CANADA/COVER

DRAWING THE BATTLE LINES

MARC CLARK October 12 1987
CANADA/COVER

DRAWING THE BATTLE LINES

MARC CLARK October 12 1987

DRAWING THE BATTLE LINES

CANADA/COVER

As the deadline for last week’s national postal strike approached, all the signs pointed to a violent confrontation. During the last strike at the post office in June, there were violent clashes on the picket lines when Canada Post brought in temporary workers to replace striking letter carriers. And in the current dispute the Crown corporation faced a union with a much tougher reputation, the Canadian Union of Postal Workers (CUPW). Bracing for trouble, the post office hired hundreds of replacement workers—and took elaborate precautions to protect them. It hired extra security guards, erected eight-foothigh chain-link fences around some mail sorting plants, created special helicopter pads and rented fleets of buses to transport temporary replacements—reviled as “scabs” by the union—across picket lines.

The early days of the strike, however, were surprisingly calm. Except for one serious incident in Montreal, where mail sacks were set on fire in two post office trucks, causing $15,000 damage, most picket lines were orderly as the union staged a series of rotating strikes. The walkouts disrupted mail service in eight centres: St. John’s, Halifax, Dieppe, N.B., Montreal, Ottawa, Hamilton, Edmonton and Victoria. CUPW, which represents mail sorters and postal clerks, said that the strike was costing the post office $2 million to $3

million a day and claimed that it had managed to cut mail volumes by 60 per cent.

But Canada Post officials insisted that they were keeping the mail moving, adding that volume was 85 per cent of its normal level.

Still, Labor Minister Pierre Cadieux threatened to legislate the strikers back to work if the impasse lasted. After receiving a report on the dispute from his associate deputy minister, William Kelly, Cadieux declared: “The government will not tolerate a disruptive, protracted work stoppage at the post office.”

Crisis: But even the toughest legislation will not solve Canada Post’s problems. Last week’s strike was a further sign that one of Canada’s most unpopular institutions is entering a period of crisis unmatched since the labor strife of the 1960s and 1970s. The battle lines are clearly drawn. A new breed of business-oriented Canada Post managers, backed by a like-minded Conservative government, is determined to wring a host of contract concessions on work rules, job security and overtime from the corporation’s well-established unions. The unions are equally determined to hang on to gains they have made in earlier years.

Canada Post president Donald Lander, a hard-driving former auto

executive, is determined to win (page 16). The concessions he seeks from the unions are part of a wrenching overhaul he has planned for the post office—and the changes are far from complete. Lander is continuing a process begun in 1981, when the federal government turned the vast and unwieldy post office department into a Crown corporation and hired top Ontario civil servant Michael Warren as its first president. It was an awesome task: the institution had 63,500 employees, 8,250 outlets and militant union leaders steeled by years of confrontations with management.

Grips: Drawing up a plan for reorganizing the post office took time. Only in the past two years have Lander and his top officials come to grips with the problems of a $3-billion-a-year corporation that moves about 36 million pieces of mail every day—a total of 7.9 billion pieces last year. But their plans for further change placed them squarely against Canada Post’s powerful unions—and

neither side shows any sign of backing down. Indeed, John Kervin, an industrial relations expert at the University of Toronto who has studied the post office, says that Lander’s plans set the stage for a series of labor battles that could stretch well into the next decade. Said Kervin: “We’re in for a knock-down, drag’em-out fight, and there is no sign of improvement on the horizon.”

Erase: Lander is guided by Canada Post’s five-year plan, a year-old document that lays out the corporation’s future in minute detail. But one element overshadows all others: according to the plan, Canada Post has to erase its deficit—$129 million last year—by 1988. That has forced the corporation into some controversial cost-cutting moves, including a proposal to close hundreds of rural post offices (page 18). But the key to balancing Canada Post’s books is an ambitious plan to win concessions on wages and work rules from 61,640 employees in seven unions.

Even the least militant of Canada Post’s unions are feeling the chill winds across the bargaining table. Last week the post office’s 250 computer system administrators, members of the Professional Institute of the Public Service of Canada, voted by a margin of 80 per cent to strike if Canada Post failed to improve its current contract offer. The computer staff, whose contract expired in May, 1986, could go on strike—for the first time—by late November. Said union negotiator Luc Grenier: “We’ve never given them a problem—no grievances, nothing. When a group like this tells Canada Post that enough is enough, then you know something has changed.”

By last January all the corporation’s unionized employees were working without contracts. Then, in June, the 20,000 members of the Letter Carriers’ Union of Canada (LCUC), the post office’s second-largest union, declared the nation’s first postal strike since 1981. It lasted 19 days and set the pattern for last week’s walkout by inside postal workers: the union staged rotating strikes, disrupting mail flow without completely shutting down the system.

In the end, the letter carriers accepted a 31-month contract with pay increases of three per cent a year and gave up some contract clauses that

management said hampered mail delivery. But they did not agree to several of Canada Post’s key demands, including its call for a two-tier wage system under which new employees would earn less than those already in the union.

