Thursday, April 5, 2007

TrentonWorks Closes Due to Losses

The closing of the TrentonWorks railcar plant in Pictou County will cost 330 jobs, but given the losses the plant was throwing up, who can really blame the management?

The plant lost $2.2 million dollars in after tax dollars this second quarter (ending Feb. 28) according to the Chronicle Herald, but that's just one way of putting how bad it was. Writes the Greenbrier Companies:
The net loss for the current period includes a special charge of $16.5 million associated with the impairment of assets at the Company's Canadian manufacturing operation, and an $8.6 million tax benefit associated with the write-off of the Canadian investment for tax purposes, for a combined loss of $7.9 million, or $.49 per diluted share. In addition, the net loss for the period includes operating losses of the Company's Canadian facility of $2.2 million, or $.14 per share.
Big figures. Late nights with accountants and tax lawyers. And if not for the plant in Nova Scotia?
Exclusive of the Canadian facility's operating losses, the impairment charge, and the tax benefit, Greenbrier's earnings for the quarter were $4.0 million, or $.25 per diluted share.
Corporations are favourite targets of populist attack because they are big, yet as big as they are, they are weak. When consumers stop purchasing, they lose money and quickly retreat.

In this case, criticizing Greenbrier won't get the plant back. Perhaps government "help" could have changed things, but at what cost? Giving the plant $2.3 million a quarter still won't be able to make it beat a Mexican site.

So what's Nova Scotia to do? Well, plant closures are a fact of economic life. This goes back to industrial revolution times. The key is to create an environment where new plants are encouraged to spring to life. The NDP certainly won't help do that, so it's all on Progressive Conservative Premier Rodney MacDonald.