Re the current auto crisis

The ingredients in the current crisis in Canadian auto manufacturing are well known. The chaos and confusion in banking and credit plus widespread job losses have reduced car sales to the point where the high-cost car makers are overwhelmed and failing. Management and administrative salaries, assembly workers' wages and benefits, underfunded pension and benefits liabilities, and huge losses in pension fund investments all combine to produce real trouble. The industry is like an overloaded and not very airworthy jetliner. Wallowing along, now ice is building up on the wings and it is going down fast.

Unless they get that ice off, a crash is coming in short order. Only swift and massive cuts in costs, and more thrust from higher sales of cars will get that ice off. If these two things are not done, there will soon be nothing to save. Ownership, management, unions, workers and others with a stake in the industry, including the government, have to come together and deal with this in a cooperative way, and they don't have the luxury of time.

If they can stave off this 'controlled flight into terrain', then these stakeholders will have the opportunity to address the airworthiness of the companies, which is the bigger threat. They must do that together, too. They cannot resolve these deep-rooted and serious weaknesses by fighting. They have to cooperate, and be ready to make big sacrifices all around.

The fact that there seems to be no sign of this happening is not encouraging. For inspiration, let them look to a Japanese model. Not Honda or Toyota, but Admiral Nagumo, who commanded the immense Japanese navy fleet at the battle of Midway. Nagumo, in the stress and confusion of battle, dithered about which type of planes to launch. The American admiral resolved his confusion by sinking him.

Last call for cooperation and maturity! Any takers? We'll see.

Need for an Industrial Tribunal

The following is a comment posted today at the Globe and Mail website.

What is alarming to me is that the viability of the major industrial activity in Ontario, directly and indirectly affecting the livelihood of many thousands of people for many years to come is, seemingly, being decided by a series of jousts between professional adversaries from labour and management, with predictable results of posturing, brinkmanship and generally testosterone-soaked and futile behavior. This is two rams locking horns on the edge of a cliff, except that the futures of many thousands of others are at stake if they go over the edge, which they seem likely to do.

Where is serious and impartial discussion about how to survive a temporary 40 to 50 per cent drop in sales? Where is a strategy to keep Big 3 and parts supplier jobs in Canada, based on real sacrifices by all stakeholders? Where is working together for the good of the industry? Where is maturity and social responsibility?

These enormous stresses and strains are revealing the utter failure of current political, business and labour leadership to act in the public interest. The public senses this, and is fed up. The people of the entire province of Ontario have a stake in intelligent and sound measures to save this industry. Who speaks and acts for them? Public officials, many of whose election campaigns are funded by business and labour organizations, are silent. Very silent.

There should be an Industrial Tribunal empowered to represent the public interest in these industrial wars, and to impose, if need be, settlements that serve the common good. We need this now.

Principles about religion, science and society

I posted this comment in the Globe and Mail online edition, today as a comment on the opinion piece, The Search for Shared Ethics, by Margaret Somerville:

Thanks to the Globe and Mail for printing this stimulating article. As a contribution to this discussion I offer the following principles.

Just as there is valid science and junk science, there is valid religion and there is junk religion. The standard for discriminating between them is the same - it is what is in accord with reason. Whatever is presented as religion that is in conflict with reason is mere superstition, and should be discarded. Likewise, whatever is presented as scientific truth should be susceptible of investigation and proof.

Science provides a precise description of a discrete part of reality, whereas religion provides a general description of the whole of reality, including the reality of the human being. Both perspectives are useful and necessary. In particular, true religion has always been the source of sound values which enable society to function. I believe this is what Ms Somerville is saying. A fair-minded person can accept this.

If in the past religion had not called ignorance knowledge, thoughtful people would not have called religion ignorance.
Science mobilizes the intellectual faculty; religion mobilizes the human capacity to love and to serve. A society can no more function without love and service than it can without science.
A key part of the plight of our time is the perception that science and religion are fundamentally opposed. They are not. Both are ways of understanding reality.
As a case in point, true religion, as I understand it, holds that the human being is the supreme value in creation, because any human being is capable of reflecting all of the attributes of God, whereas any object or idea can only reflect, at best, some of these. It is therefore wrong to sacrifice a person for the sake of any ideal, no matter how cherished because no thing or idea is equal in value to any human being. Now that's a universal value which is sorely needed in today's world, and which reason can accept.

  * Posted 27/01/09 at 9:51 AM EST

An Inaugural That Augurs Well

There has been so much that is good said about the accession to the presidency of Barack H. Obama – punctuated by some myopic grousing to make the good things stand out even better. I loved seeing the woman on CNN yesterday who could not restrain her tears of joy. She had a handsome, open, golden brown face, and was talking about what this day meant to her little boy. Now, she said, he does not have to aim to be a basketball star or a rap star to succeed. 

