A War of Words or a War of Worlds: Brazilian Vale versus North American USWA – by Kim T. Morris (Part 2 of 3)

Kim Morris won third place in the 2011 Arthur W. Page Society and Institute for Public Relations case study competition – business school category.

Her case study entry was on the Vale Sudbury year long strike – A War of Words or a War of Worlds: Brazilian Vale versus North American USWA.  She  is a senior adviser of communications and public affairs at the North East Community Care Access Centre.

USWA Local 6500

The executive of USWA Local 6500 anticipated difficult negotiations from the start. This was a new company and the negotiating team did not know what to expect. The only thing that was clear was that there would be no concessions on the part of the union.

Talks collapsed mere weeks after they began and the gloves came off shortly thereafter with both sides blaming the other for the impasse [23]. It was at this time that the USWA Local 6500 first alleged that the root cause of the problem was a lack of understanding by Vale’s Brazilian owners as to North American culture, along with a desire to trample workers’ rights and reduce their compensation package [23].

As the months wore on, the USWA Local 6500 web page featured alleged replacement workers, providing names and addresses as well as photos of the individuals. Anonymous members posted that there should be retaliation toward these so-called “scabs”. This resulted in a flurry of threats, assaults and damage to property throughout the community. In May 2010, Vale fired nine strikers for purported violations of its code of conduct on the picket line. There were also criminal charges laid against some of the nine strikers for other offences related to the strike. The matter is still before the Ontario Labor Relations Board and the courts.

After mediated talks broke down in March 2010, Leo Gerard, International President of USWA, made a statement to the media warning that if civil disobedience was the way to get through to Vale, USWA Local 6500 members would “fill the jails if necessary” [24].

This was not welcome news to the community or the police. Unlike past disputes, there was a definite lack of popular support for this strike, not only from the community, but also from other bargaining units. USWA Local 6500 used several hard line tactics that did not sit well with local residents.

First, there was a campaign to put strike support signs on as many lawns and in as many windows as possible. Another tactic was to identify which businesses supported USWA Local 6500 and which didn’t, again by displaying the signs. The union demanded that those businesses that did not support the union be boycotted, not only by the membership but by the community at large.

John Fera was the president and local face of USWA Local 6500. Fera remained calm and well-spoken, and he managed to steer clear of any direct wrongdoings or unethical conduct, although he never spoke out against any of it either. In late July 2010, Fera announced that he would be taking advantage of the retirement incentive offered as part of the settlement package, after 40 years of working for Inco/Vale [25]. Vice–President Rick Bertrand became the President, and then in August 2010, the membership elected Patrick Veinot as the new Vice-President of USWA Local 6500. Veinot was one of the fired nine.

Impact on Vale employees

“By building identification with the company, reputation as a good employer fuels employee loyalty, motivation, engagement, and commitment.” (Fombrun & Van Riel, 2004, p. 12) [27]

By the spring of 2010, it was evident in the Sudbury community that the strike was taking its toll on the workers. With strikers only receiving $200 a week in strike pay, most had depleted their savings. Many homes went up for sale or were lost, the union set up a food bank, and many strikers found temporary jobs or quit for new careers in other communities or provinces [28]. Many workers on the picket lines were also blaming the strike for marital breakups.

Media reports of the strike were constant, both locally and provincially. To the regular Vale workers, it must have seemed that the whole world was against them: their new bosses were accusing them of racism, the courts were ruling in favor of the company regarding picket line protocol [3], the local politicians mostly stayed quiet, the federal government was saying that Vale had done nothing wrong, and the community at large offered little support either for the strike or the union membership. In addition, every time negotiations stalled, it would be months before there was any sign of returning to the bargaining table.

Once the strike was settled, the company struck a final blow: Roger Agnelli, Chief Executive Officer of Vale, issued a strongly worded statement. In it, he stressed the fact that power would finally be returned to the supervisors in order to ensure the safety and efficiency of their team members. He also talked about a meritocratic system, emphasizing employee results versus changes in nickel prices [29].The aggressive tone continued during the face to face meetings that occurred over the next several weeks, resulting in an even more demoralized workforce, and an angrier USWA executive [30].

Impact on the community of Sudbury

This strike was different in that the union did not have the support of the whole community. Of course, social groups and the Mayor of Sudbury publicly supported the union, but others felt that there was no real reason for the strike [31]. In 2008, this was the reality: Vale employees boasting of salaries exceeding $150,000 a year due in part to overtime and generous nickel bonuses [32].

Support in 2009-2010 was not always there for those workers that it was perceived had flaunted these wages in the face of workers in other sectors who did not make anywhere close to comparable amounts. The lack of community support became even more evident when in September 2009, a rally held with prominent international guests, including the president of the Central Única dos Trabalhadores, the major Brazilian trade union, drew only 3000 persons, slightly less than the total number of strikers in Sudbury.

However, that is not to say that the community supported the company. Unlike Inco, Vale is a foreign company and its presence in the Sudbury community is perceived very differently [33]. In past years, Inco and its management team would support various charities and special events. Despite Vale still offering financial support to causes such as the Sudbury Food Bank, there is very little, if any, visibility of Vale or its management in the community itself.

There is also a concern within the Sudbury community for the future of Vale. Given the difficulties and at times violent nature of the strike, there is concern about what that means for Vale’s long term investment, and presence, in the community. This concern was reinforced by the cutting of 261 jobs from the Sudbury workforce by Vale in March 2009 despite assurances in 2006 that there would be no lay-offs for at least three years. Vale cited the need to streamline the Sudbury operation and cost control as the reason for the job cuts – not very reassuring for the community at large [34].

Federal and Provincial Government involvement

When Vale took over Inco in 2006, there was much debate over whether or not this was the right thing for Sudbury. Many Sudburians felt the same way many Canadians did – we should not sell off our natural resources to foreign companies. In order to allay these concerns, Vale made assurances to the Canadian government that it would preserve jobs, going so far as guaranteeing that there would be no layoffs for at least three years, and that in fact, this would represent a net benefit to Canada. In addition, Vale promised that its nickel mining division head office would remain in Canada and that the Inco division would assume responsibility for all of Vale’s nickel mining business [35].

During the strike, there were many questions regarding Vale’s legal obligations under the Investment Canada Act. USWA Local 6500 charged that Vale had reneged on its agreement to maintain job and production targets, and that Vale had cut jobs earlier than agreed to, closed operations, and put workers on strike to save on costs.
Federal Industry Minister Tony Clement maintained his position that Vale had not acted in bad faith in regard to Sudbury operations, and that the federal government was not going to get involved [36]. He explained his position stating that Vale had not targeted Sudbury for any shutdowns or other actions, and the government was not contemplating any proceedings with respect to Vale [37]. This decision infuriated many in the community as well as opposition parties, who questioned what protection Canadians do have when a foreign company acquires its natural resources.

In June 2010, the opposition federal Member of Parliament for Nickel Belt, the riding where most of Vale’s mines are located, tabled a motion calling for changes in the Investment Canada Act that include a lower threshold for public review of foreign takeovers, public hearings for affected communities and the publication of the reasons for and conditions to be met by approved foreign owners [38]. The motion was rejected.

The provincial government did get involved up to a point. In March 2010, the Ontario Ministry of Labor appointed a mediator to help resolve the labor dispute. After several meetings, talks ended. In June 2010, mediation was again attempted. Following the failure of these talks, the Minister himself, Peter Fonseca, met with Vale and the union to ask why there was still a deadlock. The mediator returned and after two more days of mediation, the final deal was reached [39].

What happened when

Timeline of the Vale/USWA 6500 strike:

April 7, 2009: Vale and USWA Local 6500 bargaining teams start the negotiations.

May 21, 2009: The May 31 expiry date of the contract is extended five days to June 5. Local 6500 members vote 97% to give their bargaining committee a strike mandate.

May 31, 2009: Local 6500 and Vale negotiators extend the contract deadline to midnight July 12 in order to allow negotiations to continue.

June 1, 2009: A two-month production shutdown of Vale Inco Ontario operations starts.

July 6, 2009: Negotiation talks break off.

July 13, 2009: Day one of the strike as Local 6500 members vote 85% to reject the company’s settlement proposal in ratification votes. More than 3,000 Local 6500 members in Sudbury set up pickets.

September 19, 2009: Approximately 3,000 people attend what they call a global solidarity rally featuring labor leaders from seven countries, including Brazil.

September 29, 2009: Vale indicates that it will resume production at its Clarabelle Mill.

January 11, 2010: Vale starts up the Copper Cliff Smelting Complex.

January 13, 2010: Local 6500 holds a march and rally. Approximately 1,500 people participate.

February 10, 2010: Hundreds of striking Steelworkers block access to Vale Inco facilities venting frustration with everything from the hiring of replacement workers to the cancellation of a bad-faith bargaining hearing into a complaint filed against the company.

February 27, 2010: Mediated talks get underway in Toronto.

March 7, 2010: Mediated talks break off.

March 11, 2010: Vale’s Offer of Settlement gets rejected 88.7% by the USWA Local 6500 membership.

April 6, 2010: The strike surpasses the 1978-1979 strike as the longest at Inco’s Sudbury operations. A mock funeral was held by Local 6500 members who wore black arm bands and brought a casket bearing the words “compassion, honesty, integrity, fairness, respect, charity and trust” to the gates of Vale’s smelter complex in Copper Cliff.

May 7, 2010: Protesters start blocking the entrances to the Clarabelle Mill and Coleman Mine despite a judge’s order not to do so. Sudbury Police show up, but do not try to remove the blockades. Blockades end May 12, 2010.

May 17, 2010: The Ontario Labor Relations Board directs both sides in the 10 month strike to return to the bargaining table. The union wanted the board to hold an expedited hearing on the firing of nine employees and the company’s assertion it will not rehire them when the labor dispute is settled.

June 4, 2010: Vale and USWA Local 6500 start talks in Toronto with the assistance of an independent mediator which last four days.

June 19, 2010: Talks resume under the same mediator’s guidance, but end June 29 due to the issue of the fired nine employees.

July 2, 2010: Ontario Labor Minister Peter Fonseca meets with Vale and USWA Local 6500 representatives to talk about the collapse of talks.

July 4, 2010: A tentative agreement is reached as the issue of the fired nine employees is to be dealt with by the Ontario Labor Relations Board.

July 7 and 8, 2010: USWA Local 6500 membership meetings and voting on the tentative agreement are conducted.

July 8, 2010: The strike ends as USWA Local 6500 members approve the five year deal by a 75.5% margin.

For Part (3 of 3), go to next posting: http://republicofmining.com/2011/04/15/a-war-of-words-or-a-war-of-worlds-brazilian-vale-versus-north-american-uswa-%e2%80%93-by-kim-t-morris-part-3-of-3/