Canadians Working ?

Thu, 23 Oct 2008 12:28:00 -0400

I had a conversation with a friend recently on the way back form a morning of fishing.

Basically he was upset over so many of our plants closing here in South West Ontario and the jobs moving to other countries. See his brother is about to get laid off and the plant he works at is shutting down and the jobs moving to Mexico. This really pissed him off and frankly it pisses me off.

Why is it that work , wither it be making cars or doing technical support for your local internet provider, are moving out of country? And why is it that Canadian companies are doing this and sending the work of shore? Well it's about one thing and one thing only - MONEY. It's cheaper to hire a worker in India or Mexico or the Philippines than to hire a Canadian in Canada.

But I want us to really examine this for a minute. Is it really cheaper to do this? I think in the end its not. Its bad profit. Bad profit is when a company makes money by short changing their customers , cell phone or banking fees anyone, and charging them for everything they can. Like at a restaurant when you want to substitute a salad for fries - that'll cost you an extra buck fifty. Bad profit makes people mad.

The bad profit thats being made when a company pulls out of Canada and moves to another country is that the community that they have been apart of and the economy that they help to support declines. If the economy declines then people don't want to buy. If people don't want to buy then the products that company sells don't get bought. If the product doesn't get bought then the company fails. ETC ETC ETCl.

Ok, Ok , i can hear it now as i did in another conversation I had recently with another fishing buddy. "It's the damn unions making it to expensive. We can't afford thoise kind of wages any more."

Now read the following for an article from the S an Diego Daily Tribune by Jai Ghorpade and you can see the true cost to a company when they don't pay a suitable wage.

" Specifically, it is essential to take into account cost of labor turnover and loss of productivity. In Wal-Mart's case, the facts are as follows: The company employs over 1 million workers. Its annual turnover in employees was estimated to be 70 percent in 1999. The company claimed that it was down to 45 percent in 2002.

Given this record, in order to find out Wal-Mart's true cost of labor, it is essential to calculate what it spends in servicing turnover, and also the cost of loss of productivity. Specifically, it is essential to calculate: separation costs (exit interviews, administrative costs, separation pay), replacement costs (advertising, interviewing, testing, travel/moving, processing new employees, medical examinations, staff time), training costs and reduced productivity.

One estimate given by Wal-Mart sources places its cost just to test, interview and train at $2,500 per new hire. If that is the case, and setting its annual turnover at 50 percent, Wal-Mart is spending about $1 billon on simply servicing some aspects of its turnover. When that is added to Wal-Mart's wage rates, its total labor cost becomes less appealing. And this estimate does include loss of productivity that can be attributed to a constantly changing work force.

A good indication of the dynamics of the interplay between a company's employment policy and its actual cost structure can be had by comparing two companies with widely divergent attitudes toward their employees. Business Week magazine recently assembled some data that compares Sam's Club, Wal-Mart's warehouse unit, with Costco, a company that says it is committed to an employment policy of high wages and good treatment of employees.

Sam's Club, following its parent company's model, paid lower hourly wages ($11.52 vs. $15.97), and covered fewer employees under its health plans (47 percent vs. 82 percent). But there were glaring differences in the operating results. Employee turnover at Sam's Club was higher than at Costco (21 percent vs. 6 percent), as were its labor and overhead costs (17 percent vs. 9.8 percent). With regard to financial returns, Sam's Club employees sold less merchandise per square foot ($516 vs. $795), and earned lower profits per employee ($11,039 vs. $13,647)."

So if we lower the rate we pay skilled employees my first question is is what effect does that have on the overall health of the economy? My second is what is the motivation for productivity - Canadian manufacturing has the highest productivity of any in the G7 and specifically Unionized autoworkers the highest of any in that field - ?

Moving On.

Bell Canada has a great internet service - except for their technical support. Why do I dislike their technical support? Because it's in India. Why is that such a big deal ? Because a Canadian company such as Bell should be using Canadian workers for a product they sell to Canadians.

But is that the sound of an isolationist I here you say? Well for somethings I am an isolationist. When it comes to Canada and its workers and its resources we should be taking care of Canadians first.

I believe strongly that Canadians can compete with any country in the world, but that's kinda hard to do when the Canadian companies won't hire Canadians to compete, or conversely they hire Canadians but pay them a low wage in order to compete with oversees workforces - also shooting us in the foot when it comes to retention and productivity - oh and the economy.

Tell me friends what should we do? Send me your comments and thoughts

Big Mouth | Sean Quigley

Canadians Working ?