Clash of cultures blamed in Vale Inco strike – by Tony Van Alphen (Toronto Star – March 27, 2010)

Tony Van Alphen is a business reporter with the Toronto Star, which has the largest circulation in Canada. The paper has an enormous impact on Canada’s federal and provincial politics as well as shaping public opinion. This article was originally published March 27, 2010.

Mark Cutifani runs a gold mining company in South Africa now, long gone from Vale Inco in Canada where he had begun engaging workers and changing an adversarial climate that had defined labour relations for more than half a century.

That adversarial climate is back in a big way at the mining giant in Sudbury and Port Colborne, where more than 3,100 employees have remained off the job in an increasingly bitter 8 1/2-month strike.

The classic labour-management struggle threatens to set back labour relations for years and undermine the value of one of the richest mineral deposits in the world.

The United Steelworkers union says a clash of cultures is at the root of the dispute. It argues that Inco’s Brazilian owners want to instill a foreign brand of subservient labour relations here; run roughshod over existing workers’ rights and cut bonus pay at a time when the company is profitable. Vale Inco says the union’s statements smack of racism and the company rejects the idea that cultural differences have anything to do with the strike.

The company claims the union is misleading its members badly. It says the union steadfastly refuses to accept that the Sudbury operations need significant restructuring to make them profitable and internationally competitive over the long term, because local mining costs are rising as the company digs deeper to reach rich reserves.

The intransigence, finger pointing and outright verbal warfare are not in the playbook of the personable Cutifani, who left in 2007 after receiving a lucrative offer as chief executive officer of AngloGold Ashanti Ltd.

“My disappointment in watching from afar is to see both sides missing each other in almost every conversation,” said Cutifani, who noted he has friends on both sides of the dispute.

“They are both yelling at each other so loudly, they are now deaf to each other’s position.”

Cutifani, an Australian who had worked in other countries, understood cultures and the importance of respecting them.

To him, they provided clues to how companies such as Inco worked and could perform better.

He arrived at Inco in 2003 and found Canadians democratic in nature and “very consensus driven.” As president of Inco North America and Europe, and later Vale Inco’s chief operating officer, he seized on those values to implement change.

Recognizing leadership shortfalls, Cutifani stressed the importance of management getting back in touch with employees and showing more respect. For openers, he took the door off his office.

Cutifani overhauled job tasks to generate maximum value from workers and machines; developed integrated planning processes so that each level added value to the next one and started targeting more investment for mines and operations to improve capabilities.

His fresh ideas empowered workers. The initiatives included programs such as “front-line planning and scheduling” (FLP&S) where crews shared decision making and gained more control in the workplace. At the same time, crews faced additional responsibility in reaching production targets.

“We were trying to introduce something more respectful and motivating for people,” Cutifani said in an interview from South Africa.

The moves in Sudbury improved relations and productivity, but Cutifani knew the company still had a lot of work ahead. And Brazil’s Companhia Vale do Rio Doce, which acquired Inco in 2006 for about $19.3 billion, didn’t interfere with the strategy, he said.

One mine manager said many workers and supervisors embraced his ideas and changes that would help them and the company.

“There certainly was a need for change at Inco and a lot of people really liked it,” said the manager, who requested anonymity in view of the escalating strike tensions. “But after Cutifani left, the stuff for the front lines in the mines wasn’t really followed up.

“(Vale Inco) brought in something else that wasn’t team oriented or all that efficient. It doesn’t prompt people to share problems and deal with common issues. There is more mistrust now.”

Without other executives pushing the same “game-changing” strategy, some initiatives drifted, according to insiders familiar with Vale Inco’s operations. They said Vale Inco took a more aggressive approach in implementing change. Instead of “give and take,” they said top executives expected lower-level managers and workers to take direction and “stand and deliver.”

Consultations with the union dropped and labour relations deteriorated after Cutifano’s departure. A stronger influence from the parent company in Brazil emerged. Other key Canadian managers left including Fred Stanford, the president of the company’s Ontario operations, whom union leaders and staff regarded as “a people person.”

In brainstorming sessions involving mine managers last June, a summary of discussions did not include any reference to the need for union participation.

“This was brainstorming with an astounding absence of brains,” said an independent expert familiar with the bargaining after reading the summary.

“I saw no evidence of any attempt to inform or engage the union leadership in any planning.”

There also didn’t appear to be much thought in the summary about getting workers to support Vale Inco’s goals in improving productivity and reducing costs after a strike.

Negotiations between the Steelworkers and Vale Inco for a new contract collapsed a few weeks later and the strike started last July 13, despite a union proposal to extend the existing pact for a year. Both sides accused each other of an unwillingness to bargain.

The key issues involved company demands to cut costs by reducing the potential payouts of a bonus incentive program; altering pension plans and giving management more flexibility in contracting out.

Vale quickly showed the strike would be different than any other walkout in its more than 50 years of labour strife. For the first time, the company resumed partial operations. It has gradually increased output with the intent of hitting full production soon with staff and replacement workers.

Vale, which was losing about $7 million a day in production earlier in the strike, has also spent heavily on monitoring picket lines.

The company has fired 10 workers and sued the union, its leaders and members for alleged property damage and threats involving picket line activity. It has taken the union to court to restrict pickets.

The union argues Vale is trying to provoke workers on picket lines in efforts to weaken union solidarity and community support. One former senior manager even went so far as to say the company had been “rubbing mud in the workers’ faces.”

Bargaining resumed with a special mediator during the past month but 88 per cent of workers, who are collecting $200 in weekly strike pay and suffering financially, voted against a five-year offer with minor improvements. The proportion opposed was higher than when the workers turned down an offer before the walkout eight months ago.

In view of the continuing wide gap in positions, the Steelworkers proposed binding arbitration to end the strike, but Vale said it would not allow a third party to decide how to run the company’s business.

In a stinging public letter after the workers’ rejection, Tito Martins, chief executive officer for Vale Inco, lashed out at the union for relying “heavily on a global campaign of misinformation, racism, intolerance and xenophobia to further its position in a country like Canada that prides itself as a model of multiculturalism.”

“Make no mistake, this labour dispute is not about countries or nationalities,” Martins said. “This is about clinging to years gone by and building for the years to come.”

For the rest of this article, please go to the Toronto Star website:–clash-of-cultures-blamed-in-vale-inco-strike