Winnipeg Free Press

Winnipeg Free Press (Newspaper) - June 21, 1987, Winnipeg, Manitoba Winnipeg free press june Page 7 Plant by Garth Whyte special to the free press during the last few years there have been a series of Large Industrial Plant clo sures in when Large corporations close their Branch plants and move out of the province often experiences serious economic and social often hundreds of jobs and millions of dollars Are lost to Why Are these Large Industrial plants relocating outside Manitoba is it because of the provincial governments economic and fiscal policies or is it because of an arbitrary decision by the Parent based on current eco nomic conditions Many people would argue that the majority of Large Plant closures Are the result of the negative business climate created by the Manitoba the provincial governments accumulated deficit is Well Over billion and taxes Are among the highest in Canada the health education payroll tax was increased by 50 per workers compensation premiums have increased on average by 20 per cent per year for the last three Manitoba labor Laws and regulations Are biased in favor of As shown by the recent introduction of an amendment to the Manitoba labor relations act that proposes final offer selection legislation but Only allows this mechanism to be used if Union members choose to do it is very difficult to prove that businesses Are leaving Manitoba because of an Adverse political the fact Many big businesses Are downsizing and employing less people linked to growth structural changes Are occurring in the International Economy which is becoming More knowledge and less Energy future Job creation is linked More to growth in the information services sector and specialized manufacturing and less on resources and heavy these realities demand a painful restructuring of the Canadian econ another reality of today world is that Small businesses Are the agents of the fact is that the Small business sector is grow ing faster than big business and adds a vital degree of flexibility to our rapidly changing during the postwar major corporations created 75 per cent of new More than 75 per cent of new jobs Are created by Small minister responsible for Busi Ness development and tourism Maureen Hemphill stated that Manitoba Small businesses Are the economic Backbone of this prov Between 70 and 80 per cent of All new jobs created Are in Small business and about 97 per cent of All companies in Manitoba Are consid ered to be Small businesses with fewer than 50 employees and less than in in Manitoba businesses with less than 20 employees accounted for 100 per cent of All new jobs and compensated for a 15 per cent de crease in jobs among medium and Large firms during a More appropriate question is whether or not Manitoba current business climate is affecting the Small business sector in affecting economic growth and Job creation the Canadian federation of Independent business has some Strong views on that surveys done by crib in 1987 found that the Manitoba Small Busi Ness sector is very dissatisfied with Manitoba current economic Situa Manitoba crib members identified total tax Burden imposed by the provincial government per cent and the workers compensation Board per cent As the most serious problems in the operations of their prior to the 97 per cent were concerned with the size and growth of the provincial deficit per cent were dissatisfied with the provincial governments efforts to reduce its these Manitoba responses showed by for the highest level of concern of any province in the believes that such Evi Dence clearly shows that the provincial governments fiscal and economic policies Are definitely hurting the Small business tax on jobs take the payroll for exam it is not related to a firms ability to pay nor is it because it is a profit insensitive tax and a tax on a new or Strug gling business could have Zero prof its and still have to pay the payroll when asked what effect Mani Tobas payroll tax had on their per cent of crib members said it reduced their profitability per cent said it reduced their Cash flow per cent said it caused them to reduce hiring and per cent said it caused them to increase their operating instead of More Meg projects and government what Manitoba should do now is rein Force this natural process of entrepreneurship and new business for mation and remove barriers to the growth and Job creating potential of the Small business Community this strategy is founded on hard economic realities and on the basis of observations almost every other industrialized society where big big government and big unions Are All downsizing to prepare themselves for a new eco nomic the agents of this change Are a More flexible group of individuals the Small business Man and we at crib urge the Manitoba government to come to grips with these new realities by implement ing policies which will assist the growth and development of the Small business it is Only through such progressive and prag Matic policy Conception and implementation that the employment wounds of Plant closures can be such policies will Supply the necessary climate and motivation for new businesses to be which in turn will create More in they will also encourage retraining and equally import a better understanding that new and different skills Are required outdated theories a government cannot build a bet Ter future on outdated economic theories and policies anymore than a business can survive on outdated marketing and management prac Plant closings in Manitoba Are just another warning to this government that it had better come to Deal effectively with the new it has a Choice to either accept and adapt to the new Reali or to ignore and resist the future of All Manitoban de pends on which Choice is this message applies to All political parties conservative or Garth Whyte is director of provincial Manitoba Canad an federation of Independent Canada packers is one of Many plants that have either closed or reduced their work by Jim Silver special to the free press the Canadian manufacturers association Cha is complaining again about Manitoba business climate free May they say the provinces labor Laws and tax poli cies Are causing Plant the evidence suggests they Are on one count the Cha has it right Manitoba has a Plant clo sure from 1976 to 1986 there were 88 closures of companies operating in Manitoba and employ ing 50 or More the direct Cost was the indirect Cost As Many so that at a conservative estimate some to Manitoba workers and their families have been Uncertain future closures will Canada packers just Cut 475 jobs a further 350 will go in 1988 when the entire Plant Centeri Nial packers closed in at a Cost of 20 Ibex industries has just been saved from but the future of its 175 employees is the Cost of the direct loss of jobs in Manitoba has been the Cha is Correct to express the Cha is mis in attributing Plant closures to Manitoba labor Laws and tax my based on press reports and extensive in suggests that Only one possibly two of the 88 clo sures in the 19761986 period resulted from government More than on third of the clo sures and jobs lost were due to rationalization corporate restructuring involving Plant clo