Thursday, June 30, 2011

Obama Hints Boeing, Union Should Settle Their Differences

After weeks of silence on the NLRB-Boeing fight, President Barack Obama strongly hinted that Boeing Co. and its union in Washington state should settle their differences for the sake of jobs and corporate investment.

Boeing plans to build the 787 Dreamliner, shown above in Washington state in March, at a non-union plant.

When asked about it at his Wednesday press conference, Mr. Obama first repeated much of what his aides have been saying for weeks. “Essentially, the NLRB made a — a finding that Boeing had not followed the law” when deciding where to locate its second 787 Dreamliner production line, Mr. Obama said. “It’s an independent agency. It’s going before a judge. So I don’t want to get into the details of the case. I don’t know all the facts,” he added.

But he didn’t stop there.

Offering an insight into his view on corporate relocations and the related management-labor disputes, he said: “As a general proposition, companies need to have the freedom to relocate – they have to follow the law, but that’s part of our system. And if they’re choosing to relocate here in the United States, that’s a good thing. What I think defies common sense would be a notion that we would be shutting down a plant or laying off workers because labor and management can’t come to a sensible agreement.”

And he wrapped up his answer with a pitch for keeping jobs in the U.S. “My hope is that even as this thing is working its way through, everybody steps back for a second and says: Look, if jobs are being created here in the United States, let’s make sure that we’re encouraging that. And we can’t afford to have labor and management fighting all the time, at a time when we’re competing against Germany and China and other countries that want to sell goods all around the world. And obviously, the air — airplane industry is an area where we still have a huge advantage. I want to make sure that we keep it.”

Regarding Mr. Obama’s hint that he’d prefer to see a settlement between Boeing and the union, a White House official said, “Just as the White House had no role in the NLRB’s independent enforcement action, the president was not weighing in on this specific case.”

Quick recap: The NLRB filed a complaint in April alleging Boeing illegally shifted unionized aircraft production work from Washington state to a new, nonunion plant in South Carolina, siding with union members who said Boeing was punishing them for past strikes. NLRB Acting General Counsel Lafe Solomon wants Boeing to move the work back to Washington state. Boeing says the charges are groundless. And an NLRB administrative law judge began hearing the case June 14.

In his remarks Wednesday, Mr. Obama avoided picking sides, irritating some who think he should denounce the NLRB.

A spokesman for the conservative Workforce Fairness Institute said Mr. Obama “pled ignorance about the job-killing policies being pursued by his regulatory agencies, while claiming to be concerned with turning the economy around and creating jobs.”

Glenn Spencer, an executive director at the U.S. Chamber of Commerce, said, “The president couldn’t be more right that creating jobs ought to be the focus. Unfortunately, it is his nominee [Lafe Solomon] that has created the distraction by filing the unwarranted complaint against Boeing.’’

Spokesmen at Boeing and the International Association of Machinists said they are open to settling the case, but each blamed the other for offering settlement proposals that weren’t serious.

A Boeing spokesman said the company had nothing to add to its previous comments. The union’s settlement proposal to the company in May “went well beyond what we would consider reasonable as it sought various production guarantees, including a commitment by the company to place our next new program and its related supply chain work in Puget Sound” area of Washington, the spokesman said.

A spokeswoman for the International Association of Machinists union said, “The Machinists have been open and have encouraged that [a settlement] all along as well, but Boeing broke the law and needs to be bringing forth settlements. To date, they have been unwilling to bring any serious proposals forward or willing to enter into serious dialogue on it.”

Wednesday, June 15, 2011

CBC prepares to defend its finances

When Jim Flaherty's ministry released the federal budget in Ottawa last week, the Finance Minister was resolute in his belief that about $4-billion in savings from program spending should be easily found.

It was, Mr. Flaherty told reporters packed into a steamy room in Centre Block, kind of odd that something as massive as the federal government -"the largest enterprise in Canada," he called it -had not undergone a thorough spending review in several years. Private-sector companies have all done it, he said. Now Ottawa will do its part. The savings "shall be found," he said, in a tone that sounded a lot like a decree.

