Saskatchewan Mining

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Scott Doherty is western director of the union Unifor, which represents some workers at PotashCorp.

For communities relying on the resource sector, there can be few mornings more devastating than the one earlier this month when workers at the Lanigan potash mine arrived at work, only to be told they were now unemployed and to go right back home. They had been laid off.

What a hard drive home that was for many back on the highway, heading out across central Saskatchewan, back to one of the many rural communities that rely on potash for their livelihood. They had plenty of time to let the news sink in … only to have to repeat it to their families when they got home.

For some 212 workers at the PotashCorp mine in Lanigan, that was how the morning of Dec. 3 played out when the company announced it would lay off 440 workers across the province and more elsewhere.

Workers at the mine were expecting something to come as potash prices dropped. Years of strong prices had come to an end with the Russians pulling out of an international potash marketing group.

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Ryan Lijdsman is a Canadian-based international business consultant.

EDMONTON — This Christmas, Potash Corp. spread the holiday cheer by raising dividends to its shareholders and gifting 18 per cent of its workforce with layoff notices.

These actions may appear counterintuitive and even bizarre to employees and those who don’t study business, but the reality is they are not out of the ordinary and are becoming more and more common in Canada. A corporate culture of maximizing shareholder value and short-termism has overtaken building “real value” and long-term corporate sustainability.

The theory of maximizing shareholder value was originally developed in the 1970s by free-market economists at the University of Chicago. Its raison d’être was to protect shareholders from a “managerialist” philosophy that taught corporations should be professionally managed to serve not just shareholders, but also employees, customers, and the broader society. It taught the purpose of the corporation was to serve shareholders and the best way to maximize the total value of the company was to maximize share price. An increase in share price was viewed as proof of greater economic efficiency, a view that is currently held in most publicly-traded companies.

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So what are we to make of the latest war of words between Premier Brad Wall and Potash Corp. of Saskatchewan? Is PotashCorp CEO Bill Doyle seriously saying that dividends to shareholders are more important than the jobs of more than 1,000 workers, including 440 in Saskatchewan?

Is the premier seriously suggesting that companies, especially Saskatchewan headquartered ones, don’t have the right to manage their business as they see fit? Clearly, Wall is casting himself as the knight in shining armour coming to the rescue of the hundreds of Saskatchewan potash miners given layoff notices this week.

First, Wall expressed concern for the workers facing layoffs just weeks before Christmas, adding that “obviously this is not good news for those employees and their families.” Then he allayed fears of major damage to the Saskatchewan economy or the provincial treasury, noting that potash revenues account for just 3.5 per cent of total government revenues.

For his part, Doyle said that he was equally concerned about the workers, promising to do “everything we can to make sure that these people are well taken care of.” But Doyle also said that PotashCorp’s dividend was “sacrosanct” and won’t be touched.

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PotashCorp job cuts a challenge for mine workers

Since high school, Daren Nakoneshny had a plan. The Lanigan native wanted to study a trade, then come home to work in Potash Corp. of Saskatchewan Inc.’s Lanigan mine. His family is there. The benefits and wages were unmatched.

“I achieved my long-term dream to work at PCS, and it was short-lived,” Nakoneshny, 25, said Friday. “It seemed like a pretty good idea at the time.” The electrician bought a house in Lanigan last year, where he lives with wife Caitlin and two young children.

On his Monday night shift, after nearly two years at the company, Nakoneshny knew something was up when he and his colleagues were ordered to a meeting at 6:30 a.m. Tuesday. Rumours swirled.

Nakoneshny called Caitlin several times that night, asking her to look online for potential bad news.

At 6:30 a.m., he and 300 of his colleagues stood in a room at PCS Lanigan, watching a video broadcast of PotashCorp CEO Bill Doyle explaining why many of their jobs were about to evaporate.

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Potash Corp. will lay off 1,045 employees, 18 per cent of its workforce, because of low prices and poor sales of the crop nutrient it produces, the company announced this week. The decision marks a sharp setback for the Saskatchewan government’s attempt to maintain cartel pricing in the potash market by preventing an Australian mining giant from buying the Saskatoon-based company and making it compete in an open market. A well-organized open market would serve Canada better.

Saskatchewan Premier Brad Wall put the bravest face he could on the failure of his policy. The province is enjoying good employment growth despite declines in the resource sector, he said after the massive layoff was announced. That seemed odd, because just three years ago, when BHP Billiton was trying to buy Potash Corp., he was telling the country the company was strategically important to Saskatchewan and could not be allowed to fall into foreign hands. Now, suddenly, Saskatchewan doesn’t need it so much after all.

