What to do with Canada Post?

[waldo]

as it stands, Canada Post {pension} has $16 billion in market assets... along with a $6.5 billion solvency deficit; a solvency deficit only comes to pass if an entity... goes solvent. Are you projecting that for Canada Post? As predicted, Harper Conservatives have provided a 4 year extension on pension payment structuring. Accordingly, you're ahead of any semblance of presumed "solvency".

that is strictly, strictly book value....... In reality, the market price would be far lower. Much of the supposed CPC 'value' is in the business itself, but unprofitable businesses have no goodwill value, partiuclarly ones where their customers are fleeing en masse. They do own real estate but in some cities- Vancouver, Edmonton, Calgary for instance they no longer have big chunks of downtown. They own a billion or so in sortation equipment, much of it newer. But.... it is worth pennies on the dollar as it is specific to their industry- who would buy it at anything close to what they paid?

no - by definition, market value... more correctly, "fair market value" (FMV). FMV is not book value. Per the 2012 Canada Post Annual Report: "Pension Assets - fair market value: 16,780 (in millions of dollars)"

what is the market value of Canada Post today? No, not using Canada Post assumptions, but in the real world?

how confused are you? Canada Post Pension assets... are assets... investment assets... of the pension plan. You've made numerous incorrect references to these same pension plan assets in terms of the corporation proper! Again, how confused are you?

.

[Boges]

I'd like to highlight a bit of Irony in this thread. Many comparisons have been made to how things are done in Europe.

Many European nations have privatized their postal services.

What's good for the goose. . . ?

Edited December 18, 2013 by Boges

[Argus]

So, you know them personally, then. Neighbors of yours?

Ironically, yes. I worked until recently in the Canada Post complex here in Ottawa. The way they treat their employees made me grateful I was in CRA - as bad as THEY are.

[cybercoma]

Very, and they're a nasty bunch, let me tell you.

Deepak Chopra? Come on. The guy is totally zen. [/sarcasm]

[cybercoma]

how confused are you? Canada Post Pension assets... are assets... investment assets... of the pension plan. You've made numerous incorrect references to these same pension plan assets in terms of the corporation proper! Again, how confused are you?

.

You don't actually have to know what you're talking about when your MO is to just slander employees and blindly echo ideological nonsense.

[g_bambino]

Many European nations have privatized their postal services.

I wonder, though: why does a mail service have to make a profit? Why can't it simply be a government service, like the passport office, Parks Canada, public works, etc.? It is allocated an amount of money in the budget and operates on that until the next budget is passed.

[overthere]

Why can't it simply be a government service, like the passport office, Parks Canada, public works, etc.?

All three of those you mention are revenue dependent undertakings, all are expected to sustain themselves in whole or part through fees charged. In the case of Public Works, the fees are most often charged for services provided to other govt departments for services provided by PWGSC. It's been that way for about 20 years there, longer at Parks and passport office which get most of their cash from the public. .

[overthere]

how confused are you? Canada Post Pension assets... are assets... investment assets... of the pension plan. You've made numerous incorrect references to these same pension plan assets in terms of the corporation proper! Again, how confused are you?

.

Not a bit confused.

For Canada Post, the obligations of the pension plan are a growing concern, in part due to low interest rates. While the plan has assets with a market value of $17 billion, its pension solvency deficit – the amount needed to meet obligations if it were wound up – is estimated at $5.9 billion as of the end of 2012.

CPC is winding up, but first we have to have a few years of grandstanding and handwringing, its the Canadian way.. They cannot make money or even come close to breaking even doing what they do, their core business is folding despite a delivery monopoly. Even if they slash costs they will also increase prices dramtically a, which will drive away their business further. Their core 1st class business is not Granny sending Billy a birthday card, it is businesses sending out millions of bills and statements monthly- and they are all finding other ways to do that. They're pooched. No govt including the current one will tolerate indefintie operating deficits. Their UNFUNDED pension liability of $6 billion can't be addresses by CPC while they have operating deficits. It doesn't mean shit if they have pension assets of $16 billion or $$16 trillion if they have a whopping liability to go with it, and a number large enough they can never catch up. That UNFUNDED laibility can only grow as they reduce their workforce, all of it is defined benefit stuff andf there is no escape except sale of the corporation. And of course, nobody sane would buy a supposedly $7 billion company with a whacking great pension liability that cannot ever be covered out of profits.

