My dad, a talented metallurgical engineer, and shrewd businessman, rose quickly through the ranks of his company. He worked for Cominco, a multinational mining corporation that boasted the world’s largest lead/zinc smelter in the small BC interior town of Trail. The history of Cominco was one of incredible success. The Trail operation began as a gold smelter for the ore that was mined out of the LeRoi mine in nearby Rossland. Its location on the mighty Columbia River was ideal, as the river provided Cominco with limitless hydro-electric power.
When the LeRoi Mine ran out of gold, Cominco retooled its operation to smelt lead and zinc from the very rich Sullivan Mine located in Kimberley, some 200 miles away by rail. From the early 1900’s to the 1980s, two factors contributed to Cominco’s success: one was the manufacturing industry in the developing superpower to the south, the U.S (World War II was especially good to Cominco); the second was the impunity that the company enjoyed in development and operations. In the early days, Cominco ravaged the land, damming rivers, stripping the foliage and belching toxic smoke into the air. Men worked in clouds of lead fumes without respirators. There was endless demand for Canada’s metal, and there was nothing stopping production.
After the War, a strong union movement gripped North America, and the city of Trail boomed. There was good money to be made in Trail. Displaced persons from Italy immigrated there for work and the city grew, eventually building a large hospital, several pools and parks, and a fine arena for its hockey team. The very profitable company kicked in money to the town. Citizens enjoyed reduced electricity rates, as the power requirements of a city were minimal compared to the factory, which itself was bigger than many small towns. If there was ever a model for trickle-down economics, Trail was it.
Up until the 70s, kids from the local high school knew that they would be able to make a good living: buy a house, raise a family, and grow a retirement plan. If you became a tradesman, you could make a very good living indeed. In the 70s, the joke among many young boys was that after graduation they’d be attending the University of Cominco. In fact, there were even t-shirts bearing the logo!
As time wore on and society in general became more educated, the Company came under more and more pressure from environmentalists. The union got wise to the inherent health risks in jobs at the smelter, and the workers demanded and won many concessions from the company, including things like regular lead level checks in union kids’ hair, and paid shower time for the employees. The company was so profitable that it could give these concessions and still survive.
But that all changed in the early 80s. A brutal recession hit, driving the metals prices lower while the interest rates rose into the high teens. The company learned new automation technologies that would reduce its environmental footprint while simultaneously cutting the labour force in half. At one point, the rumor in the plant was that after all the layoffs, the youngest union worker left was in his 30s. The company demanded huge tax breaks and government support – always threatening to shut down. With the number of young people laid off, and the harsh mortgage rates, the price of housing dropped like a stone. Suddenly secondary business had to shut down in the community. The hospital shut down beds. Life in Trail got worse. The population of the City dropped. The company was losing money, and debt trickled down to the workers.
In those dark days, under threat of operational shutdowns and further layoffs, the union in Trail gave huge concessions, even allowing contracting out of various jobs to non-unionized workers. The mine in Kimberley shut down for two years, partly due to the abundance of ore from the huge Red Dog Mine in Alaska. When the Sullivan Mine opened again, the workers started at a substantially reduced wage. In all of the layoffs and government lobbying, my dad was instrumental. An upper level manager in those days, Dad was making just a little more than the highest paid union tradesmen. We enjoyed a very good standard of living. Dad was able to buy property and other investments, taking advantage of the low real estate prices of the 80s. He did well.
The recession eventually ended, but the Company continued to struggle under the pressure of relatively stable (low) metal prices. A large mining company from Australia named Teck, eventually bought controlling shares of Cominco and a new era began. Dad was redeployed, but remained with the company. The economic forces in place, particularly Canada’s low currency in comparison to the U.S., restored Tech-Cominco to profitability. But there were still efficiencies to be found, and the Company had become good at finding them. Reinvestment stopped happening very much in the small city of Trail, in favour of a factory in the developing country of Peru, where the labour force was much cheaper. It was Dad’s project to get the Peruvian plant operational. I remember asking him if Cominco was paying the labourers well in Peru. He told me that, although they were being paid far less than the workers in Canada, they were paid much better than most people in Peru. As evidence of Cominco’s ethical treatment of the Peruvians, he followed up by saying that no one in the Peruvian factory had ever quit.
Unbeknownst to Dad, his life was soon to end. In 1999, he contracted an aggressive cancer, but in his last few years, he began getting paid more money than he had ever been paid before. Teck Cominco was pulling in record profits, and Dad was getting bonuses – large ones that had previously been unavailable to him, no matter how much the company earned, and no matter how demanding his job had become. The city of Trail recovered somewhat, but never ever regained the prosperity that it had enjoyed before the 80s. It is a city left behind, where retailers struggle to survive. The work force has lost benefits and remuneration relative to the economy. There have been occasions when the demand for electricity in the U.S. has set up scenarios where it was more profitable for the company to shut down its operations and sell its hydro power than it was to produce and sell metal, so that’s just what it did. The union workers were laid off for months while the company’s profits went up and up.
Trickle down economics in Trail is a thing of the past, and what has happened in Trail is a blueprint for all of North America. Outsourcing, and the co-opting of profits have left the laborers behind. This is now the world we live in, and yet we still cling to the belief that the success of large corporations somehow trickles down to everyone. It’s a myth. If there is a solution, it surely lies in public policy aimed at redistributing the benefits of profits: subsidies for the basic needs of everyone: housing, health and education. The reason why this doesn’t happen, is, as the Occupy movement has shown us, the fact that it is the big corporations who are able to successfully lobby government. They stubbornly continue to propagate the trickle-down myth, allowing them to protect their immense power.