Résumés
Sommaire
La participation des travailleurs aux profits dans les entreprises connaît une grande publicité et fait l'objet de maintes discussions. L'auteur, en observateur sympathique mais objectif, a voulu étudier de près le fonctionnement d'un plan particulier. Les résultats de ses recherches sont une invitation à la prudence dans l'appréciation des formules concrètes qui sont présentées.
Summary
Supreme Aluminum Industries Limited is a company which has experienced for some years a profit-sharing formula of great importance: First because companies which have adopted such a policy are very seldonj, also because the president of this company, Mr. Harold V. Lush, is at the same time president of the Council of Profit-Sharing Industries. This association, which was formed in 1947 and has actually a membership of approximately 900 members, had its origins in the U.S.A. where the great majority of its members is to be found. The fact that Mr. Lush, a Canadian, has been chosen as president of this association, is a great tribute to his ideas on profit-sharing and to the application he made of these ideas in his own enterprise.
SAIL is a private company incorporated under the Ontario Companies Act-It is known throughout Canada by its famous aluminum cooking products. It is located in eastern Toronto. A medium-sized enterprise: 226 employees were on its payroll in 1955.
The profit-sharing formula applied by SAIL can be briefly stated as follows: "We pay the going rates to labour and capital then split the profits 50-50". In fact, 5% interest is paid on the net worth. As we shall see later, this is a gross revenue.
As far as labour is concerned, its rates of pay are determined by the board of directors. The only information released by the company to the author on this particular subject is that the average hourly rate paid in 1955 to women was $1,00, -while the rate for men was about$1.50. According to the Federal Bureau of Statistics, the average hourly rate paid in Canada as of December 1st 1955 to workers in the aluminum products was $1.452; the workweek was 42.1 in the average. The average weekly revenue was thus $61.13. If we consider strictly the wages, those paid by SAIL seem lower than the overall Canadian average in this particular type of industry.
Now let us make an analysis of the profit-sharing formula itself. To get a quick and clear understanding of it, let us consider a hypothetical case. Let us suppose that profits before profit sharing and taxes amount to $100,000. Here is the distribution of this amount:
Profits before profit sharing and taxes...$100,000
Less amount required to provide 5% net return on capital investment off, say $300,000 =3 $15,000 Before Income Tax of 47% this requires
$15,000 / .53 = 28,300
Amount subject to 50-50 Profit Sharing 71,700
Employees' Share (50%) 35,850
Company's remaining share, subject to 477P Income Tax, net $19,000 35,850
Distribution
Profits before profit sharing and taxes $100,000
Less employees' profit sharing 35,850
Profits before Income Tax 64,150
Less Income Tax (47%) 30,150
Net profit after Income Tax $ 34,000
This schedule is self-explanatory. As one can see, this profit-sharing formula has no provision concerning the income tax which the employees must pay on their wages. Thus it is clear that the total share of labour is not equal to that •which the capital gets. Moreover, the amount of $35,850 that is labour's share is again a gross sum of money whereas capital's share, totalling $34,000, is a net profit.
Let us examine now how the total labour's share is split and managed. First, a certain amount of money is given at Christmas to all employees which are on the payroll. A second part of the profits is credited to employees with more than two years' service as company contributions to an old age retirement plan. A third part is paid out by the company to employees with three months' service or more as a contribution to a life insurance plan. Finally, the rest is given in cash to employees with one year's service or more at the end of the year.
Administration of the whole profit-sharing plan is vested in a committee of 5 men. The president and two other members of this committee are appointed by the board of directors of the company, and the two others are chosen by the employees, through their plant council and social club. The personnel manager is the secretary of this benefit plan management. The company pays the cost of administration of the plan.
If the average hourly rate paid by SAIL to its workers is lower than the Canadian average for the same type of industry, profit-sharing puts these workers in a good position. The hourly average of profit-sharing money per employee from 1950 till 1954 is more than thirty cents ($0.30). For the same period, total profit-sharing benefits credited to the employees amount to approximately 20% of factory wages.
Since the incorporation of the company in 1920 up to 1950, there has been only one issue of common shares. Actually, the president, Mr. H.V. Lush, and his family own more than half of these. From approximately 1940 to 1950, nominal dividends only were declared. In 1950, taking advantage of section 95A of the Income Tax Act, the surplus was capitalized and preferred shares were issued. A special 15% tax was paid. Since then, no change has occurred in the financial structure of the company except that some of the preferred shares have been redeemed.
Since January 1st 1948 till the end of 1954, total net worth has increased by 72%. During the same period, working capital increased by 195%.
As a matter of conclusion, one can say that the profit-sharing plan as SAIL is something which rests entirely in the hands of the board of directors of the company. It is not the result of an agreement between the company and the body of workers grouped within a union.
The company hopes that the profit-sharing plan will apply indefinitely but it reserves the right to modify or cancel it, should future circumstances warrant such action. Moreover, the administration of the plan is made by a committee of which the majority of members are appointed by the board of directors. Finally, the workers have no control on the financial statements of the company nor on the management of the business.
One must admit, then, that even if the workers are well cared of under the profit-sharing plan they* are not real partners with the shareholders and the board of directors in this particular field. In spite of the great interest of this plan, it cannot be considered as a genuine example of labour and capital partnership.