August 28, 2023

Privatized Monopoly Consortia

Privatization backfires in many different ways, but one of the more obvious ways is the private sector's tendency towards oligopoly.

Contract negotiations for funding privatized school bus service between a consortium of employers including First Student and the consortium of Ontario Catholic school boards has hit a wall.

I think that these contract negotiations are standard fare right now across the industry. The outsourcing of school bus service is all about downward pressure on costs (wages) for school bus drivers.

With inflation and other increases in prices for keeping buses on the road, costs have gone way up for employers like First Student. Their contracts are up and they want more money.

This particular disagreement is also a result of new Ministry funding formulas for school transport which has capped funding to the boards. The privatization of school bus operations was supposed to be the answer to continued cuts to public funding for this service, but that isn't looking very smart right now:

The state's funding increase was not inline with what the companies who operate the bus fleets were expecting or probably what the school boards need to provide the funding. So, bus operators' (we usually call them "companies") profits are being squeezed. If the companies fail to provide the service, the school boards are going to have to find resources elsewhere.

The threat of alternative tendering is concerning since that would result in a contract flipping situation for the unionized drivers, but also because it will mean the cost savings being sought by the school boards will come at the expense of wages.

The operators not running is a capital strike, not a worker strike.

The bus companies are betting that the services are not going to be brought back in-house. Which is a good bet because school boards do not have the capital to buy the busses in time for the school year and likely do not have time to figure it out if they did.

The companies were first successful with this tactic in Quebec.

However, I am not sure that monopolies like this can really last in the face of legislation. When the state decides that their plan of making companies compete for the lowest bidder is undone by the companies forming a monopoly, the government eventually just balks and legislate their way around it.

In a follow-up email, Murray said STEO offered the bus operators a net increase of 13 per cent for the upcoming school year over what was paid in 2022/23.

“STEO’s best offer, which would provide for an additional $19 million over the proposed four-year term was rejected by the school bus companies, twice,” Murray said. Article content

“The school bus companies made a counteroffer valued at an additional $40 million over a proposed five-year term, double STEO’s stated best offer, and vastly exceeding the available funding for student transportation.”

That's not even close.

What's the answer? Well, it is likely legislation by right-wing governments to this blackmail by capital for profit subsidies will end in workers losing-out.

So, the response needs to be for unionized drivers to make their voices heard. In the fight between profits or wages, we must make the costs be bourne by reducing profits.

Mexico Trucking Strike?

  • AMOTAC is preparing for a trucking strike tomorrow.

The strike, scheduled to begin at 8 a.m. Central Time on Tuesday, is expected to include blockades along main highways, potentially disrupting both domestic and international freight shipments.

Other major demands include reducing the cost to use toll roads in the country and ending abuses and extortion by state and municipal police, AMOTAC officials said.

“The [toll] fees are excessive. We have roads in terrible condition, the roads we have are disgusting and we are paying a very expensive toll that really harms the truck,” Romero Trujillo said.

Romero Trujillo said if the government does not negotiate during the two days of demonstrations, AMOTAC could continue to extend the strike and blockades.

Danger from cargo thieves is one of the major issues truck drivers in Mexico face, AMOTAC officials said. (FW)