October 23, 2019

Recently you may have heard our company communicating a ‘key message’ of theirs comparing us to Sears and Nortel. The talking points are attempting to compare the Co-op Refinery’s business position to that of Sears and Nortel prior to their historic downfalls.

The goal of the ‘key message’ is to get you thinking about the demise of Sears and Nortel. It’s done to plant a seed in your mind about the future viability of the Co-op Refinery.

Sears and Nortel were once two highly revered juggernauts of business. They ruled their industries and were darlings of the stock market. However, in each story they both suffered the unthinkable, cash flow stopped, debts piled up, and panic set in. Several attempts to save both businesses were attempted with unfortunate and ill-fated circumstances.

Is Federated Co-op on the same path as Sears and Nortel? Or perhaps, Co-op Refinery is nothing like Sears and Nortel and it’s a talking point? If we are Sears and Nortel, what are the plans for preventing this?

Comparing Co-op Refinery to Sears and Nortel

Simply put, Sears sold all kinds of household goods in stores to people. They owned the largest retail footprint in the Western World at one time and their catalogue business was thriving. Nortel seemed to own the dot com race and were at one point the most important company in Canada. Both companies were money printing machines and for many years made a lot of money. How could they fail? And why did Sears and Nortel fail? Most importantly how are we different?

The Co-op Refinery

The Co-op Refinery operates in a market where there isn’t a large number of competitors. The market supply matches demand closely, keeping gasoline and diesel at a profitable price.

The Co-op Refinery has several competitive advantages and produces massive profits. We are leaders in waste water treatment, we produce high quality products and are proud of our cooperative values.

We successfully operate the Refinery. Our safety record is good and always improving. There are many bright spots for the future of the Refinery and Federated Co-op. Yes there are challenges ahead to change and adapt as with any business.

Sears Holdings

Sears operated in a very competitive environment selling TV’s, furniture, clothing, and many other products. They pioneered the retail space and dominated in business for many years.

They owned a large retail footprint and had a catalogue business that thrived.

Their downfall was not the amount of money they made, but a failure to successfully adapt to the future that had snuck up on them. They sold stuff that anyone could sell. The company’s biggest competitors were Walmart and Amazon. Other rivals include Macy’s, JC Penney, Home Depot, Lowe’s, and Best Buy. Could they have been one of these stores? Probably but they didn’t make the right choices. 

Pension liabilities did not bankrupt and collapse Sears. Their management and executives failed to plan for the future and failed to pivot or see how the world had changed. They got caught red handed without a solid plan. They ignored the online landscape and it crushed them. They could not recover. 

The combined company’s profits peaked at $1.5 billion in 2006, then dwindled to nearly nothing by 2010. The company lost $10.4 billion from 2011 to 2016. In 2014, and its total debt surpassed its market cap. 

Competition with Amazon alone precipitate Sears’ decline. When sales and profits began to fade, in the mid-2000s, other big-box retailers—particularly Walmart—were thriving. In 2011, the year Sears lost over $3.1 billion, Walmart made $17.1 billion.


The story of Nortel is one of poor accounting, hiding cash, and extremely poor management. Executives were accused of hiding losses and paying themselves bonuses that looked like personal cookie jar schemes.

You couldn’t say that it was Nortel’s rapacious compensation or its aggressive accounting that caused it to sink. A toxic corporate culture ultimately proved fatal to the company – especially when it got mired in the presumed accounting scandal. As CEOs came and went, Nortel was never able to manage a turnaround and extricate itself from controversy.

Let’s look at Nortel from the perspective of a CBC article written in 2014:

“In 2005 when there was an overhaul at the executive level it became clear that Nortel was an industry laggard. They failed to plan for the future. Money wasn’t their issue. Pensions weren’t their issue. Their problem was the same that plagued Sears, they couldn’t move forward because of inept management.”

Is The Co-op Refinery Trying To Tell Us Something?

When they compare us to Sears and Nortel are they trying to signal to us or tell us that our company is on the verge of impending doom?

When they compare us to Sears and Nortel are they trying to tell us that their management team has failed and is failing as you read this? Are they trying to tell you that the senior leadership team has its hands in the cookie jar and that the company is bleeding money through shoddy accounting practices?

Are they trying to tell you to look out because they have no plans for the future and have no idea where to take the company?

I don’t believe any of the above statements to be true regarding the situation at the Co-op Refinery, so we might ask ourselves why are they comparing us? Is this pure and simple a scare tactic?

Co-op Refinery is a Success

The Co-op Refinery is in an excellent position to move the company into the future. Since the contract in 2016 began, the Co-op Refinery has made over 3 billion in profit!

The Co-op Refinery has a major competitive advantage in heavy oil refining. They have a workforce that cares and performs. They have an advanced waste water facility that has won awards! They are a leader in the industry! Changes to the corporate tax structure in their favour allow for capital expansion and revamps in their operations.

Future of The Co-op Refinery

The DB Pension Plan is not the biggest threat to the future viability of the Co-op Refinery. For FCL the pension plan might be a thorn in their side because of greed or of a philosophical contention.

The biggest threat to FCL might be their operation in a Sears-like environment in the grocery business. Folks will say a Co-op is not designed to make money but if you’re not making money it’s difficult to change and pivot. Will the retail always survive? With good decisions and staying true to the Co-op values, maybe they can navigate the challenges.

The company has argued that renewables and climate change are a threat to the Co-op Refinery business as well. Buying one ethanol plant will not ensure that we’re ready. And buying an ethanol plant doesn’t signal that they are ready for the future.

If FCL truly believes that renewables and climate change are rapidly having an impact on us, we might ask what are their plans!?

Where are the solar panels? Where is the wind farm going? Where are the electric charging stations? What are you doing for the future!? Or is it all hubris and there is no threat to our system for the foreseeable future. We can look at graphs and projections all day long but what we need is a plan! Perhaps the answer is a Co-Gen Plant?

So now after reading that, is it fair to compare Sears and Nortel to the Co-op Refinery? Are we failing to plan? Planning to fail? What is it? Based on the facts it’s abundantly clear that we are not Sears or Nortel. We are not facing impending doom so the company’s ‘key message’ must be ardently dismissed.

In Solidarity,

Unifor 594 Bargaining Committee

We invite you to learn more about the issues and ask questions by staying informed through our social media, website #SupportUnifor594and email communications. Knowledge is power that you can use as a tool to challenge misinformation in the workplace!