DOCUMENT RESUME ED 067 501 VT 016 721 AUTHOR Eleen, John W.; Bernardine, Ashley G. TITLE Shutdown: The Impact of Plant Shutdown, Extensive 4Employment Terminations and Layoffs on the Workers and the Community. INSTITUTION Ontario Federation of Labour, Toronto. PUB DATE Aug 71 NOTE 139p.. EDRS PRICE MF-$0.65 HC-$6.58 DESCRIPTORS *Community Problems; *Labor Economics; Labor Legislation; *Labor Problems; Management; *Manpower Utilization; Manufacturing Industry; Strikes; *Unemployed; Unemployment IDENTIFIERS Canada; *Plant Shutdown ABSTRACT . This report discusses the social, economic, and human implications of plant shutdowns. As part of the data gathering process, personal interviews were held with civic leaders, company representatives, union leaders, and workers in order to gain insight into the causes and effect of the closing of plants..Sections of the report cover topics such as:(1) Four Major Industries: An Overview, (2) Reactions From Four Industrial Communities, (3) The Psychological Effect of Plant Shutdown and Unemployment On The Workers,(10 Impact of Industry On the Community and On Employment, (5) The Contribution of Collective Bargaining To Adjustment To Technological Change and Plant Shutdown, (6) The Guaranteed Annual Income, and (7) Legislation On Plant Shutdown, Termination of Employment and Layoff In Ontario, Quebec, and The Federal Jurisdiction.. Also included are 18 specific proposals for dealing with the problems associated with plant shutdowns.. (JS) Ontario Federation of Labour, CLC David B. Archer, President Terry Meagher, Secretary-Treasurer Research Department August, 1971 SHUTDOWN: The Impact of Plant Shutdown, Extensive Employment Terminations and Layoffs on the Workers and the Community Prepared by John W. Eleen and Ashley G. Bernardine 4* 4PS ;" , .obworINT.- i , -;-14,-." r% " -"" "A t . U.S. DEPARTMENT OF HEALTH. EDUCATION & WELFARE OFFICE OF EDUCATION THIS DOCUMENT HAS BEEN REPRO DUCED EXACTLY At, RECEIVED FRDM THE PERSON OR ORGANIZATION ORIG INATING IT. POINTS OF VIEW OR OPIN- 'IONS STATED DO NOT NECESSARILY REPRESENT OFFICIAL OFFICE OF EDU CATIDN POSITION OR POLICY. Ontario Federation of Labour, CLC David B. Archer, President Terry Meagher, Secretary-Treasurer Research Department August, 1971 SHUTDOWN:The Impact of Plot Shutdown, Exteniive Employment Terminations and Layoffs on the Workers and the Community Prepared by John W. Eleen and Ashley G. Bernardine Acknowledgement The Research Department wishes to thank the persons who answered our questionnaires and those who gave of their time to be interviewed. We are grateful to Ashley Bernardine of York University who did the field work on this project. Thanks also go to Mr. D. C. McNeill of the Manpower Services Division awl other officials of the Ontario Department of Labour who assisted us in various ways. Grateful' appreciation is expressed to the labour research per- sonnel of the different unions for their assistance, cooperation and advice. Especially helpful were the members of the sub- committee convened for the project: Giles Endicott, Carrol Coburn, Ed Seymour, Hank Skinner, George Specht, and Emile Vallee. Our thanks are also extended for their advice and many helpful suggestions to the members of the OFL Executive, and especially the two table officers Dave Archer and Terry Meagher who con- ceived the project and guided it to its successful conclusion. Finally, we are indebted to thedepartmentsecretary, Shelley Acheson, who in addition to her other duties, collated the returns from the questionnaires, performed a trojan task of deciphering hand-written notes, checked footnotes and bibliography and fussed over syntax. J. W. E. Photo on the cover is of the Eaton Automotive plant, now closed reproduced by the kind permission of the London Free Press. iii Sr 3 Foreword For the past year, sometimes several times a week, the papers have reported yet another plant that had either closed, drastically reduced staff, or had experienced extensive layoffs. To determine the extent of this disruption to the economy, its effect on the workers and the community involved, and to Lot, able to make realistic proposals to effect a solution to the problem, the OFL executive, through its officers, have instructed the Research Department to conduct a study on plant shutdowns in Ontario. The terms-of-reference for the project were "that the OFL undertake to do a study of plant shutdown, plant reduction, ter- mination of employment and extensive layoff situations in Ontario, their sources and causes, their contribution to the overall un- employment, what effect they have on the economy, ascertain what legislative protection exists, and draft proposals for solutions to the problem through legislation, contractual safeguards and other means." A meeting of labour researchers was convened to discuss the project,,,to determine what documentation was available and to make proposals to guide the work. Ashley Bernardine, a law student who has had some economics background, was hired to do the field work. A questionnaire was prepared and sent out to all the unions