Economics

Relocation will cost Quebec 91,000 jobs

Relocation, the process by which companies transfer some of their operations overseas to reduce production costs, could cost Quebec 91,000 jobs by the end of the decade. That’s equivalent to double the population of Drummondville.

This number has been posited by Prof. Pierre Martin of the Department of Political Science and Director of the Chair in American Political and Economic Studies, and Christian Trudeau, a doctoral student in economics and a Chair researcher. Call centre jobs were the first to be funnelled to countries in Asia where labour is cheaper. This phenomenon has now spread to the manufacturing and service sectors.

For instance, Indian employees now handle Air Canada passenger complaints when luggage goes missing between Montreal and Toronto; SNC-Lavalin now has its Indian subsidiary handle contracts that were once the preserve of Quebec engineers; Bombardier Transportation also subcontracts its engineering work to India; and Canam has Indian employees design its steel beams. Video game designer Ubisoft runs a development centre in China that rivals its Montreal centre. Prof. Martin states, “This new phase of globalization is threatening workers who used to be protected.”

While this march toward the East is cause for concern, the United States is verging on panic. CNN anchor Lou Dobbs has launched a veritable crusade against what he calls “exporting America.” Politically, relocation was high on the agenda during the 2004 U.S. presidential campaign. And those elected to Congress and State legislatures have also had their say. From 2003 to 2005, over 230 bills were tabled that were designed to check the outflow of jobs from the service sector. In looking at these bills, a dozen of which have been adopted, researchers Martin and Trudeau have noted that most of them seek to restrict the awarding of public contracts to American companies. New Jersey voted in a law along these lines last May. Other States have opted for more subtle measures, including Indiana which gives preference to companies from the State.

The researchers have also noted that the relocation of services has created a new political dynamic in the U.S. In the past, when relocation hit the manufacturing sector, employers and employees spoke with one voice: if their industrial arm was threatened by globalization, they demanded protectionist measures; if, however, their area benefited from exports, they supported opening the market. Today, as Prof. Martin explains, “these divisions between industrial sectors have been replaced by divisions between labour and capital, in other words, class conflict.” Unlike times past, employers in the industrial sphere can now profit from relocation, while workers are losing their jobs to foreigners.