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Letter: A role for government in Scotsburn closure?


Dear editor: In the last few days Scotsburn has announced the decision to close its St. John’s plant, resulting in the elimination of approximately 170 good paying unionized jobs.  The actual decision along with it coinciding with an escalating regional economic downturn contributes to an even more negative human impact.

The Scotsburn facility on LeMarchant Road in St. John’s, where the company produces ice cream. The plant will be closing in December, the company has announced.

These hardworking, honest, taxpaying Scotsburn employees are in a very precarious position pertinent to attaining new good paying jobs in this contemporary slumping economy.

The Newfoundland and Labrador economy will further contract with the loss of 170 jobs that pay approximately $50,000 dollars per year. Approximately 80 to 85 per cent of the approximate $8.5 million that these 170 Scotsburn employees earn goes directly back into the Newfoundland and Labrador economy through taxes and consumer spending.

The loss of the economic benefits to our provincial economy that these good paying jobs provide will further erode our economic growth.

See related: Scotsburn plant in St. John's to close in December

Scotsburn has indicated that they are closing the local plant because increased competition motivated them to have their plants closer to larger markets.

It would be a benevolent political move for our provincial government to intercede and subsidize the amount of Scotsburn’s transportation expenses that equate to the numerical savings Scotsburn projects to attain from closing their St. John’s plant.

Another benevolent act for our provincial government would be to formulate a proposal to Scotsburn pertinent to subsidizing approximately a quarter to a third of the severance packages that Scotsburn intends to offer its most senior employees.

A feasible hypothesis for Scotsburn contraction would be retiring 50 of its most senior employees with respectable severance packages that are accentuated by moderate provincial government subsidies of approximately $2.5-3 million.

This may persuade Scotsburn to maintain its St. John’s plant with approximately 120 employees, particularly if our provincial government offered them a $3 million annual subsidy that would equate to half of the annual Scotsburn payroll.

Perhaps this subsidy could be financed by a one per cent sales tax on Scotsburn products that probably account for $300,000 to $400,000 worth of sales per day and a one percent sales tax would likely accumulate to several million dollars annually.

The 2017 cost for our provincial government would be approximately $6 million $10 million dollars and two thirds to three quarters that cost every other year, however the annual cost of not acting will likely be approximately $5 million dollars in less taxes and consumer spending.

The loss of so many jobs will impact the approximately 500 to 600 family members and could result in possibly half of those people leaving our province and extrapolating millions of dollars more of lost taxes, consumer spending and economic growth.

In 1997 the then provincial Brian Tobin Liberal government implemented a subsidy package for Country Ribbon Chicken that contained a one year $4.5 million grant to defray operating losses and up to $4 million for capital infrastructure as well as a $10 million capital loan guarantee to the Bank of Nova Scotia.

Based on past provincial government subsidies a moderately similar contemporary subsidy from our current provincial government for Scotsburn employees would be indicative of compassionate capitalism that will have beneficial components exceeding the costs.    

John Ryall, Mount Pearl

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