Wednesday, June 6, 2012

GM confirms jobs gone for good: all Canada is Cape Breton

"Goin' Down the Road" (1970) is one of Canada's best films. It shows how poorly educated folks from Cape Breton struggle and fail in Toronto where the good jobs require education and connections.

At the time Cape Breton still had some decent work for less skilled workers but that work was drying up. Toronto had some work -- and in the movie the leads found jobs, initially, at a soft drink plant filling boxes.

Today, well, most of the country is becoming Cape Breton in the 1970s:

GM will cut 2,000 jobs at its Oshawa plant, another hit for a beleaguered sector of the Canadian economy. GM's national workforce is now down to 8,000 workers from a high of 40,000 not too long ago.

GM is moving production to Tennessee, where the average wage will be $14 per hour compared with $32 per hour in Oshawa. As much as some commentators want to label Dutch disease due to resource production as the cause, even if the dollar were at US80¢, a 20% decrease, the wage bill in Canadian would still be the equivalent of nearly $26 per hour before benefits, surely not low enough to stave off the job losses.

Were GM to negotiate to keep jobs in Ontario, it is unlikely to agree to $32 per hour when demand outstrips supply for jobs at its plants. That is the Darwinian nature of the corporation. To expect it to behave otherwise is naive.

Turning back to wages, $14 per hour doesn't sound like a lot. However, the median home price in Tennessee is now $145,000 (in the Oshawa-Durham region, it's closer to $280,000) and non-transport energy costs are at historic lows. The cumulative effects of the Great Recession have ensured that it costs less to live in many parts of the U.S. than it used to.

We should be concerned for the Canadian workers who lose their jobs and the impacts that this has on families and communities. It is clearly not in the national interest to have high levels of unemployment or underemployment.


Alison said...

Canadians should stop buying GM products. We should collectively turn our backs on any company that pulls this sort of stunt. If there has been any government help or incentives to a corporation (eg Electrolux and GM) we should boycott them. There are good or better products available.

The Rat said...

Alison, dear, I don't intend to destroy my family simply because someone else lost their job. Instead maybe we should ask why Tenessee, a small state geographically, has such cheap housing when In Canada, a huge country, housing is so expensive? Why do we insist on subsidizing manufacturing in the most expensive place in Canada? I wonder why we don't have more manufacturing close to the resource production areas?

Anonymous said...


If you really want to protect jobs you could start by demanding the Ontario gov't reverse their policy that is driving electricity rates through the roof. Their is little evidence that the environment has benefited anyways.

You could also demand they reverse the employer health tax that was added a decade ago after the new Ont. gov't promised no new taxes.

By all means boycott but the rest of us need to drive to work somehow.