Harper gave them four more years because.... they don't know what to do. They gave Air Canada a similar extension last year for similar reasons, but AC has far better prospects of survival than CPC.

The govt overall has a huge pension shortfall, but they have more numerous and many more revenue sources than CPC.

Taxpayers will end up eating the CPC pensions shortfall, there is no other way.

[overthere]

your MO is to just slander employees

Where did I do that?

I commented on the quality of CPC management, which is generally poor.

I have spent way too much time at CPC HQ and in their Operations groups in the regions and major plants to have any other opinion.

[TimG]

Taxpayers will end up eating the CPC pensions shortfall, there is no other way.

Are you saying that crown corporations cannot go bankrupt? If so why not? It seems strange to set up an arms length legal entity if the government/shareholder is liable for all debts. Edited December 19, 2013 by TimG

[Wilber]

Are you saying that crown corporations cannot go bankrupt?

Maybe not in the normal sense. It will be an interesting test if it ever happens.

[g_bambino]

All three of those you mention are revenue dependent undertakings, all are expected to sustain themselves in whole or part through fees charged.

I highly doubt any of them could survive on fees charged. If they could, why are moneys allocated to them in the budget, either directly or indirectly?

[Argus]

You are relying on assumption that moving from one quintile in Europe is the same as doing so in the US. It's not, because people have more opportunity to earn more in the US, the quintiles are larger. You need to move up higher on the ladder to move quintiles in the US, so the apparent mobility is lower when using that kind of assessment.

An interesting theory. No doubt you have evidence to support this along with a study of income mobility allowing for this which purports to show that income mobility is NOT lower in the US than in most other western countries. I eagerly await its posting.

There is no definition of a moral wage in Germany, it's conceptual.

Perhaps not but like art, the Germans seem to know it when they see it, and they see it in Wal-Mart.

No you are mispresenting the reality of the European welfare state, by pointing to only the most effective systems. The reality is that most European nations who attempt such systems are sinking under them.

Evidence? Cite? Certainly the Mediterranean nations are having issues, but then they've always had governance issues.

But even with bad government, which I'll grant you France has, which overspends on unnecessary items, which I'll admit they certainly do, they're still a rich country. Their deficit is about the same % of GDP as that of the US. And they certainly have the means to address budgetary issues without cutting back on their social safety net.

Furthermore, you selected some of the nations with the whitest, most homogenous populations. Those nations do better on every metric, not just economic outcomes, so such a selection muddies the waters.

Some of them have a lot of immigration. Sweden, in particular. But that's irrelevant, really.

After all, isn't the Conference Board of Canada and all three main federal political parties constantly telling us what a big boost to our economy immigration is?

Many systems that you probably believe help me other than you or me, actually just hurt the majority in the long term.

Well, perhaps, but I'm not sure that's a valid argument. For example, it hurts the majority (economically) in the long run to look after disabled people. Better they should all be shot out of hand. You could also say that rather than paying welfare we should sell poor people as slaves to other countries or to industry. The 'majority' would be economically better off.

That's not because of their government. You take the same ethnic demographic groups in the US or Canada and evaluate their mobility and success, and you will get the same or better results.

I suspect you're wrong there. I think a lot of 1st generation immigrants are poor, but most immigrant groups place a lot of importance on education for their young and are willing to make huge sacrifices on their behalf. Of course, some do not, but overall their economic mobility is probably not much below that of the general population. Mind you, there are some distinct groups which defy this, and we ought to address that. But probably not in this thread.

Corruption is always a problem. You don't avoid that with more government, actually you usually increase it.

I don't see any evidence to support that. The corruption rate in western Europe seems to be pretty low, esp compared to that in the United States, where corruption is endemic.

