Business

The expendable Canadians

Angela Ferrante November 14 1977
Business

The expendable Canadians

Angela Ferrante November 14 1977

The expendable Canadians

Business

Angela Ferrante

It had been growing ominously evident for months. Mother Inco, as Sudbury miners call the world’s largest nickel producer, was in serious trouble. The days had long passed when the giant multinational pulled all the strings in the nickel market, when Canada exported 95% of the free world’s nickel and Inco took the usual business cycle—four good years, one lean—easily in stride. But in the past 10 years, Inco’s debt had gone from nothing to $1.4 billion. Its share of the market had dropped to less than 30% and inventories piled up six months high as new competitive nickel producers snapped away at its once privileged domain and a stubbornly sluggish world economy stifled demand. In July, Inco broke a sacred tradition and stopped posting the price of nickel—once the basis for buying and selling, now merely a target for competitors to undercut. Finally, late in October, caught in a classic cash crunch, saying it could no longer defy the laws of supply and demand, Inco announced it would cut back production. With it would go 3,450 jobs by mid-1978 in Sudbury and in Thompson, Manitoba.

For Inco, the decision was just a sound business move, but to the workers it was a “betrayal.” Twenty-two-year-old Dave Duval, a miner with a small child and another on the way, vomited when he found out about the layoff. In order to get another job he has to move away from his family. Reflecting the local bitterness, he said: “When I got hired, Inco said you have a future with Inco. Inco is big. Well, the Sudbury workers have just worked themselves out of a job.”

The reaction across the country surprisingly was even stronger, and at times ridiculous. The layoffs, fully expected by the mining industry which long ago diagnosed its own weak condition, sent politicians into a tizzy, coming as they did at a time of high unemployment and low investor confidence. The Ontario NDP called for nationalization. The province’s Liberals wanted Inco to shut down any overseas operations that would compete with Sudbury nickel. Sudbury mayor James Gordon, who faces the prospect of 2,200 unemployed miners at the end of January, called Inco an “18th-century industrialist” for not warning the town sooner. As it became obvious that the issue went beyond the

Sudbury basin and pointed to the weakness in the entire economy, Prime Minister Pierre Trudeau mused about a nickel cartel. Even the more reasonable federal proposal to save the jobs by putting Sudbury workers on a four-day week, with some of the difference covered with unemployment insurance, was rejected when it became apparent that the layoffs were no temporary matter but could stretch out indefinitely. As Inco’s Chairman J. Edwin Carter warned: “It could get worse before it gets better.”

The political reaction was so furious that after a series of meetings between Inco, the union and both levels of government (designed more for effect than to find solutions), Ontario invited Inco to explain the move before a committee of the provincial legislature. The “faceless owners,” as Bud Germa, New Democrat MPP for Sudbury called the Inco people, were going to be forced out of the corporate closet. Inco senior vice-president Walter Curlook shuddered at the prospect. “It’s going to be vicious. There will be a lot of invective showered down upon us. It will be a difficult time.”

The public response “flabbergasted” the company, as one Inco man put it. “Completely irrational,” fumed Curlook. After all, as Inco pointed out, it is only one of several troubled mining companies forced to lay off workers. Noranda Mines Ltd., a major copper and zinc producer, facing a similarly depressed market, was studying possible layoffs at the Gaspé copper division in Murdochville, Quebec, affecting 1,700 workers. Langmuir operations near Timmins will be shut down with 120 lost jobs, and two other mines in Quebec face temporary shutdowns affecting more than 500 workers. The laying off of another 80 workers in New Brunswick has been held off temporarily while the province looks for solutions. Altogether Noranda has lost about 3,000 jobs through attrition in the past two years. Falconbridge Nickel Ltd.,

the other much smaller nickel operation in Sudbury, has also retired about 400 jobs this year. Port Colbome, Ontario, found itself in even worse shape as both Inco and Algoma Steel Corp. laid off a total of 514 people in a population of 20,000. And in February, Alcan will close down a fluorspar mine in Newfoundland, not because it is losing money (which it isn’t) but because the company can get the mineral cheaper in Mexico.