Barack Obama delivered the best speech I have ever heard, and I mark hard. It was a matchless combination of situational awareness, poetry and appropriateness. I was utterly impressed.

And it was heart-warming to see not hundreds, or thousands or hundreds of thousands, but, by some estimates, millions of people who came out in the bitter cold and stood for hours for the inauguration, and smiled about it. I saw a seemingly infinite number of faces of every shade and shape - all smiling. No one can fail to be moved by so much happiness. This has to be a very good thing. And if I might be permitted to say it, it gives me particular pleasure to see so many people of colour happy. It is a sight that is all too rare. But happiness looks great on them.

I heard Charlayne Hunter-Gault, a heroine of the integration movement, speak well and insightfully on PBS: ‘Barack Obama had a father from Kenya, and a white mother whom I've just written about, who helped make the man the man he is. And what she emphasized was values.

And if we want to understand Barack Obama and if we want to understand the kinds of things that we need to be passing on to our young people no matter whether they're black or white, it's those values that you see coming out in Obama all the time.

Everybody talks about his confidence and so forth. Well, this was a kid who was a recalcitrant teenager, but his mother, who was poor -- although she was educated -- nevertheless, when he was goofing off in school, she said, "You are going to get up every morning at 4:30, and we're going to go over your lessons before I go to work." And she said, "You may not be enjoying this, but I'm not either, buster ."

I am very grateful to Ms Hunter-Gault. She helped me to realize what I love about this inauguration. It is not only that Mr. Obama is a man of mixed race, although that is partly it, because that means so much to so many Americans. It is that he is so excellent – a wonderful even temperament, excellent mind, highly articulate, patient, a peacemaker. The list could go on and on of the excellences of this man. 

The day before the Inauguration, Mr. Obama was giving a day of service – pitching in – as he called it - to observe Dr. Martin Luther King Jr. Day. He was painting a wall at a drop-in centre for youth. Later that day, he arrived at the place where his wife, Michelle, was packing gift boxes for soldiers serving overseas. The crowd there asked him to speak. He took the microphone. “I can’t say anything much just now, he said, smiling. ‘I have to save all my best lines for tomorrow”. 

Some people off-camera called out, “We love you, Barack.”. He paused in what he was going to say, and responded to them. “I love you back”, said the President-elect of the United States. 

Don’t you just love this guy?

Recourse to Principles to Resolve Economic Problems

Recourse to Principles to Resolve Economic Problems

The primary challenge is to raise the context to the level of principle, as distinct from pure pragmatism.

In seeking to formulate advice for the Government in the preparation of its next budget, a key consideration is the identification of basic principles on which this and future budgets should be based. In scanning commentaries and position papers relating to the economy it is striking to observe that the most convincing and compelling points are those which rest upon not only a keen analysis of the problem, but a clear identification of the principles on which the recommendation is based. This is not accidental. In any general crisis, such as the current plight of the economy, the supreme need is to mobilize the willing cooperation of those who are affected, and the most powerful way this can be accomplished is to explain the basis of actions with recourse to principles. However this must be done in a meaningful and clear way so as not to arouse suspicion. For the public is very sensitive, through long and bitter experience, to attempts to manipulate its opinion by hollowly adducing great principles of public good while dissembling other motives.

Polity. Among the most fundamental principles is that of polity – which for these purposes means the recognition of the oneness and wholeness of the nation, and that any government measures should promote the interests of the nation as a whole, rather than those of a particular sub-group. The principle of polity expresses the principle of justice. It upholds that something which is not in the best interests of the whole cannot in the long run be in the best interests of any component part. The basis of all power struggles is the quest for preference and precedence. Documents bearing the imprimatur of the national government must be free of the odour of favoritism and provincialism, otherwise they will not receive general support among the population. The budget should announce in its preamble that its intention is to uphold the general interests of the people of Canada above any particular regional or factional advantage, that this in practice involves compromise, and that any proposal has been carefully evaluated as to its potential overall effect on the country.

Assistance, rights and responsibilities. Industries, sectors and populations have the right to receive assistance from the national treasury when this is needed. However, this right is accompanied and balanced by responsibilities. It would be unconscionable, for example, to propose to give, or for that matter to accept money derived from the exertions of ordinary taxpayers, most of whom are of modest means, without a firm commitment from the recipients that these funds will be used in the general interest. For example, if the automobile sector receives government assistance, it should be on the conditions that jobs will not continue to be exported to other countries, and that management and labour will ensure the long-term viability of the industry by whatever means are within their power - including the agreement to adopt without delay a compensation system whereby salaries wages and benefits of people at all levels of management and labour, including retirement benefits, will henceforth be paid with a fixed portion (say 60 per cent), and the remainder paid as a conditional portion if and when the company is profitable.