Prized: CUPW has been just as tough. The union backed down from several of its wage demands, but it insisted on negotiating Canada Post’s plans to sell postal franchises to private store operators. Although Canada Post officials pledge that no current employees will lose their jobs in the changeover, union spokesmen say that franchising could eliminate 4,200 prized day jobs—but not night jobs—behind the counters of Canada’s 400 post offices, leaving CUPW members with only lessattractive shift work in mail-sorting plants. Said CUPW president JeanClaude Parrot: “I cannot sit at the bargaining table and say, ‘Take 4,200 good jobs from us.’ I’m not budging on that issue.”

Still, Parrot made some concessions after the rotating strikes began. The union, he told negotiators for Canada Post on Sept. 30, would not fight the creation of franchises in new shopping plazas and some other locations—as long as existing postal stations were not turned over to franchises and providing that none of the existing 4,200 wicket jobs were eliminated. But chief management negotiator Harold Dunstan said that was not nearly enough. He said that CUPW

should negotiate on the basis of a report released before the strike by federal conciliator Claude Foisy. Foisy’s report supported Canada Post’s franchising plans and called for union concessions on job security.

That réponse confirmed the union’s worst fear: that Canada Post was only waiting for the government to bring in back-to-work legislation which would, in effect, implement the Foisy report. Union insiders said that the legislation threat was one reason the picket lines were so quiet. CUPw did not want to give the government an excuse to order its members back to work. But the union could not control all of its members. In Montreal, the militant union local defied its national leaders by ordering a complete walkout.

Help: Meanwhile,

Canada Post advertised in newspapers and on radio across the country for workers to replace the striking posties— and hundreds responded. When workers in some cities ended their rotating strike as scheduled, Canada Post would not let them return to work and kept using replacement workers. William Giggie, chairman of the Computer System Administrators’ Union, claimed that Canada Post also dispatched some management personnel from Ottawa to other cities to help keep the mail moving. They were “given $4,000, a credit card and they were gone,” said Giggie. “Canada Post told them to be prepared to be gone for two weeks, then come home for a few days to visit their families, and go again.”

In Ottawa, Parrot and Lander matched moves like chess players. Lander monitored the mails from Canada Post’s computerized control centre on the sixth floor of its headquarters in the Sir Alexander Campbell Building, an office tower in the south end of Ottawa. A few kilometres to the north, Parrot and his union executive determined strategy in a cluttered meeting room in CUPW’s headquarters, located over a downtown Italian restaurant.

The strike—the post office’s 10th in the past 22 years—was just the latest chapter in Canada Post’s notorious saga of labor relations. The roots of

the problem stretch back decades—but were compounded in the late 1960s when the post office embarked on an ambitious plan to mechanize its operations. As the wooden furniture of staid Victorian post offices gave way to

clanging machines in sprawling new sorting plants, workers became increasingly militant. Said the University of Toronto’s Kervin: “People

were shifted into settings designed, it seems, by engineers who had a malicious outlook on human nature. They are horrible places to work.” Added LCUC president Robert McGarry: “The big plants were the worst thing they could have done. Everybody admits that now, but the plants are still there, the machines are still there— and the bad feelings are still there.”

Key: Meanwhile, postal management floundered under increasing pressures from unions and government. Management had to rely on Kelly: dispute a variety of government departments for key decisions—and 13 different ministers since 1968. As David Stewart-Patterson wrote in Post Mortem, a study of the postal service published last month, “Neither crisis nor opportunity could get fast answers

out of Ottawa.” According to StewartPatterson, meddlesome politicians added to the confusion. As the labor situation worsened—there were seven major strikes between 1965 and 1981 — ministers in charge of the post office

increasingly bought peace by accepting restrictive work rules that drove up postal costs. At the same time, they delayed raising stamp prices to avoid public complaints—depriving the post office of badly needed revenue.

By 1978 then-prime minister Pierre Trudeau ordered that the post office be turned into a Crown corporation. The assumption was that the post office would be more efficient if it operated like a private business. Three years later Canada Post Corp. was born. But the government badly underestimated the difficulty of g transforming a govern| ment department into a z semi-independent busi9 ness. Many managerial functions, such as finance and labor negotiations, had been handled in part by other government departments; under the Crown corporation structure, Canada Post had to recruit its own specialists.

But despite the change—designed in

part to put distance between politicians and the postal service—Canada Post remains closely tied to government. Cabinet still appoints the corporation’s board of directors and president, approves its business plans and controls its revenue by approving—or withholding—increases in postal rates. And although Harvie Andre, the minister responsible for Canada Post, said last week that he was not influencing the course of the postal negotiations, Canada Post officials acknowledged privately that Andre was on the telephone with Lander almost daily.

Pressure: Under its first president, the outspoken Warren, Canada Post managers groped for solutions to their problems, while union pressure continued unabated. The election of a Conservative government in 1984 brought new problems. “After almost 20 years in opposition, the Conservatives still thought of the post office as a big patronage opportunity,” said André Villeneuve, Canada Post’s vice-president of communications. “We told them,

‘It’s different now, we’re a corporation.’ They didn’t believe us.”

