Sunday, August 15, 2010


After over half a year of locking out their employees XL Beef in Moose Jaw Saskatchewan has announced that they plan to close their plant permanently. Molly has blogged before on this lockout and the subsequent boycott of XL Beef products which the Saskatchewan Federation of Labour (reluctantly and tardily) agreed to. The story of the closure is given below in a story from the Moose Jaw radio station CJME. Before getting into that, however, there is a lot of behind the scene details about this story that the reader should be aware of. Unions sources are suspicious that XL planned to close the plant all along. If they didn't it would seem like gross incompetence for them to dither about with temporary closures and lockouts as long as they did. If these plans were in the making for this long the actions of the company in carrying out the lockout were more than slightly deceitful and callous. Anyone who would like to say so to the parent company of XL Beef in Calgary can do so via the following contact info:
Nilsson Brothers Inc.
5101- 11th St. SE
Calgary, Alberta
T2H 1M7
phone 403-258-3233
fax 403-806-3849

Molly thinks that the union suspicions are quite accurate. To see why here are some forgotten facts about the plant. The plant originally opened as a joint private/public partnership in 1995 under the name of 'Western Canadian Beef'. At that time the Crown Investments of the Saskatchewan government owned 40% of the equity for God knows how much of the original investment. Management of the plant was turned over to the private partners whose "efficiency" ran it into the ground so that in 1998 the Crown had to take over the entire operation. The remaining 60% of the operation was purchased for $1.8 million with a government loan guarantee for $3 million for operating expenses.

Over the course of the next two years the provincial government also failed to turn a profit from the plant, and, despite the cyclical nature of the beef business, they were convinced they should unload the facility back to the private sector. In the year 2000 they sold the plant to XL Beef for a cost of $1.868 million plus, of course, a government financed loan at low interest rates of $2.368 million. Note this loan as it is important. The loan was to be paid off over 10 years.

Ten years arrived in 2010 !!! During that time the funds available from the loan were still active despite the fact that XL Beef had been in either shutdown or lockout for the better part of a year. The loan was "presumably" for operating expenses that never existed during the time of shutdown. While XL continued to pay back the government at a low interest rate they were able to apply the funds in more profitable ways all the while. When the loan was finally repaid XL had no reason to not go ahead and do what they intended all along ie close the plant. One has to wonder what uses the loan monies were put to over the years, uses remote from ensuring the profitability of the Moose Jaw plant. You gotta love the company accountants.

Let's examine the sale in 2000. The province bought the remained of the plant in 1998 for $1.8 million and sold it again in 2000 for $1.868 million. Seems about even ? Wrong ! Don't forget that the province already owned 40% of the plant in 1998. Selling both the 60% interest and the already owned 40% would have yielded a selling price of about $3 million to break even. Seems like a great deal for XL, and it was indeed.

Let's travel back to 2000 again. Labour activists in Canada are forever enraptured by the NDP and its supposed virtues. In 2000 the Saskatchewan government was NDP under Roy Romanow. In other words the beloved "left wing" NDP engineered a massive corporate giveaway that any conservative government would have drooled over. Here's the then Minister in charge of the sale John Nilson about the supposed benefits of selling the plant to XL:

"Our goals were to keep the company in business, to keep it in Moose Jaw and to prevent further financial loss for the Province"

It's 2010. The company is no longer in business in Moose Jaw. The province incurred a huge "paper loss" by selling the plant for far less than it was worth at the beginning. Given fluctuating interest rates the province may or may not have 'broken even' over the loan guarantees for the past decade. It depends on the fine details of the loan that are not open to public access.

What should have been done at the very beginning of this disaster ? Libertarian socialists as opposed to the statist socialists of the NDP would have seen the plant as a prime candidate for a "mixed cooperative". This would originally have been a tripartite partnership between the workers involved and their union, Saskatchewan beef producers and the provincial government. The monies needed would have come from exactly the same sources as XL drew upon (unless you believe the fairy tale that XL just so happened to have $1.8 million of 'spare cash' hanging around in their safe) ie loans. There should have been an agreement in place for the workers and the producers to gradually buy back the provincial equity. That sort of thing would have been the only way that it could be assured that the plant would remain to service Saskatchewan producers and consumers.

Is this alternative viable now ? Obviously not. There is a conservative provincial government in place in Regina. The Saskatchewan Federation of Labour was seriously reluctant to launch a simple boycott and did little to promote it after its announcement. The city of Moose Jaw is cash strapped and could hardly step in to replace the province. The union representing the workers the UFCW is far too weak in the province to carry out such a thing on its own. Saskatchewan beef producers are cynical and rightfully so. As a side bar to this story I can remember many years ago when an anarchist comrade from Saskatchewan who was also a cattleman attempted to organize a cooperative marketing group for Saskatchewan beef. Who were the main opponents who killed the idea by vigorous campaigning ? Full points if you guessed the NDP government.

All that Molly can say is that a few conclusions can be drawn from debacles such as this. One is that governments, including so-called 'left' governments are by their very nature treacherous, and that one should never depend on them and always keep them under close scrutiny. Another is that a cooperative alternative should always be first and foremost in examining what can be done about economic questions. The whole idea never occurred to anyone's mind in 2000, but if it had the story would have been quite different today.

Enough of the lecture. Here's the story from Moose Jaw.
XL Beef lays off 200, closes its doors permanently in Moose Jaw
Blames market conditions and lack of collective agreement with union

It's been a very unlucky Friday the 13th for employees of XL Beef in Moose Jaw -- almost 200 picketing workers have been permanently laid off.

A letter from XL Beef says the closure is for business and economic reasons, blaming market conditions and that they still don't have a new bargaining agreement with the union that represents employees at the plant.

"We've maintained all along that we're willing to negotiate, that the people go back to work and negotiate a fair and equitable contract," said Norm Neault, president of the United Food and Commercial Workers Union Local 1400.

"I don't think we've been the ones holding this up by stretch of the means. We haven't taken a strike vote and I guess the company, for the lack of a better word, gave up on that.

"They've got their interest in Alberta which is where their negotiating right now and I think that's on their horizon. I think Moose Jaw has been part of their plans for quite some time now."

Nilsson Bros, the parent company of XL Foods out of Alberta, have declined to comment.
The facility was initially shut down last spring due to market conditions. Employees were supposed to be back to work in the fall of 2009. Just days before they were to return, employees were locked out by XL Beef and a labour dispute began. Union members have been walking the picket line ever since.

The letter from XL Beef says the plant will be permanently closed within 90 days.

While the union tries to get all of the loose ends under control, Moose Jaw's mayor is voicing his disappointment in the decision -- saying this is terrible news for the city.

Mayor Glenn Hagel has been in touch with Nilsson Bros, the parent company of XL Foods in Alberta.

"They called to advise that they were making their decision," he said. "They assured me that there wasn't anything that the City of Moose Jaw did or didn't do that influenced their decision and indicated that their decision was final."

If there is anything that the employees can look forward to, it's the opening of the pork plant -- that facility opens in the new year.

With reporting by Chris Rasmussen, CHAB Moose Jaw.

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