Here’s an alternative to bailing out auto workers

I admit I’m mystified why the auto industry deserves a big bailout to keep operating. Although it is a big industry, there are other big industries and they, too, operate in a global marketplace with unions and taxes and other challenges. Nobody pops up with a cheque when they announce layoffs due to falling world commodity prices. The existing safety net of unemployment benefits is expected to suffice until workers find something else to do.

The Canadian and Ontario governments announced in December that they would make some $4 billion available.  That’s about $110 bucks from each Canadian as a direct donation to our fellow Canadians who happen to work in the auto industry. They are called loans, but if you believe they will be paid back, let’s talk about that swampland in Florida. Meanwhile, union leaders are adamant that workers should make no concessions because labour costs are not the problem.

Auto industry analyst Dennis DesRosiers estimates that the combined US and Canadian bailout packages will buy the industry about 3 months. Presumably at that point, the Big 3 will either be back for more, or will collapse anyway.

The CAW’s website says it represents 82,000 auto workers, so let’s accept that as the number of Canadians who will benefit from the $4 billion. In other words, $48,780 per worker.

Is there a better way to spend $48,780 per worker?

First, it would buy a pretty good retraining package.

Second, there would be enough left over to subsidize the worker and family moving to a place that actually has jobs. Like, say, Alberta. Figures released by StatsCan on January 9 showed that Alberta has an unemployment rate of just 4.1% – even in the midst of the “greatest recession since the Great Depression”. In economic terms, that’s close to zero unemployment. And that’s with oil at about $40 a barrel and natural gas at about $5.85.

The Canadian rate at 6.6% is not bad. It’s predicted to go as high as 8% before the recession ends, but I can remember double-digit unemployment in my lifetime. Some sectors actually increased the number of jobs in December, despite the recession, including transportation, financial sectors, and yes, manufacturing. Natural resource job losses were small despite media hype that warned of  unemployment carnage.

So why not give the bailout money to those workers who agree to retrain for careers that need workers and move to places that have  jobs? Alberta and Saskatchewan need workers – even now, but particularly in 6-12 months when the price of oil and gas inevitably rebounds. These are good, well paying jobs that people with auto sector skills could retrain for with reasonable effort. And the West is a nice place to live.

The auto sector should be permitted to collapse to a size that is commensurate with the number of cars they can sell. Management needs a good knock on the head to update its product. Maybe that means closing down for a few months to retool and start over.  The union could use a knock on the head too, til it understands that high wages, elite benefits, and pension costs that exceed worker costs are, yes, contributing to the problem. The factories and equipment will still be there when management has a new business plan and labour has figured out they can have some jobs with reasonable compensation, or no jobs with fabulous compensation.

There will still be a market for cars in six months. There might be fewer auto sector jobs, but there are good jobs elsewhere. Canadian citizenship doesn’t guarantee the job you want, at the pay scale you covet, in the exact part of the country you prefer.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: