BUSINESS

LABORING FOR A NEW APROACH

CANADIAN UNIONS EMBRACE STRATEGIES TO SAVE JOBS

TOM FENNELL October 4 1993
BUSINESS

LABORING FOR A NEW APROACH

CANADIAN UNIONS EMBRACE STRATEGIES TO SAVE JOBS

TOM FENNELL October 4 1993

LABORING FOR A NEW APROACH

BUSINESS

CANADIAN UNIONS EMBRACE STRATEGIES TO SAVE JOBS

The relations between autoworkers and the Big Three North American car manufacturers have always been fraught with fireworks. Weeks before contract negotiations got under way every three years, there would be sinister rumblings. Labor and management would aggressively stake out their turf and threaten to defend it to the end. Frequently, a stalemate would result in strikes and bitter recriminations all around. More recently, however, there has been a distinct change in the tone on both sides. In fact, the contract talks between the 43,000-member Canadian Auto Workers union (CAW) and their employers last month, were downright civil. And despite some mild foot stamping early on, the union and its target, Chrysler Canada Ltd., came to an agreement with relatively little fuss. Declared CAW president Buzz Hargrove: “Business and labor now have to work together to create more jobs.” Across Canada, dozens of unions wounded by layoffs, plant downsizings and closures are casting a new eye to the bottom line—and their relationship to it. Pushed by global competition and collapsing trade barriers, including those in the proposed North American Free Trade Agreement (NAFTA), organized labor is now taking unconventional steps to save union jobs. In British Columbia, a union-owned

venture is building a $750-million residential housing complex, in the process keeping its membership working. And while some unions are trying to consolidate their power through mergers, others are embarking on partnerships with corporate management to increase productivity, profits and competitiveness. Some recent labor contracts even stipulate that unionized workers must meet aggressive cost-reduction goals set by their employer. Notes Brian Bartja, president of the 500member union local at LOF Glass of Canada Ltd., a manufacturer of automobile windshields in Collingwood, Ont.: “The plant isn’t just here to give me a job. We have to make a profit and we’re proud that we do.” The auto industry negotiations, which continued in Toronto last week between the CAW and General Motors of Canada Ltd., clearly reflected many of the new pressures on both sides. The number of people employed in such heavy manufacturing industries has plummeted since 1980 as plants closed and new technology was deployed. As a result, auto industry analysts say that the CAW has had to adopt an approach that goes beyond negotiating wage increases. And as uncertainty about Canada’s social safety net mounts, more workers are looking to their union—and their employer—for assistance with broader issues such as job creation, work sharing, better pensions and better severance packages for laid-off workers. In return, North American automobile manufacturers are winning concessions in their struggle to stay abreast of their Japanese competitors with the introduction of the latest technology and more flexible production schedules—both contentious issues with the CAW in the past.

One reason labor leaders are adopting a more co-operative stance is to stop the steady erosion of their ranks. Pradeep Kumar, associate director of the Industrial Relations Centre at Queen’s University in Kingston, Ont., notes that membership in mining and manufacturing unions alone dropped 37 per cent between 1978 and 1989 as the economy restructured and new technology was deployed, resulting in large job losses. And despite strong overall economic growth in the 1980s, the total number of people enrolled in Canadian unions has actually stagnated. According to Statistics Canada, the percentage of non-agricultural workers in unions rose from 16 per cent in 1920 to an

historic peak of 37.6 per cent in 1980— where it has remained ever since.

Organized labor is also under pressure from new international trade agreements that lower tariffs and make it easier to transfer production and jobs to the southern United States and Mexico, where labor and other operating costs are lower. One attempt to stop that trend is the the North American Agreement on Labor Co-operation, a controversial side deal to the North American Free Trade Agreement (NAFTA), which was released in Washington last week. Under the terms of the accord, designed to quell opposition to NAFTA in the United States, labor ministers from the three countries would oversee disputes involving such issues as child labor, minimum wage and occupational health and safety.