My Favourite Moment of the Election Campaign

The recent Canadian election campaign contained a fine moment, which I want to share with anyone who may have missed it. It occurred in the French-language leaders debate, and came in response to a question from a man I assume is simply an ordinary Quebecker. He asked the leaders to each say something positive about the person sitting to his or her left.

Whereupon, each of the candidates in turn, although girded for confrontation and battle, began to shed their armor and say something in praise of the leader of another party. For a few brief minutes, the atmosphere around the table changed completely as they began to speak in praise of each other. Their expressions changed - there were smiles, a bit shy, as they heard themselves recognized for some good quality they possess. And as each one spoke, I began to see it, too. Here were five people who are really very excellent and very able. I saw, through the eyes of each of them, something noble and valuable that they acknowledged in the other. I thought, 'how fortunate we are that people of this calibre and ability want to serve our country'. I became proud of them. It is true - each of those people - Gilles Duceppe, Stephane Dion, Stephen Harper, Jack Layton, and Elizabeth May - are very fine people, deeply committed to the service of others.

Suddenly I had a glimpse of what it would be like to have them working together, drawing on each others' strengths, supporting each other and influencing each other. They would have differing priorities and points of view, certainly, because they are each individuals. But if they could see themselves as all on the same team, what a team that would be. Just to look at the expressions on their faces as they were praised and valued was an unforgettable experience. I felt as though I was able, for only a brief glimpse, to contemplate something of the reality of each of these people - their nobility, their capacities, and their hearts. I felt something for each of them which I did not expect to feel. I don't know what to call it - but it is what you feel when you see something you love in some other person. And each of these leaders had given me this gift by saying something they admired in one of the others. I was moved, and I was taken completely by surprise.

The moment passed, and they then had to resume their arguments and combat. But did I detect a slight softening in their words, a greater focus on values and visions that they could all share? I think I might have. Kindness is a powerful force in human relations. It is disarming.

And I realized that the environment in which these people have to work day in and day out is toxic to them. It literally makes them ill. Human beings are not really designed to live in an acid-bath of disparagement and criticism. Our politicians are required to function in continuous conflict, and are bombarded with criticism - much of it personal and very hurtful. They exist in an atmosphere that tends to highlight their vulnerabilities and shortcomings, which is in itself a frightening thing for any person, no matter how courageous. No wonder they feel defensive and lash out at one another.

So, Globe columnist Rick Salutin, among many others ask how do we explain the behaviour of the Prime Minister and other major political figures during the stresses and strains of the past week. I think we have to look for the explanation to the political system that breeds and encourages conflict and strife. If Canadians are heart-sick about the political happenings of the past week, a great part of it may well be that we feel compassion for all of the people involved, and yes, even ashamed that they are subjected, publicly, to so much disparagement and humiliation from each other, and alas, from us, too. They are, after all, our leaders. What happens to them happens to us, by extension.

In addition to all of this, of course, we are conscious that amidst all this strife, the measures needed to tend to our country are postponed, perhaps even defeated, since in the poisoned atmosphere a really good measure may be discarded simply because it is voiced by the wrong mouth.

We, as a people, need to give our political gladiators permission to stop fighting for a while, and see how that works. Let's tell them that we have seen something in them, in that fleeting moment during the Quebec debate, that we can never forget, and that we desperately want to see more. I'm not talking about 'playing nice'. It is something far deeper than that. It is showing recognition of and respect for the value of another human being. It is encouragement and gratitude for the burdens they are shouldering on our behalf. It is trying to see the other person as God sees them. If we don't like it, we can always go back to strife and discord. They are not hard to bring back.

And while we are at it, let us not forget that Quebecker who asked such a fine question of the leaders, and the moderator of the debate, who allowed it. Let's be proud of them and grateful that our country includes their province. Down deep inside we know that we really can't, and really do not want to live without each other. So why don't we just decide that from now on, we are going to act like it?

