Thursday, May 1, 2014

Flextronics Moving Solar Panel Manufacturing to Mexico

YorkRegion.com is reporting some unfortunate news for the Newmarket community:  Flextronics, a company with a manufacturing plant in Newmarket (just around the corner from my office, incidentally), is downsizing its Newmarket facility, moving its solar plant manufacturing operations to Mexico.

Newmarket-Aurora MPP candidate Jane Twinney is cited as saying that several hundred jobs are likely to be affected.  (Indeed, their press release from 2011, in advance of starting solar panel production here, indicated that it would employ 400 people.)

Their cell phone refurbishment operations, employing approximately 50 people, will remain in Newmarket.

Why Move?

Question of the hour:  Why open an operation in Ontario in 2011 and move it in 2014?  One would assume that it's more cost-effective to do business in Mexico, so the real question is:  Why did they come here at all?

Presumably, it has something to do with the Feed-In Tariff (FIT) program:  The FIT program was established in 2009 under the Green Energy Act, enabling Ontarians to sell renewable energy to the OPA under 20-year contracts.  These contracts have taken some criticisms for overcommitting the OPA to long-term contracts at too high a price point, but the motivation was to create jobs and clean up energy production by enabling the development of an Ontario market for green energy production.

To help create jobs, the FIT program required 'local content' - meaning that a portion of the equipment had to be Ontario-made.  The effect was to create a huge demand for Ontario-made equipment, including solar panels.  So companies manufacturing such equipment, such as Flextronics, had an incentive to open plants in Ontario.

Just one problem:  It amounted to protectionism, plain and simple.

In 2010 and 2011, Japan and the EU complained to the World Trade Organization that the 'local content' requirement violated the GATT (General Agreement on Tariffs and Trade).  In 2012, the WTO ruled against us; we appealed, and in 2013 we lost.  As a result, the FIT is changing to remove local content requirements, and the inflated demand for Ontario-made equipment is quickly vanishing.

What about the Workers?

The YorkRegion.com report also paraphrased a Flextronics VP as saying that "Impacted employees will receive severance packages in accordance with company customs and local laws".

Interesting choice of words.

It bears noting that Ontario's Employment Standards Act sets out only minimum standards for notice and severance, and that actual entitlements upon dismissal are largely governed by contract.  And where there is no written contract (with enforceable language dealing with termination entitlements) or collective agreement, common law doctrines of 'reasonable notice' govern.

Accordingly, it's important for employees, being asked to sign off on a package, to seek appropriate expert advice.

I'm not aware whether or not the affected employees are members of a bargaining unit (i.e. unionized).  Unionized workers can (and generally must) turn to their union with such concerns.  Non-union employees, when being offered a package, would be prudent to consult with an employment lawyer about it.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

4 comments:

  1. Thank you for your opinion. I was actually employed there before all of this happened but I do know a lot of people received severances. I do not know to what extent but they were definitely not unionized and I know for a fact they were not treated the best.

    Thank you explaining what has happened.
    -Daniel

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  2. A sudden shutdown of a plant affects the work force, though this solar plant will be a boon for Mexico.

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  3. we are happy to read your post , its a very nice and more informative...
    Exert Realty provides all your.....solar power

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  4. It may be too much for me to undertake at my age, but it does create a little bit of confidence in future alternatives.I suspect most home owners would rather fund a program to help pay for their own panels and reduce their own carbon and electrical bills vs the Animal Shelter, or other orgs or businesses? I'm not against community support.solar panels.

    ReplyDelete