I'm just trying to imaging shareholders deciding they should hire a guy with no ability because he's in the 'in-club'. "Hey why don't we potentially devastate our portfolios by hiring this well-connected guy with no clear ability to make this corp a success.

I didn't suggest people with 'no ability' were hired. I suggested that the rate of compensation is in large measure because the CEO and the directors are in the 'in club' as you put it. There's a lot of back scratching going on there.

Nobody begrudges Steve Jobs. He took apple stock from $17 to $700.

Sure. But how many CEO's do that? Virtually none.

They still all get immense multi-million dollar salaries, though. And these are the people clamping down on salaries and benefits for workers. Yes, I know CEO pay doesn't mean a lot in terms of total company profit, but it's a statement, it's an example. It's why our prime minister doesn't earn %50 million a year.

Btw, it also insulates the CEO from any and all bad decisions. No matter how badly he screws up, he'll remain a multi-millionaire.

Edited December 21, 2013 by Argus

[overthere]

I highly doubt any of them could survive on fees charged. If they could, why are moneys allocated to them in the budget, either directly or indirectly?

They are certainly trying, the fees for passports and Parks Canada services have gobne up steadily. Parks has also cut services/staff pretty dramatically recently, especially in their Historic Sites side. Public Works is a much larger undertaking than either, and revenue dependency has been around for at least two decades there. They do have legacy programs like GILT(grants in lieu of taxes) that pay out perhaps a billion or more per year in kickbacks to municiplaities for property taxes on federal porperty. Hard to recover that, it is just cash out.

Are you saying that crown corporations cannot go bankrupt? If so why not? It seems strange to set up an arms length legal entity if the government/shareholder is liable for all debts.

Not at all, I can certainly see a scenario where CPC will fail as a Crown agency. We are watching it happen now. They are 'arms length' but they are still owned by the Crown and report to the Crown, though given a lot of latitude to run their affairs.

That does not mean that the govt will also allow the pension scheme to fail, or leave retirees with nothing. But the inlcudion of the unfunded pension liability in a sale means 'no sale', nobody wouyld even think fo taking that burden on because there is no way for the current CPC to eliminate it or any imaginable buyer to carry it.

I noticed full page colour ads in our local paper yesterday by Canada Post, telling us they are looking to a bright future delvering our parcels.

The problem they will have with that scenario is that they have no monopoly and a few large, well run competitors. Their subsidiary Purolator already has a lower profit margin than UPS or FedEx, unless they seriously whack labour costs and seriously upgrade their management, they'll get eaten alive. Even so, they'll never make enough to touch the pension issue.

[PIK]

The postoffice was a public service taxpayer paid service that was not supposed to be making money. But it was made into a crown corp in the 70's I think and it has been down hill ever since. Something like the E-test that was not suppose to make money, but does.

[ironstone]

Pensions are only considered lavish because you choose to believe that. Companies have convinced you that they shouldn't have to look after their people. When employees have to make up the shortfall in their pensions, they are effectively taking a pay cut. When companies (not particularly Canada Post, but the private sector) don't look after their people, they're effectively downloading those costs of doing business to the government. The federal government isn't going to let little old ladies live on cat food. They're going to take money out of other programs or raise taxes to make up for the pensions that companies decided they no longer had to pay. Paying your employees is a cost of doing business. If you can't afford employees, you can't afford to do business. It's as simple as that.

Does every single business,big or small, have a responsibility to "look after" their people from the day they are hired until the day they die?

As for rank and file Canada Post employees,they are very well paid and it's not exactly rocket science is it?And their union is just as militant as ever.

[Bob Macadoo]

Does every single business,big or small, have a responsibility to "look after" their people from the day they are hired until the day they die?

As for rank and file Canada Post employees,they are very well paid and it's not exactly rocket science is it?And their union is just as militant as ever.

They do if thats what they negotiated to do, funny thing bargaining for labour is. I don't understand why the concept of an equal footed negotiating table scares people. Its not "looking after" either its just meeting contractual requirements. Don't like it, don't negotiate, get your billy clubs out and teach them workers some respect for their employer.

