I awoke on a quiet night,
I never heard a sound
The marauders raided in the dark
And brought death to my hometown
They brought death to my hometown
They destroyed our families, factories
And they took our homes…
--Bruce Springsteen, Death to My Hometown
General Motors dropped a corporate bombshell on Oshawa, ON on Nov. 26, 2018, announcing that the automaker will shutter its production facility there at the end of 2019, throwing approximately 2,500 well paid auto workers onto the unemployment line.
Without a doubt, the economic ripple effect throughout the Oshawa community and beyond will be felt far and wide, with many families facing real hardship.
The automaker is shifting production away from traditional cars to electric and autonomous vehicles and will no longer produce the vehicles currently manufactured at the Oshawa plant. And GM has made it clear that it is unwilling to refit the Oshawa plant so that it could produce the vehicles of the future.
The rapid pace of technological change in the automotive sector is not the only reason that the autoworkers in Oshawa are losing their jobs and way of life. As General Motors embraces innovation, it is also relying on globalization to enhance its profitability. Indeed, the company is ramping up production in Mexico, a low wage jurisdiction.
“The GM decision to close the facility is completely against all the contribution and sacrifice of their workers have made,” Hassan Yussuff, President of the Canadian Labour Congress (CLC), said in a telephone interview. And the labour leader believes that the GM workers at Oshawa are perfectly capable of building the electric cars of the future.
“This is not a lack of skills or abilities on behalf of the workers,” Yussuf said, noting that Chrysler is about to start manufacturing a hybrid car in their Windsor facility.
“It truly is a slap in the face,” he said of the GM decision to pull out of Oshawa.
Oshawa is not the only Ontario community to be affected by a rapidly changing economy. For example, my hometown of Brockville, located in eastern Ontario city on the banks of the mighty St. Lawrence River between Toronto and Montreal, is suffering heavy losses as the forces of globalization and innovation decimate Ontario’s manufacturing sector.
Once a prosperous small working class city where manufacturing facilities provided thousands of good paying jobs, Brockville has suffered over the last two decades as globalization has taken hold.
For instance, Black & Decker launched a manufacturing facility in Brockville during the 1960s, and by the early 1980s, the plant employed more than 1,000 people. However, over the years, the company, which makes tools, workbenches and lawnmowers, gradually shifted Brockville’s manufacturing jobs to low-wage jurisdictions.
By 1998, Black & Decker ceased manufacturing operations in the city, transforming the Brockville facility into a mere distribution hub. And in 2011, the company announced that an additional 42 full time jobs would be slashed at the distribution centre, leaving just 20 employees in Brockville.
In the spring of 2017, the Brockville community took a huge hit when Procter & Gamble announced that it will shutter the city’s biggest industrial facility and employer. When the P&G plant, as it is commonly referred to in Brockville, closes in late 2020, 500 people will lose good paying jobs.
The plant’s closure will undoubtedly have a significant ripple effect throughout the Brockville area, hurting local businesses that currently service the plant and sell goods and services to P&G workers and their families. The financial hardship that the loss of the plant will have on the city of just 22,000 people should not be underestimated.
When Proctor & Gamble closes its Brockville, ON facility in 2020, 500 workers will lose their jobs.
The sad reality is that Brockville has lost most of its manufacturing facilities. Should workers in the hard hit community even entertain the hope that good paying jobs will come back to the city? “I think there is always hope. You can never give up hope,” Yussuff answered.
“The reality is that we can still create good employment for all kinds of people,” the labour leader said, offering a glimmer of hope to those who need it most.
“Technological advancement and change cannot be stopped. It’s going to continue, in my view. But I think the reality is that government has to consistently labour at the effort on how we get the public policy right to ensure that our citizens do not fall victim to the changes that are happening.”
According to the CLC president, public policy must play an important role in the economy if places like Brockville are to have manufacturing jobs. “I think for too often the governments have let the economy operate without any kind of levers on it.” And he contends that this lack of government engagement has contributed to “the devastation in places like Brockville” and elsewhere.
