Cohn: How Canada let Caterpillar strip a
plant clean
Published On Sat Feb 4 2012
Toronto Star
By
Martin Regg Cohn Queen's Park Columnist
Ask yourself this: Why
did Caterpillar buy a plant only to destroy it?
The labour dispute at a London
locomotive factory was nasty, brutish and short — a depressingly
Hobbesian scenario in which brute strength prevailed over civilized
rules of conduct.
There were no strikebreakers
wielding clubs at Electro-Motive Canada, because there was no strike to
break — the union was locked out on New Year’s Day. There were no
replacement workers to bust the union, because the union was merely
invited to slit its own wrists — by halving most wages from $34 to
$16.50 an hour.
The U.S.-based owner,
multinational giant Caterpillar Inc., didn’t so much humiliate 460
skilled workers as ignore them. It started and ended this negotiation
with a carefully choreographed plan to pack up, shut down and leave
town.
Clever multinationals — and
this is one cunning Caterpillar — don’t spend hundreds of millions of
dollars to buy a factory only to shutter it. So what was the plan?
Never mind Caterpillar’s
cold-hearted tactics. Its clear-eyed strategy exposes our own blindness.
The big bad Americans saw past
our myopia — beyond the cash value of the plant’s physical property to
size up and seize the company’s intellectual property: the innovation,
trade secrets, manufacturing processes and R&D residing in London.
It won’t just relocate the
heavy equipment on the factory floor, but harvest the technological
know-how subsidized with government incentives and writeoffs. This
wasn’t bullying, it was highway robbery — with our politicians watching
from the sidelines.
Caterpillar kicked those
workers in the teeth, but we should be kicking ourselves for letting it
acquire the legal right to do it as it pleased when purchasing the old
locomotive plant. There has been much hand-wringing that foreign
investment safeguards weren’t triggered, failing to ensure a net benefit
to Canada with explicit job guarantees after the takeover.
But lost jobs aren’t our only
loss. Be it Nortel or RIM, we need to value the technology and patents
in play when foreigners start kicking the tires. The buyers are just as
likely to be scavengers as investors. And if their primary goal is to
spirit away our intellectual property, they will treat the ancillary
human resources as an expendable asset to be stripped away, bargained
down or locked out.
The
$4.5 billion auction of Nortel patents last year made a mockery of
the more modest valuations that the bankrupt company had put on its own
treasure trove of intellectual property, nurtured by our tax dollars.
Canadians always sell themselves short.
So the first lesson of the
London massacre: Ottawa must be vigilant about vetting foreign
investment and retaining jobs, but also mindful of valuing — and
anchoring — our homegrown intellectual property. Why underwrite our
companies if we willingly sell off our embedded brainpower to foreign
bidders who leave Canada cash-rich, patent poor and jobless?
If RIM is one day placed in
the shop window, are we ready for a fire sale of its technology? What if
Bombardier — which also builds locomotives — ever goes on the auction
block, patents aplenty?
Another lesson: When it comes
to the economy, empathy isn’t enough. Premier Dalton McGuinty adopted a
reflexively tepid tone from the start, expressing the vain hope that
both sides would come to their senses. Belatedly last week, he ratcheted
up the rhetoric by exhorting the plant’s owners to play fair.
But he never picked up the
phone to the employer. Nor did he reach out to Prime Minister Stephen
Harper to forge a non-partisan common front. When a company treats its
workers like dirt, a premier should leave no stone unturned.
McGuinty and Harper must
conduct a post-mortem. More Caterpillars are coming, and they will
metamorphose into a plague on our intellectual property if we don’t
start using our heads.
I’ve argued before that globalization can bring benefits, but only
if we’re smart enough to play defence as well as offence.
It’s too late to save the jobs
in London. Caterpillar has closed a plant and cashiered its workers, but
it has opened our eyes: it’s not just the jobs on the factory floor that
are lost, but the technology that buttresses them.
A locomotive factory is gone.
Now the tech train is leaving the station — with a free pass from our
politicians.