The distrust was pervasive. In June, 1985, Perrin Beatty, the first Conservative minister responsible for Canada Post, set up a five-member committee led by Alan Marchment, chairman of

Guaranty Trust Co. of Canada, to study Canada Post and make recommendations on its future. “We came away thinking it was basically hopeless,” said committee member Alix Granger, vice-president of a Vancouver

brokerage firm. “The unions got away with murder, management had an extremely confrontational attitude, and they had about twice as much management as they needed.”

Granger said that she was astound-

ed when Warren’s staff presented plans for a $790-million electronic mail system. “They had no market surveys, no idea of how to pay for it, nothing,” she said last week. “If it was a corporate finance deal, I would have packed my bags and walked out.”

In a November, 1985, report, the Marchment committee made 43 recommendations, including one that the government should consider selling Canada Post to private business if it could not break even by 1991. That was not soon enough for the Conservatives. The five-year business plan approved the following year stipulated that Canada Post break even by 1988.

Alarm: For CUPW, the most alarming part of the plan was a commitment to sell post office franchises to small stores and businesses. Canada Post intends to move out of the over-the-counter postal business—except in a few rural areas —and concentrate on moving and distributing mail. Its current retail network is a hodgepodge of 13,300 outlets— _ 6,000 of them operated by Canada Post—ranging from massive public buildings to stamp sellers in cigar stores.

Elisabeth Kriegler, a Canada Post vice-president who is in charge of retail services, said that a number of surveys of more than 11,000 people by several private firms from the fall of

1986 through early summer of this year showed that Canadians consider themselves ill-served by the old-style downtown post office. By contrast, Kriegler said that the survey showed general satisfaction with the 2,000 privately run sub-post offices in convenience stores and drugstores, many of which are open in the evening and situated in shopping areas with abundant parking. Said Kriegler: “We have to bring postal service out of the last century, and we just don’t have the money to do it. By franchising, we get other people to pay the price.”

Under Canada Post’s plan, store owners will pay from as little as a few hundred dollars to more than $100,000 for a franchise, depending on how much the outlet is expected to earn. The franchises offer a full range of services. But to ensure that customers can buy stamps close to home,

Canada Post also expects the franchisees to arrange with a number of local stores nearby to sell prepackaged stamps.

Replace: Currently there are only seven franchised postal outlets—in Winnipeg, Toronto and London. But during the next 10 years Canada Post expects to replace thousands of post offices and subpost offices with such outlets, although some existing post offices in good locations would be retained. Estimated saving of the move: $1.3 billion, most of it in labor costs.

CUPW officials say that is unacceptable. Union leaders acknowledge that many post offices lose money, but they argue that their revenue would increase if, as in other countries, they were allowed to sell other products such as bus passes and offer services such as bill payment. But Canada Post insists that its plans for franchising are not negotiable. One postal official compared CUPW’s demand to an auto union telling a car company what line of cars to make. Added Canada Post’s Dunstan: “We have offered the union total job security. No employee would be laid off as a result of opening a franchise. I don’t know how much further an employer can go.”

While taking a hard line with the unions, Lander and his management team appear to have ended much of

the front-office confusion that marked Canada Post’s first years. Lander himself has imposed the discipline of an experienced factory manager. In earlier days, said Kriegler, “people did things because Joe, their predecessor, told them to do it that way.” Lander analysed the whole operation in detail. Canada Post’s Villeneuve recalls him touring one plant in Montreal and firing detailed questions at a supervisor about the charging of batteries on forklift machines. Added Villeneuve: “Lander wanted to know why the batteries were arranged the way they were, whether turnaround time could

be made quicker if things were moved a bit—all questions I never would have thought of.”

Tags: Change came quickly. Lander insisted that the corporation’s 30 major plants standardize their equipment. He speeded up replacement of hard-to-handle mailbags with wire and plastic containers. Postal workers who once laboriously stacked bags on tractor-trailers by hand now load the containers with forklifts. The new president also introduced a system of color-coded tags that allow supervisors to identify at a glance any mail that is behind schedule—and give it priority in the system. But his crowning achievement is the twoyear-old control centre in Canada Post headquarters, where a small team of experienced supervisors monitors every movement of the mail in

an attempt to improve delivery service.

The new methods have already shown results. The post office’s operating deficit, which had soared to $395 million in 1984, dropped to $210 million in 1985—and then to $129 million last year. And despite an eight-per-cent increase in the volume of mail over that period, Lander cut 1,310 people from the payroll. Canada Post also says that it has improved delivery times.

Still, major problems lie ahead. Post office critics contend that government influence could still play havoc with

Canada Post. Above all, Canada Post has set itself on a collision course with its unions. Said negotiator Dunstan: “We won’t do it all in one round of bargaining. We may not be able to do it in two or three rounds of bargaining. But we need changes.” In preparing for that battle, Canada Post, like its labor foes, has recognized the need for public support. Last month it followed a series of full-page newspaper advertisements by distributing 10 million full-color flyers to mailing addresses across the country. The flyers said in part, “We’ll be the first to admit, it’s time Canada Post improved.” Even the battle-scarred opponents in the latest dispute would support that sentiment.

— MARC CLARK in Ottawa with correspondents’ reports