In October 2010, when Billiton was offering $130 a share for all the outstanding shares of Potash Corp., Premier Wall told the Saskatchewan public it was a bad deal for the province. Billiton was going to take the Saskatchewan company out of the Canpotex producers’ cartel and compete for sales. This would not work and the Saskatchewan industry would suffer, Mr. Wall believed. He urged Prime Minister Stephen Harper and the ruling Conservatives to block the takeover.

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http://saskatoon.ctvnews.ca/

Premier Brad Wall has sent a letter to Potash Corp. of Saskatchewan executives blasting them for cutting jobs while preserving the dividend paid to shareholders.

The Saskatoon-based company said Tuesday that it is laying off 1,045 people to reduce its workforce by about 18 per cent, with the biggest hits in its home province of Saskatchewan.

Wall is upset because PotashCorp CEO Bill Doyle said the fertilizer company’s dividend is “sacrosanct” and won’t be touched.

“This can only mean that the interests of shareholders were protected while the interests of employees here in Saskatchewan and elsewhere were sacrificed,” Wall wrote in the letter dated Dec. 4.

About 440 people will lose their jobs in Saskatchewan. Most of those positions are at PotashCorp’s Lanigan division, where one of two mills is to suspend production by the end of the year, and at its Cory division where production will be reduced. Cuts will also be made at the Saskatoon headquarters.

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REGINA – There was shock Tuesday in a small town east of Saskatoon after Potash Corp. of Saskatchewan (TSX:POT) cut hundreds of jobs at a mill.

The Saskatoon-based company is slashing its workforce by about 18 per cent, affecting 1,045 people.

The biggest job cuts will be in Saskatchewan, where 440 people will lose their jobs, and most of those will be at the company’s Lanigan division, where one of two mills will suspend production by the end of the year.

“These layoffs were effective immediately. People were sent home this morning,” said Rick Suchy, an electrician at the Lanigan mine and president of Unifor local 922.

“This was the end of their shift. Some guys were supposed to come back tonight. They won’t be coming back tonight. Some guys were phoned at home. They weren’t there. And many people were coming in for the day shift and they were sent home. “It was a really shocking experience.”

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Potash Corp. of Saskatchewan Inc.’s decision to cut 18 percent of its workforce and reduce capacity probably foreshadows similar actions by North American rivals amid a price war in the $20 billion global potash market.

Potash Corp., the world’s largest fertilizer company by market value, said yesterday it will close a Canadian potash mine, lower output at another and halt a processing mill. Calgary-based Agrium Inc. (AGU) and Mosaic Co. of Plymouth, Minnesota, are likely to follow with job and capacity cuts, said Peter Prattas, an analyst at Cantor Fitzgerald LP, and Mark Gulley, an analyst at BGC Partners LP.

“Something has to give,” Gulley said yesterday in a telephone interview from New York. “They have to be looking at the same issues in terms of price and profit-margin pressure.”

The potash industry has been in turmoil since the end of July when Russia’s OAO Uralkali, which produced more of the crop nutrient last year than any other company, quit a sales accord with its Belarusian competitor. Uralkali’s strategy now is to raise output to gain a bigger market share. That’s spurred some customers to defer purchases in anticipation of lower prices.

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Mandryk is the political columnist for the Leader-Post.

Dispatching a “rapid response team” to deal with 440 Potash Corp. of Saskatchewan layoffs while telling us not to panic created a bit of a mixed-messaging mess for Premier Brad Wall on Tuesday.

However, it isn’t the first time that Wall and his Saskatchewan Party government – perhaps facing their biggest economic challenge since BHP Billiton’s attempted takeover of PotashCorp in 2010, or perhaps the potash revenue collapse of 2009 – have been confounded by the contradictions coming out of this particular company.

Nor will it likely be the last time.

This latest saga of potash politics – once again courtesy of Potash Corp – should serve as a reminder to the Sask. Party government that it needs to divorce itself from the specific interests of this company … or for that matter, all the companies that make up the industry.

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The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Potash Corp. of Saskatchewan Inc. is slashing its work force by 18 per cent amid low prices for its crop nutrients and weak demand in emerging markets.

The agriculture giant said Tuesday it will cut 440 jobs in Saskatchewan, 130 in New Brunswick, 350 in Florida, 85 in North Carolina, and 40 in other U.S. regions and Trinidad.

The company is also ceasing, suspending or cutting production at several operations. Potash Corp. chief executive officer Bill Doyle said the move is an attempt to match output of potash, nitrogen and phosphate with global demand, which has been flat since 2007.

A wide range of jobs – from sales to administration and production – are being eliminated, he said in an interview.

“Despite confidence in the long-term drivers of our business, a significant portion of fertilizer demand comes from developing markets where growth has been less robust than expected,” the Saskatchewan-based company said in a statement.

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