Less than two years after opening, Target Canada has announced its plans to discontinue operations in Canada.
The company made the announcement Thursday morning, as it filed an application for protection under the Companies’ Creditors Arrangement Act with the Ontario Superior Court of Justice in Toronto.
“We were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021,” said Target Corporation Chairman and CEO Brian Cornell.
Target Canada currently has 133 stores across the country and employs approximately 17,600 people.
“I can’t think of another time in Canadian history when 18,000 people were laid off at once; It’s a tragedy on several levels,” said Unifor economist Jim Stanford. “It’s an incredible legacy of scorched earth that Target has left from its misguided venture up here in Canada.”
The Minneapolis-based department store entered the Canadian market in 2012, after purchasing 200 former Zellers store locations from the Hudson’s Bay Company.
In that $1.8 billion deal, almost 27,000 workers lost their jobs. Shortly afterward, Target announced that all Zellers employees — regardless of experience or years of service — would be fired and needed to reapply if they wanted a job in their rebranded workplaces. The new jobs were not unionized, and “new” hires lost their years of seniority, and started their jobs with wages set at the bottom of Target’s pay scale.
Target claimed that successor rights did not apply in this case because the transaction was merely a real estate deal and not a wholesale purchase of the Zellers chains. The company denied it had any legal obligation to the 15,000 former Zellers employees or the UFCW, which represented workers at 16 Zellers locations in B.C., Ontario and Quebec.
Target’s failure in Canada “is a direct result of its bully tactics and its disrespect for Canadian workers and shoppers,” said National President of the United Food and Commercial Workers Paul Meinema in a press release. “Twenty thousand jobs were lost then. Now add to that the crushing news that another 17,000 workers are being shoved out. We are very concerned for the Target workers and their families, and appalled that Harper’s rubber-stamp approval of the corporate agenda has once again injured tens of thousands of workers and their communities.”
The company is seeking court approval to make cash contributions of $70 million into an Employee Trust. According to Target, this amount would provide nearly all Target Canada employees a minimum of 16 weeks of compensation, including wage and benefits coverage for employees who are laid-off during the company’s wind-down period.
Target Canada stores will remain open during the liquidation process.
“This is the second time that Target has thrown thousands of Canadian retail workers in the garbage bin,” said Stanford, “and it’s incredibly angering and irresponsible. Target comes up here with a scheme and it didn’t work out, so they’ll just go away forgetting that peoples’ lives are on the line.”
In labour law, Target is required to give some legal minimum notice for the lay-offs, and there are minimum level severance requirements for workers. However, Stanford explained, most Target workers won’t qualify for Employment Insurance benefits, “because of the bias rules that makes it very hard for part-time or irregular workers to collect enough hours to qualify.”
“These workers have been abandoned by Target and now they will be abandoned by the government. Most of them will fall through the gaping holes in our EI system. It’s absolutely shameful,” said Stanford.
Target expects to report approximately $5.4 billion of pre-tax losses on discontinued operations in the fourth quarter of 2014. The company has projected that cash costs to discontinue Canadian operations will be between $500 million to $600 million but that the decision will increase its earnings in 2015 and beyond, and increase its cash flow in 2016.
Ella Bedard is rabble.ca’s labour intern. She has written about labour issues for Dominion.ca and the Halifax Media Co-op and is the co-producer of the radio documentary The Amelie: Canadian Refugee Policy and the Story of the 1987 Boat People.