No one from the CBC gulped or gasped audibly. But they might have. If Reaper Jim is sharpening his scythe, could the public broadcaster possibly avoid a swipe?

It is in this environment that the CBC on Wednesday released a study on the economic impacts of the CBC (and its French-language counterpart, Radio-Canada). In what will not come as a shock to anyone, the study the CBC commissioned found that the CBC has a significant positive impact on the Canadian economy.

Deloitte & Touche, the study's authors, estimate that the CBC contributed $3.7-billion in "gross value added" to the Canadian economy in 2010, based on expenses of $1.7-billion, of which $1.1-billion was direct government funding. The good news goes even further: the study estimates that the CBC contributes an additional "net value added" of $1.3-billion, a figure at which it arrives by estimating the economic benefits of spending the CBC's $1.1-billion on alternative government measures. Ten per cent on health, 30% on social services, 0.2% on gazebos in Muskoka, that kind of thing.

The general conclusions are fairly obvious -not only does every dollar invested in the CBC generate significant positive dollars worth of economic activity, but spending it elsewhere would have less of an impact.

As Hubert T. Lacroix, the president and CEO of the CBC, said in a conference call with reporters yesterday, he's often asked about that $1.1-billion figure wherever he goes.

These takeaways, though, come with a couple of boulders of salt. First is the very nature of a study like this. The economic impacts are essentially an elaborate piece of guesswork that measures both the direct impact of investment and the indirect impact "across CBC's supply chain and more widely as money continues to flow through the economy." So, the authors take a dollar spent in one area, add something called a Type II output multiplier, and end up with a larger number. A dollar spent on television programming in British Columbia, for example, has a multiplier of 2.3. (The authors use Statistics Canada multipliers; they aren't plucked from the air.)

The projected impacts are just that, in other words: projections. It's not unexpected that they would be rather rosy, especially when it is the CBC that paid for the study. (Mr. Lacroix said the cost of the study is confidential.) When Quebec City commissioned a study last year into the economic impact of a government-funded arena, the report (also from Deloitte) found that such a stadium would be profitable even in the absence of an NHL franchise. It also assumed, rather optimistically, that the "surrounding region" of Quebec City, from which it would draw attendees to Disney on Ice and the like, includes Charlottetown and Moncton.

The rather large assumption in the CBC study is the two scenarios it assesses: one with the current funding model, and one in which the CBC is solely financed by commerical revenues. This anti-CBC, the study suggests, "makes commercially motivated decisions regarding its content, target audience, regional presence," and other factors. In that world, it would abandon businesses that are not commericially viable, and it would compete with private broadcasters in areas where it does not currently do so. If it, say, dumped the CBC-produced Republic of Doyle, filmed in St. John's, and replaced it with NCIS: Los Angeles, it's easy to see how the latter scenario wouldn't be as good for the Canadian economy.

But the "counterfactual" CBC that the study presents is simply a straw man. The CBC may not be beloved within the Harper government, and a chunk of the Conservative base will rail against it at the first opportunity, but only those few Canadians who believe the "state broadcaster" is run by Maoists truly want to see its subsidy eliminated. What the CBC might have to confront is not a world without public funding, but with less of it. Is it possible that a Tory spending review will determine an easy way to trim $100-million is to drop the CBC's direct funding to $1-billion? Does Don Cherry look like he's wearing drapes?

The public broadcaster conducts a perpetually tricky dance. When it announces a new show aimed at a broad audience and commercial advertisers, critics sniff that it's drifting from its public-service mandate. Give us interpretive dance, not hockey players! But if it directs too much programming into the nether regions of public interest, it will make less money and require more from Ottawa.

But $1.1-billion is a lot of money to protect. The CBC will have to erect some battlements. This study reads like a first shovel in the ground.