Despite their initial lobbying for the side deal, many Canadian and U.S. labor officials found the agreement unsatisfactory. Andrew Jackson, senior economist with the Ottawabased Canadian Labour Congress, for one, says the accord does not go far enough because it cannot force Mexico to adopt more progressive labor legislation. As a result, Canadian employers opening plants in Mexico would still face few regulatory hurdles. For their part, U.S. labour organizations are profoundly concerned about the potential threat of NAFTA—and have vowed to lobby aggressively for its defeat in Congress. U.S. union membership is dwindling already as industrial production shifts to the southern states, where wages are lower and unions are harder to form. In fact, the percentage of nonagricultural workers in U.S. unions has been cut in half—to 15.1 per cent of the total population from a peak of 32.5 per cent in 1953.

Canadian unions desperately want to avoid the same squeeze. But, says Hargrove, the CAW recognized in the mid-1980s that the North American automotive industry was consolidating in the face of stiff international competition and that it would no longer be a major source of new employment and union jobs. Still, in the new three-year contract that the CAW signed with Chrysler, Hargrove said the union was able to increase employment by convincing the automaker to hire as many as 600 new workers instead of just relying on ever-increasing amounts of overtime from existing employees. The union also stressed that such measures would improve quality and provide a cost saving.

Michael Flynn, associate director of the automotive transportation study office at the University of Michigan, says that the CAW now acknowledges that Chrysler has to stay competitive to survive. As a result, he added, the union has become more receptive to the introduction of new technology. Added Flynn: “The days of hard-nosed negotiations between the CAW and the automobile manufacturers are fading into the past.”

Those new priorities and tactics mark a radical departure from the labor climate of 20 years ago. Then, says Flynn, a car company’s market share was less significant because if Chrysler’s share declined, an American competitor would register a corresponding increase. Furthermore, since autoworkers were all in the same union, such a shift was generally accepted by senior union leaders. Now, however, foreign competitors are the major threat. And more than anything, says Flynn, that threat has forced organized labor—and management—to become much more receptive to a fresh approach to their problems. “If you lose market share to Honda because you resist technological change,” said Flynn, “the union also lases.”

That philosophy is at the core of a number of newly negotiated contracts. And it is a concept that the 250 unionized workers at Edwards, an electronics company in Owen Sound, Ont., have already embraced. James McCoubrey, Edwards’ vice-president of manufacturing, says that union members now sit on a joint union-management steering committee, overseeing production, training and plant operations.

Some of the most recent labor contracts actually lock union members into company cost targets. At LOF Glass of Canada Ltd., the 500-members of the Aluminum, Brick and Glass Workers International Union, have agreed to reduce operating costs by $10 million over three years. To achieve that objective, the union promised to work with management in identifying and reducing costs wherever possible. David Soules, LOF’s manager of human resources, says union leaders agreed to those measures because they realized that the plant had to stay competitive, particularly with sister operations in Kentucky and Texas. “As long as the plant is profitable,” says Soules. “They will have to think twice about shifting production to the United States.”

Unions are also attempting to boost employment for their own members by making direct investments in the economy. Ken Georgetti, president of the B.C. Federation of Labor, says that one of the largest projects undertaken to date involves a $750-million housing complex in Surrey, B.C. Built by the union-owned Vancouver Land Corporation, the project will employ thousands of unionized workers over the next five years. Says Georgetti: “We are able to put unionized workers to work and, at the same time, build a worthwhile project.”

As well, when firms begin experiencing severe financial difficulties, an increasing number of unionized workers are mobilizing to save their own jobs. One of the largest such buyouts in Canada occurred in 1991, when more than 1,000 workers bought 52 per cent of Spruce Falls Power and Paper Ltd. of Kapuskasing, Ont. Spruce Falls vice-president and general manager Denis Turcotte says the company is now making money—$10.7 million in profits on total sales of $100 million in the first nine months of fiscal 19921993—because a new spirit of co-operation has led to more flexibility on both sides. Instead of doing only one job, he says unionized workers are now performing a variety of tasks rather than rigidly adhering to formal job descriptions.‘We’re not only surviving,” says Turcotte, “we’re going to thrive.” And if Canada’s fragile economic recovery is to take root, that sentiment will have to spread to shop floors across the country.

TOM FENNELL