The signs are evident everywhere that Canada’s eight-billion-dollar-a-year mining industry, employing 143,000 people, is not the rock sound pillar of the economy Canadians always imagined it to be. As the Science Council of Canada put it in a September report: “Canadian industry is chronically and gravely ill. Indeed, the country, industrially, is rapidly falling behind other nations and, by default, placing its hopes for the future on a resource sector which, in its present form, is inadequate to the task of raising or even maintaining the standard of living which most Canadians take for granted.” Complained Noranda head Alf Powis: “Everybody in the industry has known for the past two years. But nobody would believe you until something drastic happens.”

What made the Inco layoffs such a target, however, was the massiveness, the concentration in one community with a lifeline stemming directly from the company. The Inco problem seemed to crystallize all of Canada’s economic insecurities about not being able to compete internationally. It has finally taken the nation’s collective head out of the sand only to point out there is really very little that can be done. The sense of helplessness in the face of a multinational’s survival manoeuvres was felt very personally by the workers, but also by the politicians. Finance Minister Jean Chrétien summed it up: “It is impossible for the government to solve all problems... We have to compete with other nations and if we are not in a position to compete, we are losing jobs. That is a fact.”

Unfortunately, a lot of extraneous issues were pulled into the debate which onlyhelped to muddle things even more. Inco was criticized for taking a $78 million loan from the Export Development Corporation, a federal agency, to develop open pit nickel mines in Guatemala and Indonesia which will eventually compete with Sudbury’s output, EDC loans are not charity, however, since they come with the stipulation that the company buy Canadian goods. That particular loan resulted in 4,000 man-years of employment for Canadians and those mines would have been developed anyway, if not by Canadians then by someone else. What is perhaps more worrisome, in the long run, is the development of seabed mining of an almost limitless supply of nickel-bearing nodules. Inco has 25% ownership in a consortium now studying the feasibility of such an undertaking. When that comes about, as early as the mid-1980s, expectations from land-based mining of nickel will definitely be revised.

But all the explanations are of little comfort to the workers being laid off, even though, paradoxically, in Sudbury (which faces a total loss of about 6,000 jobs counting the ripple effect and about $69 million in salaries) the news was accepted with a measure of resignation. It’s the same kind of resignation that for years allowed Mother Inco’s belching sulphurous emissions to pick the landscape clean of trees and shrubs. Inco after all, helped to give Sudbury its high wages, and protectively cocooned it back in the recession year of 1975. The old-timers are used to Inco giving and taking away, knowing that in the bad year the workers with the least seniority will be sloughed off like dead skin on a giant and simply drift off. Syncrude has already passed through town trying to attract miners to Alberta’s tar sands. Denison Mines in nearby Elliot Lake is ready to take miners into the booming uranium mines. Some of the single men have already gone. Inco was already paring its unionized work force, mostly because of mechanization, from a high of 17,000 in 1971 to about 14,000 before this present layoff. Mayor Gordon says the town was ready for the Inco work force to drop to about 9,000 by the early 1980s, but not for this overnight kill. Peter M ggy, a 24-yearold laid off miner with two cids and a big mortgage, summed up his situation ruefully. “The guys who were laid off will just move on and people will forget. The people in Sudbury figure we’re a lost cause, so now let’s see what we can do about preventing future problems.”

Sudbury has in fact been pulled together by the layoffs and is using the limelight to push the government to help diversify the local economy, something it has been crying for without result for years. For the first time in its history, such arch foes as the United Steelworkers of America, who represent the Inco workers, and the local

Chamber of Commerce find themselves allies. The regional government, strapped with a $ 130 million debt with little room to move in generating jobs, is also pressuring for help. (The region was about to go to U.S. money markets to borrow $6.5 million when the layoffs were announced and it was forced to withdraw. It is waiting a while before approaching Moody’s for a credit rating.) To some degree, the region is managing to attract attention. The federal government is rushing plans to build a data centre and is considering a maximum security prison or a uranium refinery plant for the Sudbury area. The province is going ahead with a government office tower scrapped in the days of restraint. Thought is being given to building a rapid transit system between Sudbury and Elliot Lake which has plenty of work but no housing, “We’re far from dead,” said regional chairman Douglas Frith. “But it will be a rough four years.”