[Topaz]

The CEO said 40% of their business is home deliver of parcels and I'm sure this is going to increase with more people shopping online. Another items, do taxpayers pay for any mail that goes out to and from MPP's or MP's? How about all those Santa letters??

[Argus]

Does every single business,big or small, have a responsibility to "look after" their people from the day they are hired until the day they die?

As for rank and file Canada Post employees,they are very well paid and it's not exactly rocket science is it?And their union is just as militant as ever.

The posties union hasn't been militant in decades.

And there's a lot of truth in the fact that companies like Wal-mart, which pay less than a living wage while raking in huge profits, are forcing the taxpayers to, in effect, subsidize their work force. A lot of those people can't work at places like Wal-mart without government handouts to keep them fed. One third of bank tellers are receiving some form of social assistance, as well.

http://www.businessinsider.com/wal-mart-relies-on-taxpayers-to-subsidize-low-wages-2013-6

Edited December 30, 2013 by Argus

[Shady]

The posties union hasn't been militant in decades.

And there's a lot of truth in the fact that companies like Wal-mart, which pay less than a living wage while raking in huge profits, are forcing the taxpayers to, in effect, subsidize their work force. A lot of those people can't work at places like Wal-mart without government handouts to keep them fed. One third of bank tellers are receiving some form of social assistance, as well.

http://www.businessinsider.com/wal-mart-relies-on-taxpayers-to-subsidize-low-wages-2013-6

Then it's best to find skills for jobs that are in demand. Because the demand for low skill labour is very low, and the supply is very high, hence the low compensation.

[On Guard for Thee]

Then it's best to find skills for jobs that are in demand. Because the demand for low skill labour is very low, and the supply is very high, hence the low compensation.

Well somebody is going to have to grease up your burger and of course I'm sure you enjoy the wal mart welcomer. It just makes me a little PO'd that I as a taxpayer have to keep them from starvation whilst the companys suck off huge profits. It is I think quite timely to this discussion that Macdonalds pulled their highly embarrasing, and prohetic MCRESOURCES website down just recently.

[hitops]

An interesting theory. No doubt you have evidence to support this along with a study of income mobility allowing for this which purports to show that income mobility is NOT lower in the US than in most other western countries. I eagerly await its posting.

If you believe what you supposedly do, that the gap between rich and poor is much larger in the US, then it's a simple math problem. By your own logic, this should be self evident.

Perhaps not but like art, the Germans seem to know it when they see it, and they see it in Wal-Mart.

German wages are supported by the facts that Germany is one of the only developed nations that still makes money by building and selling things.

Evidence? Cite? Certainly the Mediterranean nations are having issues, but then they've always had governance issues.

But even with bad government, which I'll grant you France has, which overspends on unnecessary items, which I'll admit they certainly do, they're still a rich country. Their deficit is about the same % of GDP as that of the US. And they certainly have the means to address budgetary issues without cutting back on their social safety net.

The French economy is now contracting. They now have a 16-years high rate of unemployment at 11%, 26% for youth. The credit rating has been downgraded. Hollande's approval rating is now 15%. They have the some of the developed world's least productive, best compensated workers. Millionaires who pay hugely disproportionate taxes are leaving due to the yet greater tax just approved. Exercise in logic: where do you think this is going?

Well, perhaps, but I'm not sure that's a valid argument. For example, it hurts the majority (economically) in the long run to look after disabled people. Better they should all be shot out of hand. You could also say that rather than paying welfare we should sell poor people as slaves to other countries or to industry. The 'majority' would be economically better off.

Has anyone argued for not helping disabled people? The issue today is not that disabled people need help, but that there is massive fraud in disability. Having Down's syndrome or the loss or both arms used to mean disabled. Today it means you could not control yourself and got massively fat and now your back hurts a little, so you are 'disabled'.