The Two Thirds Solution - An Industrial Strategy for Survival in Hard Times

Companies in the manufacturing sector need to re-organize if they are to survive hard times, according to Canadian management consultant Charles Fitzsimmons. "The way most are structured now makes them fragile. They're OK in boom times - who isn't? - but when their industry enters a down turn, they have no way of protecting themselves, and things can go bad in a hurry. Orders fall off, inventories rise, fixed costs stay the same, and the largest cost of all - labour - becomes a millstone around the corporate neck. Everyone knows what happens next - production is cut back, people are laid off en masse, the fixed costs are spread over an even small base, which makes the balance sheet look even worse. The firm begins to eat into its reserves; working capital dries up, credit becomes more expensive or disappears entirely.. If the local company is part of a larger corporate empire, then it may be closed, and everyone loses their jobs. We see this more and more. Manufacturing firm these days are like infantry walking into a fire fight standing straight up, and not wearing any body armor. How about some defensive strategies? Wouldn't it at least be a good idea to duck?
 
"The question of how to survive hard times is highly relevant now, says Fitzsimmons, "because we're in a recession now. But strategies to survive the down part of economic cycles will probably always be needed, because ups and downs are just part of life for manufacturers - and plenty of others, too." 
 
So where are they, these strategies for surviving hard times? "One approach I find very interesting, says Fitzsimmons, "was adopted by some large Japanese manufacturing firms about 20 years ago. The principle is very simple: employees are only paid about two thirds of their wages in their regular paycheck. The remaining third is paid twice per year, in a lump sum, but only if the company is making money. Think about it. When times are tough, these firms can reduce their salary expense - always the largest cost - by one third without making a single lay-off. And when orders pick up again, all the trained staff are still in place so that production can be ramped up again immediately, while competitors who let their trained people go during the down times, have to recruit, hire and train new people to get back up to speed. And that takes time, and time is a competitive edge. The Two Thirds companies - that's what I call them - have the competitive edge is a number of ways. 
 
A strategy that helps you survive in hard times, and gives you a competitive edge in good times. That's what this looks like to me. First, the Two Thirds Solution guys are able to give lot more loyalty to their employees than other companies - the quick-shedders, as I call them. Because they offer greater loyalty, they get more loyalty back. They reduce staff turnover, which is in itself a cost reduction. By having a strategy in place to deal with downturns, they can offer their customers quick response, because they're always ready to go with trained staff who are very keen to see the company make money, because when the company makes money, the employees make money, too. Everyone knows that when employees have a direct stake in the profitability of their company, you get the best out of your company resources - less waste, reduced absenteeism, a company-wide ethic that, hey, we're all in this together, so let's make it work. Also, the disruption and heartache of layoffs is avoided - but at a cost - people have to be willing to accept the potential of less pay when times are bad
 
Sounds, good, right? says Fitzsimmons. "So why is it just about unheard-of in North America? Here are some reasons that occur to me. Unions may not like it, because they see it as their job to protect the highest seniority, highest paid workers. If that means that junior folks go out the door in hard times, well that's just the way it's always been. Employees who are at the top of the seniority and pay heap may feel secure enough, or close enough to retirement, that they don't want to see their monthly pay go down just so that there won't be lay-offs that probably won't affect them anyway. Mind you, if the whole plant closes, they are out in the cold with everyone else. Management may not like it because they have to play by the same rules - meaning their pay goes down by a third when the company isn't making money, just as it does for the workers. Also, it implies a commitment to candor - letting employees see how the company is actually doing. That's a big change for most companies. Shareholders may not like it, because it actually elevates the stability and profitability of the company in the long term ahead of short-term financial results, and for some of them the short term is what their compensation is calculated on, so that's the only term that matters."
 
Fitzsimmons says, "I think governments, when they are considering pleas for assistance from companies in the manufacturing and other sectors that are hurting right now, are entitled to ask whether these companies are doing anything like this to protect their own viability, as a condition for getting help. When someone asks you for a blood transfusion, it's seem a legitimate question to ask whether they are doing anything to stop the hemorrhaging." 
 
So what's the bottom line on this? According to Fitzsimmons, "in the Two Thirds Solution, everyone involved may have to give up something. In return they get a better shot at their company weathering the economic storms, and also performing better in good times, too. But people generally don't like change, and often the people wielding the levers of power in companies, unions and the financial world measure everything with their own personal yardstick. It's like they'd rather burn the engine out and then junk the car than change the oil if they have to pay for the oil change themselves."
 
But is he optimistic about this idea catching on? "Well, hard times are a great teacher. Many companies are looking into the abyss right now. Winston Churchill said, 'the likelihood of imminent death concentrates the mind wonderfully'. 
 
Final words: "When the interests of so many people and communities are at stake if firms go under, is it too much to ask people to act responsibly and consider the wider interest? After all, he says, "there are other people to consider in any situation, and there is such a thing as tomorrow."