Chickens Coming Home to Roost with Inco Contract – by Michael Atkins

Northern Life, Greater Sudbury’s community newspaper, gave Republic of permission to post Michael Atkin’s column.

Michael Atkins

Buzz Hargrove, the feisty (I’m being kind) president of the Canadian Auto Workers (CAW) union, recently said they would go on strike against General Motors (GM) if the auto maker did not promise new car products for Windsor, Oshawa, and St. Catharines, Ontario. A few days later, he changed his tune completely.

“You strike after something you think is achievable,” he said. “If we thought there was a product out there that we could strike and fight and win, then you can bet your boots we would be striking over it.”

Of course, what happened between the ultimatum and the climb down was that GM announced unceremoniously it would close a transmission plant in Windsor, whether the union liked it or not. Buzz is now negotiating severance packages, not new jobs.

All of that was before they announced the closure of the truck plant in Oshawa two weeks after signing a new agreement, which came perilously close to bad faith bargaining.

GM is retreating as fast as it can to a size that makes economic sense. Its business is in disarray.

The problem here is not a new one. All sorts of unions, which in an earlier day fought courageously for workers’ rights and safety, have squandered their gains by taking no interest in the economic viability of the industry that pays their wages. They feel little or no responsibility to be a part of the solution now that they are full partners. As a result, they are getting no say in the solutions.

In a year’s time Vale Inco will likely lock out its employees in Sudbury or the union will strike over the value of the nickel bonus, which has been extremely lucrative for members of the United Steel Workers.

Vale Inco has already sent a very clear message. They have delayed their maintenance shut down until the month before the contract is up. They will not start up again without a contract. That is usually the union position.

The union has a problem. They have little or no leverage. Yes, the price of nickel will be high and the opportunity cost will be substantial, but Vale Inco can well afford a long strike. Sudbury represents a very small part of Vale’s business.

Vale Inco is a top-down company. Anything of importance is decided in Brazil. Senior levels at Vale Inco have been eliminated and decision-making has slowed markedly. This will not be Canadians negotiating with Canadians.

The union would be wise to learn some Portuguese and get to work talking to Vale Inco about ways to improve productivity and enhance future prospects for the Canadian division. They won’t keep the nickel bonus unless it is also somehow tied to the cost of nickel, not just the price on the London market.

The nickel bonus is worth defending. It is a variable cost, it aligns the workers’ gains with the company’s ability to pay, and frankly is about the only place Canadians get a bonus on the resources that belong to them, with the exception of the shareholders who took the money and ran.

In fairness, the ineffectual former board members and executives of Vale Inco were unable to give the shareholders any alternative to selling out. We lost fair and square. No guts, no glory. That said, the chickens are coming home to roost and the easy part is over.

The Steelworkers, who have had to be creative in the steel industry, are going to have to be creative in Sudbury. The old rhetoric, like say some of the stuff flying around the CIBC altercation, is from another era.
It’s time to grow up and get real.

Michael Atkins is president of Laurentian Media Group.

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