high cost of living), and office space is expensive. You would think medium-to-large corporations would prefer to situate themselves in smaller centres (eg London, Madison, Saskatoon) to save on overhead.

It's a drive that perplexes me too. I personally think that London has several competitive advantages for businesses, including the lower costs that you mentioned; also, I believe that above-average unemployment in a city that has multiple post-secondary institutions generating talent is a competitive advantage that too many companies miss. They think that they need to centralize in Toronto for the sake of being in Toronto, when they forget there are graduates of Western and Fanshawe that would remain in London if they could get a good job there.

[manny_santos]

Originally Posted by Symz

Honestly I think the Electromotiv lock out is a croc of shit. They're making big demands meanwhile they're parent company Caterpillar is posting quarterly profits.

These are decent paying jobs too and it's depressing right after the closure in St. Thomas.

We can all agree that the company as a whole is profitable.

However, I have an accounting background, and my question is: Is the London plant on its own profitable? I honestly don't know. What I do know is that Caterpillar appears to be trying to hedge risks associated with the current global economic situation. They may be profitable now, but the current cost structure may be a big problem if there's a global economic meltdown.

I've thought a lot about this, and I honestly think that Caterpillar is thinking globally, and long-term. It sucks for the London workers, and I have to wonder if the Government of Canada was overly generous in allowing this company to take over the London plant.

[MolsonExport]

Problem is, companies want to be in the GTA because they are closer to their markets, financial partners, and moreover, that is where employees want to be. Those firms looking for cheaper digs can simply lease space in North Yark City Centre, Missingsausage City Centre, Ditchmond Hill, Mark'sHam, or Vince Vaughn. Which is what many if not most do for their back office operations. London and other medium cities are left searching for ways to grow their employment base. The vaguaries of globalization are dealing out winning and losing hands. It appears that London currently has a lot of bad cards (mfr, overreliance on Michigan/auto industry), but a few good ones besides (UWO, Fanshawe College, London Health Sciences). Our cheap real estate is not a strength but rather symptomatic of our economic weaknesses.

[manny_santos]

Not London, but it could have a ripple effect here if unemployed Sarnia employees come looking for work in London...

http://www.lfpress.com/news/london/2012/01/06/19209091.html

Could any of London's call centers be next? A call center I used to work for is owned by American interests, and recently downsized and gave existing employees the option to work from home. I'd rather see that than job cuts, but considering that when I worked there there was continual complaining about "our colleagues in Toledo" doing a better job than us, it's hard to say what will come of that place.

[Symz]

My fiancee said that Electromotive is a big customer to her company and before I really said anything more she said 'they're planning on moving to Indiana'.

I hope that's not the case, but like manny said Caterpillar is playing a game right now, we all know who loses though right?

Added: I read an article a few days ago talking about Caterpillar being woo'd by officials from other regions in the states. If that's the case the company can sit back and watch regions fight over the jobs and race to the bottom and then just relocate to wherever the labour is cheapest and/or tax subsidies the greatest.

[manny_santos]

Originally Posted by Symz

My fiancee said that Electromotive is a big customer to her company and before I really said anything more she said 'they're planning on moving to Indiana'.

I hope that's not the case, but like manny said Caterpillar is playing a game right now, we all know who loses though right?

Added: I read an article a few days ago talking about Caterpillar being woo'd by officials from other regions in the states. If that's the case the company can sit back and watch regions fight over the jobs and race to the bottom and then just relocate to wherever the labour is cheapest and/or tax subsidies the greatest.

I guess that's also what happens with Obama's Buy American rules.

[Wharn]

I've heard rumours that Caterpillar is also very much afraid of a Chinese entrant, and part of the reason why they're being so tough with the collective bargaining is to give themselves a solid pricing and manufacturing advantage over any potential competitors.

Of course, it could just be another case of American assholism, much like the U.S. Steel-Stelco debacle a few years back.