and to companies that had terminations or layoffs. Personal interviews were held with civic leaders, company repre- sentatives, union leaders and workers in a number of areas. The recently enacted notice of termination legislation in Ontario and that of other jurisdictions and other countries was analyzed. iv Several labour researchers contributed material for the project, and the Manpower Services Division of the Department of Labour supplied some of the data on plant shutdowns. Discussions were held on our proposals. Halfway through the project Mr. Bernardine was offered an opportunity to attend a law seminar at the Hague. We released him from his commitment and our Research Director, John Eleen, completed the plant shutdown study and wrote the report. The Federation is deeply concerned, with the hardship and suffering plant shutdowns cause the workers and the communities. We are also conscious of the dangers these displacements can be to the economy of the province and the well-being of its people. We believe the conclusions and proposals contained in this study are realistic and if acted upon, would do much to safeguard and advance the welfare of the workers, the community and the province. We will work towards their implementation. David B. Archer, President Terry Meagher, Secretary-Treasurer r. TABLE OF CONTENTS Page ACKNOWLEDGEMENT iii FOREWORD iv Chapter I INTRODUCTION 1 Chapter II THE SURVEY 3 Chapter III THE ECONOMIC SITUATION 5 Chapter IV FOUR MAJOR INDUSTRIES: AN OVERVIEW 15 The Textile Industry 15 The Electrical Industry 19 The Automobile Industry 22 The Steel and Mining Industry 25 Chapter V REACTIONS FROM FOUR INDUSTRIAL COMMUNITIES: Brantford, Kingston, Cornwall and London 29 Chapter VI THE ROLE OF THE BRANCH PLANT IN THE ONTARIO ECONOMY 31 Chapter VIITHE PSYCHOLOGICAL EFFECT OF PLANT SHUTDOWN AND UNEMPLOYMENT ON THE WORKERS 41 Chapter VIII IMPACT OF INDUSTRY ON THE COMMUNITY AND ON EMPLOYMENT 47 Chapter IX THE CONTRIBUTION OF COLLECTIVE BARGAINING TO ADJUSTMENT TO TECHNOLOGICAL CHANGE AND PLANT SHUTDOWN 51 Chapter X THE GUARANTEED ANNUAL INCOME 77 Chapter XI LEGISLATION ON PLANT SHUTDOWN, TERMINATION OF EMPLOYMENT AND LAYOFF IN ONTARIO, QUEBEC AND THE FEDERAL JURISDICTION: 81 Ontario 81 Quebec 83 Federal 85 Chapter XII OBSERVATION, CONCLUSIONS AND RECOMMENDATIONS 89 Appendix 1 SURVEY QUESTIONNAIRE 97 Appendix 2 INTERVIEWS: FOUR INDUSTRIAL COMMUNITIES: 98 Brantford Sterling Action & Keys 99 Westinghouse 105 Kingston Frontenac Floor & Wall Tile 109 Cornwall Chemcell 113 Edo Corpn. 114 Courtaulds (Canada) Ltd 114 London Eaton Automotive 118 Kelvinator 119 Appendix 3 ADVANCE NOTICE AND SEVERANCE PAY LEGISLATION IN EUROPE 121 Appendix 4 TECHNOLOGICAL CHANGE AND JOB GUARANTEE PROVISIONS 133 BIBLIOGRAPHY 134 Chapter 1 Introduction In the one year period under review (June 1970 - June 1971) Ontario has had more plant shutdowns and greater reduction of employment than in any one decade since the financial crash of 1929. Our survey, based on a widely distributedquestionnaire (Appendix I) and conducted by personal interviews by a field worker, showed that the situation was more severe than press columns disclosed, and much more serious than the initial reports reaching our office from all parts of the province indicated. The closing of Kelvinator in London in 1969, the dramati clos- ing of the Dunlop plant in East Toronto in the spring of 1970, and the phasing out of the G.E. tube plant in West Toronto that same year, while receiving headlines publicity, were only the harbingers of a cutback in operations that have not abated to this day. The only difference between the dramatic excitement and the protest-laden activity of the closing of the three plants mentioned, and the reaction to the many subsequent dislocations, was that these latter, though no less severe, after plant closing was no longer news, were relegated "appropriately", as some wag unkindly remarked, to the obituary pages in the daily newspaper. What an outcry, what anguish, what indignation would be generated amongst the public were these workers who were arbitrarily and callously dismissed to be exiled to some barren wasteland with no means of support. In view of the economic climate in this country in the past year, and the high rate of unemployment in general (8.0% in 1 January), many of these Workers have, in fact, been banished to the. industrial scrap heap. Our survey of plants, only those that have had 25 or more workers terminated or laid off during a one year period, showed that 138 companies were affected. In total 16,224 workers either lost their jobs or viere laid off. Our observation was that many of those officially "laid off" were in fact terminated after a 13 week period. Over sixteen thousand workers lost their means of support and that figure does not include thousands of workers who lost their jobs in plants that had less than 25 terminations or layoffs each. Apart from the tremendous hardship imposed on the workers directly involved, there is no doubt that the plant shutdowns have wide ranging implications to the province as a whole.