I suspect you're wrong there. I think a lot of 1st generation immigrants are poor, but most immigrant groups place a lot of importance on education for their young and are willing to make huge sacrifices on their behalf. Of course, some do not, but overall their economic mobility is probably not much below that of the general population. Mind you, there are some distinct groups which defy this, and we ought to address that. But probably not in this thread.

That's exactly the point. Those hard working immigrant groups do well no matter what, and did so long before the behemoth expansion of the scope of government. You don't need a massive social system to help them, their own cultural attitudes accomplish that just fine. Those same traits were found in our culture a few generations back, with the same results.....the results which we live off today but are gradually screwing away in a march to socialism.

I don't see any evidence to support that. The corruption rate in western Europe seems to be pretty low, esp compared to that in the United States, where corruption is endemic.

On the corruption index, western Europe is pretty similar to Canada and US. You mentioned France, so of note France has a worse score than the US, and Spain and Italy both have much worse scores. Scandinavia has the best scores, which is somewhat expected for very white, very developed, small economies.

I didn't suggest people with 'no ability' were hired. I suggested that the rate of compensation is in large measure because the CEO and the directors are in the 'in club' as you put it. There's a lot of back scratching going on there.

A lot of back scratching rather than ability, would mean damage to the bottom line of corporations. They have no incentive to do so, no rational incentive that makes any sense. CEO's are not hired by their 3 best friends, they are hired by boards of perhaps 15 - 30 people, all with large stakes in the performance of the company. There is simply no rational, logically reason they would deliberately hurt themselves by hiring anyone but the best they can get.

They still all get immense multi-million dollar salaries, though. And these are the people clamping down on salaries and benefits for workers. Yes, I know CEO pay doesn't mean a lot in terms of total company profit, but it's a statement, it's an example. It's why our prime minister doesn't earn %50 million a year.

Btw, it also insulates the CEO from any and all bad decisions. No matter how badly he screws up, he'll remain a multi-millionaire.

You've missed the point. It doesn't matter whether he remains a multimillionaire. His companies bad decisions belong to his company, not you. It's a free country, if you don't like it, don't buy from them. You are under no oligation whatsoever to contribute or take losses from any company (except a few). But we are all under mandatory obligation to take losses from a bloated government. One has choice, the other dose not. THAT is what is truly offensive. And the companies we must take losses from?.....are the ones with government backstopping, like the housing sector for example.

[The_Squid]

Not a single citation that would show these claims to be true...

massive fraud in disability - where's your evidence?

Millionnaires leaving France by the Peugeot full - any evidence??

Traits of Canadians are different today than in the "good old days"- evidence?

Scandanvia is corruption free becasue it is "white" - LOL evidence for this correlation????

The claims in hitop's post are nothing but absurd rhetoric.

[ironstone]

They do if thats what they negotiated to do, funny thing bargaining for labour is. I don't understand why the concept of an equal footed negotiating table scares people. Its not "looking after" either its just meeting contractual requirements. Don't like it, don't negotiate, get your billy clubs out and teach them workers some respect for their employer.

It is foolish to make promises that can't be kept.Apparently both sides at the negotiating table at Canada Post had not the slightest concern for the ability to pay down the road.

In the past,can you recall which side was always the one to use billy clubs?

http://www.thestar.com/business/2013/11/21/canada_post_warns_it_will_need_cash_due_to_pension_woes.html

http://news.nationalpost.com/2013/12/16/canada-posts-6-5-billion-shortfall-just-a-fraction-of-more-than-150-billion-in-unfunded-federal-pension-liabilities/

[ironstone]

The posties union hasn't been militant in decades.

And there's a lot of truth in the fact that companies like Wal-mart, which pay less than a living wage while raking in huge profits, are forcing the taxpayers to, in effect, subsidize their work force. A lot of those people can't work at places like Wal-mart without government handouts to keep them fed. One third of bank tellers are receiving some form of social assistance, as well.

http://www.businessinsider.com/wal-mart-relies-on-taxpayers-to-subsidize-low-wages-2013-6

Could you provide an actual number for the living wage you talk about?How much per hour or per year?Should all employees in Canada also be provided with the generous sick leave as well?Family days?Volunteer days etc?