[manny_santos]

Originally Posted by Snark

Clearly, most folks working there are skilled tradespersons even if not formal post-secondary grads. Many will have years of experience as well that is far more valuable than education. They build large, complex, sophisticated machines of very high value. This is not some factory making light bulbs. So what should a skilled worker earn? What do you think electricians, gasfitters, and plumbers earn?

I do know that people in these professions earn a lot of money, often above the Canadian average. Part of that is because consumers are willing to pay the price for a plumber or electrician. The question is, how much are Caterpillar's customers willing to pay for a locomotive? Everyone wants the best locomotive, and I would imagine Caterpillar wants to keep its costs competitive, so it can't charge too much more than its competitors. That leads to the question of how much the price of a London-made locomotive is above the cost of overhead and labour at the London plant. We don't know.

Originally Posted by Snark

Agreed! They should just accept that the middle class should be reduced by 80% in this country in order to be "competitive". We should let the nation's wealth to return to its rightful place: that 5% that is the traditional ruling class or better yet completely out of the country. And with time, with a remaining rump middle class no longer able to drive the economy we can no longer afford things like a healthcare system or law enforcement, but we will be competitive and draw major employers just like say.... Juárez. You know, the city in Mexico that has 300 assembly plants and and 3,000 murders a year.

I saw a story on CNN last night about the high demand for IT professionals with computer science degrees, at least in the United States - and I would assume also in Canada. Perhaps, if the economic reality is that high-paying manufacturing jobs are going away in Canada, more people should be going to university and college for re-training. The government would have to play a role in that.

Originally Posted by Snark

1) Why do you think that is?
2) Get used to it if the "economic competitiveness" that you defend does end up becoming entrenched as the new norm in society here. You won't be able to afford to send your kids to university. For that matter you will never own a home. You will die poor.

1) In my case, I am a relatively recent university and college graduate. My last job was an entry-level sales position which paid a little under $12/hour. Had I chosen to, I could have applied for a higher position that pays $27/hour, although I would have had to move to another province - the main reason I did not apply for it.

2) You're right - global economic competitiveness is going to harm Canada's economy. However I also think that many Canadians have been living lavish lifestyles that many in our world can't afford. I'm no advocate of communism, but I think some people need a reality check. Just look at Canada's huge household debt - a lot of people living beyond their means. Do people really need three SUVs, top-tier satellite TV, and mansions? I'm just happy to have food and a roof over my head.

[Wharn]

After reading up a little more on the Electro-Motive situation, I'm almost certain Caterpillar is playing hardball so they can try to move production to the States.

Granted, the London plant may very well be uncompetitive relative to other North American manufacturing facilities (especially thanks to McStupid's high electricity prices), but I'll bet CAT's facing political pressure to move production "back home", and they figure that there is a certain level of wages where they can justify keeping production in Canada. This whole thing is really beginning to reek of the Champion debacle a few years back.

Normally I'm a Harper supporter, but I really hate how he's being such a US ass-kiss. If I were him, I wouldn't be witholding commentary right now. I'd tell CAT that if they close the plant, there'll be trouble. For instance, they would have to repay all the tax incentives we gave them back in 2008. Furthermore, if the plant was closed, the government ought to nationalize Electro-Motive and run it as a Crown Corporation. Seize it, expropriate it, and tell the Americans to shove it. We don't need Caterpillar to make locomotives, just like we don't need American scum who come to buy up industrial capacity and proceed to shut it down.

Now mind you, the CAW is not completely relieved of blame. It's been pretty obvious for years that the Canadian dollar has been appreciating, making exported manufactured products less competitive. They should have seen this sort of thing coming, and lobbied the company to reconsider their sales strategies and improve the efficiency of operations. But instead they remained fixated on wages and benefits, which are only half the story.

[MolsonExport]

^full agreement on all counts, 'cepting being a Harper supporter.

[Symz]

Big companies 1 : Average Working Families 0

[Wharn]

What really, really pisses me off about this is the Federal Government handed CAT about $1 billion in subsidies to keep jobs in Canada, and now they're going to move them out. You know what that subsidy for a hostile American company was? That was our Ring Road. That was our LRT. That was our ticket to fixing every goddamn pothole. That was a water system overhaul. That was a UWO expansion. That was a new City Hall.