in order to maximize prof in such cases the closed Plant May still be or capital invested in the Plant May have made it but reinvest ment is directed elsewhere be cause doing so is More profitable than investing in in 32 of the 88 corporations closed their Manitoba plants and shifted production elsewhere East Ern Canada in the Case of Christie ice keep rite and Kimberly Clark the United states in the Case of Harco Radovac and general aluminium forgings and Western Canada in the Case of in the Case of get Sylvan a and Moser production was moved to Eastern Cana leaving a warehouse and distribution Centre in in each of these production might have been continued in Manitoba but the calculation of corporate profit and the mobility of capital dictated of the 88 or 19 per followed an acquisition or this too is part of the process of rationalization and often has Little to do with a plants ability to closures at least of Man fac mining and logging firms Are also related to foreign owner in of All employees in mining and logging in per cent worked for foreign controlled if ownership were not a per cent of Job loss would have occurred in foreign owned in per cent of Job loss occurred in foreign owned Sug Gesting a higher propensity to clo sure Given foreign logging jobs per cent of Manu mining and logging jobs in Manitoba were in while per cent of the jobs lost occurred in suggesting an even higher Propen sity to closure twice As High Given american this analysis suggests that the cams explanation for Plant clo sures is and that the Solu Tion they advocate is no solution the the problem is the Normal operations of the Market and the endless demand for profits which it imposes of Cor especially footloose Branch plants owned outside of these plants Are pre pared to relocate quickly and frequently to maximize be cause that is what the Market thus to Call for greater Reliance on the which is what the Cha Means by a better business would Only aggravate the the Plant closure problem cannot be completely solved so Long As we organize our society on the basis of since the search for profit causes the problem in the first a partial solution is possible through the establish ment of a Plant closures review mandated to investigate investigations should in clude a social audit by a commis Sion including labor and Community to determine causes and real costs of closures and to determine if a Plant could be kept open under different owner ship when it the Agency would provide or mob Lize the technical Finan organizational and the necessary no purpose in Many cases investigation is Likely to reveal that no response is no Good purpose is served in intervening indiscriminately to save uneconomic plants in dying but in some cases a Plant about to be closed will still be it May have been operating but not profitably enough for its Parent or it May have been so that improved management would make it and a social audit May reveal that the real costs to the Community of a closure Are much higher than the costs of keeping the Plant in opera in such cases it May be Possi ble to keep the Plant open under new of which several variations Are another or group of or even a private Community Consor May be found or local ownership is since Manitoba based capital is generally less Mobile than capital domiciled or the employees May buy the the nip government has claimed to be committed to developing a Plant closure thus far they have not done largely due to fear of the business since the business Community under standing of Plant closures is so flaw this fear should be set aside and the government should act to protect the interests of perhaps along the lines suggested if they do not do so then working plus those thousands not thanks to Plant would be justified in demanding they do in unions have a particular interest in making such since unionized jobs Are being Dis proportionately affected by while per cent of Manitoba paid nonagricultural workers were unionized in per cent of the jobs lost due to closures were three unions have lost More than one Quarter of their membership to clo sures six have lost More than clearly the Trade Union movement has an interest in de manding that action be taken on Plant business will but their facts Are wrong and the solution they advocate would Worsen the prob they should be this leaves the Ball squarely in the nip governments us see a meaningful response to our Plant closures Jim Silivra teaches political Sci ence at the University of tax Reform White paper turns out to be a Bland Shade of Grey Wilson produces a work of Grey by Leonard Shifrin special to the free press Ottawa finance minister Michael Wilsons White paper on tax Reform is a work of Grey if anyone had predicted that i would be less than elated the Day a minister of finance finally proposed replacing regressive exemptions and deductions with flatmate cred i have believed like i would have been incredulous if someone forecast anything less unbridled outrage As my reaction to a finance minister offering three quarters of families in the Over category tax cuts averaging More than a the Wilson White paper is a col Lection of Black and White measures that average out to a perfect the claim that Low income taxpayers will be taken off the tax 4 Rolls is the great majority of these taxpayers were Only recently added to the tax Rolls by the governments earlier decisions to eliminate the tax reduction credit and de Index the tax Wilson is proposing More than just undoing his previous but not a lot and because the de indexing will the first few years of the new system could see most of these people pushed Back onto the whats even in year one of the new hundreds of thousands of canadians with sub poverty line incomes will still be paying the eligibility limit for the full of the refundable child tax cred it will continue to be of net family but because the definition of net family income will be More restrictive under the new sys fewer families will qualify for maximum and those now getting partial benefits will find these a family with of total in for will get per child instead of that necessarily be a bad thing if the Money these Middle income families lose were used to increase benefits for lowest income but it is in to provide tax savings for 000plus of course it is also in to provide the family with a tax but even it is the wife who loses the of child tax credit while the bulk of the tax Cut goes to the higher income spouse almost in variably the on the one hand and on the other hand that is the Story of Michael Wilsons White it is impossible to love and impossible to hate that is its but not an Assurance of its while no great firestorm of pro test will engulf the neither will any groundswell of support propel it into Law in its present that double barrelled Munfor could be the perfect recipe for a Campaign of quiet persuasion by business based special interest groups intent on saving favorite the history of past tax Reform efforts in this country has demonstrated the Potency of those who employ High priced lobbying organizations to represent their interests in such after if High priced we rent Worth their the Bottom line watchers in corporation land keep ;