“I used to service Brockville as a union rep, at one time, so I know pretty well all the manufacturing jobs that used to located there,” Yussuff said. “At one time, they went to Mexico and at another time they went to other places around the globe,” he said of the migration of manufacturing jobs from Brockville to low jurisdictions outside of Canada.
“Most of those products are still being produced, except they are being produced someplace else,” he observed. “I think there is a huge resentment."
According to the Mowat Centre, an independent public policy think tank at the Munk School of Global Affairs and Public Policy at the University of Toronto, Ontario lost 300,000 manufacturing jobs between 2004 and 2014. And the process of de-industrialization isn’t just an Ontario phenomenon; it is playing out across the industrialized world.
“Manufacturing jobs have been disappearing in just about every developed economy for the past two decades,” states the think tank’s website. The combination of automation and the shifting of production to low wage countries are contributing to the rapid decline of manufacturing in the industrialized world.
Technology and special skills
“Technology means the application of scientific or other organized knowledge to practical tasks,” the late great economist, thinker, and diplomat John Kenneth Galbraith wrote in a pre-computer age essay entitled The Imperatives of Technology. “Its most important consequence, at least for the purposes of economics, is in forcing the division and subdivision of any such task into its component parts.”
Technological innovation drives change, but it is also driven by change. “In examining the intricate complex of economic change, technology, having an initiative of its own, is the logical point at which to break in,” writes Galbraith. “But technology not only causes change, it is a response to change.”
For example, Galbraith notes that technology forces specialization, but is itself, the result of specialization. And while technology requires organization, “it is also the result of organization.”
According to Galbraith, “technology requires specialized manpower.” And he explains in The Imperatives of Technology that “organized knowledge can be brought to bear, not surprisingly, only by those who possess it.”
In addition, Galbraith understood that the planning of an industrial process also requires “a comparatively high level of specialized talent.” And he writes that the ability “to foresee the future in all its dimensions and to design the appropriate action does not necessarily require high scientific qualification. However, he maintains that “it does require ability to organize and employ information or capacity to react intuitively to relevant experience.”
Technology disrupts the workforce
According to a detailed 2018 report from the World Bank, “technology is disrupting the demand for three types of skills in the workplace.” The report, entitled The Changing Nature of Work, notes that the first issue is “a rising demand for workers with non-routine cognitive and socio-behavioral skills.”
The second issue identified by the World Bank is the decline of “demand for routine job-specific skills.” And the thirdly, the report notes that “payoffs to combinations of different skill types appear to be increasing.” And these changes in the nature of work manifest themselves “through new jobs replacing old jobs,” as well as “through the changing skills profile of existing jobs.”
The World Bank points out that “machines replace workers most easily when it comes to routine tasks” that can be readily codified, such as payroll processing and bookkeeping. And when it comes to physical labour, robots are replacing humans in welding, assembling goods, and driving forklifts.
However, non-routine tasks are much more difficult to automate. For instance, tasks that involve analytical, interpersonal, or manual dexterity skills are still dominated by humans. “Designing, producing art, conducting research, managing teams, nursing, and cleaning have proven to be hard tasks to automate,” the World Bank reports.
In addition, the World Bank acknowledges that people in advanced economies “are anxious about the sweeping impact of technology on employment.” And the report states that many “hold a view that rising inequality, compounded by the advent of the gig economy—in which organizations contract with independent workers for short-term engagements—is encouraging a race to the bottom in working conditions.”
However, the World Bank optimistically concludes that, on balance, innovation tends to create new jobs and opportunities.
To take advantage of innovation, the World Bank recommends “investing in human capital,” making it a priority so as to “make the most of this evolving economic opportunity.”
To succeed in the new economy, workers will need specific skills. “Three types of skills are increasingly important in labour markets: advanced cognitive skills such as complex problem-solving, socio-behavioral skills such as teamwork, and skill combinations that are predictive of adaptability such as reasoning and self-efficacy.”