The money could have been spent on so many other worthy causes, but it looks like it's just been wasted. This is why government and private sector should never mix.

[bolognium]

I thought the Feds gave a $5-million tax break to the buyers of E-M locomotives, which was a part of a much larger $1-billion general industry investment. Did I misunderstand this quote?

"Harper visited the plant in March 2008 to showcase a $5-million federal tax break for buyers of the diesel locomotive-maker's wares and a wider $1-billion tax break on industrial capital investment."

Source

[haljackey]

The problem is blue collar workers are a dying occupation.

If this doesn't take their jobs, computers and increased mechanization will. Pouring money onto it is like adding gas to a fire.

Although there is still demand for skilled blue collars (trades), or jobs that require thought in addition to labour. Investments here, along with investments in science and technology will help our local and national economy prosper.

Still, I hope there's a decent settlement for these workers. This sharp change is too much.

[north 42]

Originally Posted by haljackey

The problem is blue collar workers are a dying occupation.

If this doesn't take their jobs, computers and increased mechanization will. Pouring money onto it is like adding gas to a fire.

Although there is still demand for skilled blue collars (trades), or jobs that require thought in addition to labour. Investments here, along with investments in science and technology will help our local and national economy prosper.

Still, I hope there's a decent settlement for these workers. This sharp change is too much.

I agree, high paying industrial, blue collar jobs are soon gonna be history, so our cities need to look at R & D, and tech investments if we want to be prosperous. You shouldn't make 35 bucks an hour, and only have a highschool education.

[Wharn]

Originally Posted by north 42

I agree, high paying industrial, blue collar jobs are soon gonna be history, so our cities need to look at R & D, and tech investments if we want to be prosperous. You shouldn't make 35 bucks an hour, and only have a highschool education.

That's normative. It's not a question of should and should not, it's a question of can and cannot.

Besides which, there are plenty of people making well over $35 an hour without post-secondary education. It's just that the growth potential in those sectors is far more limited.

[Blitz]

Not sure how this rally is going to change anything tomorrow. I guess it might put London in the national spotlight again and you know...bring even more publicity to the local unemployment problem. Great.

[Snark]

Originally Posted by north 42

You shouldn't make 35 bucks an hour, and only have a highschool education.

Why?

You are confusing education with ability. The two are very different.

The first one says that you spent some time in a post-secondary environment.

The second one says that you are good at something that people will pay you well to perform and that you work well with others in order to help an organization move forward.

Sometimes the two go together, sometimes they do not.

I've met more than my share of university grads whom I wouldn't hire to mow my lawn. I know more than a few high school-only grads who could build an entire house with only the most rudimentary of plans. I have of course, seen the opposite as well - but that is just my point. The two are not necessarily linked.

The market will determine who gets $35/hour based on who it needs, not a coronation in purple robes and mortarboard hats.

[haljackey]

According to city councilor Matt Brown's twitter feed, there are 15,000 people in Victoria Park right now to support the Electro-Motive workers.

"Speaker just said there are 15,000 ppl here."
https://twitter.com/?ref=nf&utm_campaign...tm_medium=fb&utm_source=fb#!/Matt_Brown_

That's pretty amazing if you ask me.

[north 42]

Originally Posted by Snark

Why?

You are confusing education with ability. The two are very different.

The first one says that you spent some time in a post-secondary environment.

The second one says that you are good at something that people will pay you well to perform and that you work well with others in order to help an organization move forward.

Sometimes the two go together, sometimes they do not.

I've met more than my share of university grads whom I wouldn't hire to mow my lawn. I know more than a few high school-only grads who could build an entire house with only the most rudimentary of plans. I have of course, seen the opposite as well - but that is just my point. The two are not necessarily linked.

The market will determine who gets $35/hour based on who it needs, not a coronation in purple robes and mortarboard hats.

Let me rephrase that, you should not demand 35 bucks an hour when you want to be hired by a company where people working for 20 years are making the same, you should get a starting wage and work your way up the pay scale.