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The New Inco: Promise and Challenge (11/05)

Sometimes we get surprised. The purchase of Falconbridge by Inco is big news.

Sometimes we get surprised.

The purchase of Falconbridge by Inco is big news. It was like your baby sister Phyllis, who has been living with that no-good Fred for 12 years in Chapleau, up and getting married, long after the parents and grandparents had despaired it would ever happen. You go from bugging them to death to looking around and wondering if they made the right decision. These two behemoths were worse than Phyllis and Fred. They just didn’t like one another.

Michael Atkins-editorial columnist-Northern Ontario Business
ATKINS

It was always too close for comfort. The senior managers were never close. The style has been completely different. There was Copper Cliff and there was Falconbridge and seldom the twain would meet.

That’s before we even get into the historical animosity and competitiveness between the unions.

It didn’t take The Globe and Mail long to find an old Mine Mill veteran to talk all about the fights, the bitterness and violence years ago ... things that hadn’t been thought much about in Sudbury for a very long time.

Thirty, 40 years ago you are talking about more than 30,000 miners.

Today it is maybe 5,000.

Still, these companies sneeze and we all get a cold.

Well they didn’t sneeze. They took some Vitamin C and got married.

What brought them together was the only thing that could. Fear.

The fear was to become a tiny speck in somebody else’s party.

Falconbridge’s immediate problem was Swiss-based Xstrata, which had picked up 20 per cent of the company and seemed well prepared to buy the rest. For Inco, it was the unknown suitor, which can be more frightening than the known.

There will be short-term pain for Sudbury.

Some good paying jobs are going to be lost on the management side of the business and their loss will hurt. It is unavoidable. The cuts will pay for the purchase.

Additionally, Inco will likely continue to knock buildings down that are surplus to their needs.

This is disastrous for a city that needs every tax dollar it can put its hands on. It already endures a disproportionately low tax take for the amount of business that goes on in Sudbury.

Underground infrastructure is not municipally taxable. This all could amount to millions of dollars in losses.

The labour question is touchy. Who knows what will happen? The Canadian Autoworkers union (CAW) is losing members in the car industry. The Steelworkers are losing members in the industrial sector across North America. Neither will be in the mood to lose more. It will take some real creativity to pound out a win-win deal.

If they are smart, they will amalgamate staff just like Inco and Falco and enter into a revenue-share and cost-share agreement that limits the downside expense of a strike and shares revenue in good times. The problem is these union executive jobs are well paying and coveted. What looks practical in Toronto and Pittsburgh won’t play closer to the action. The problem for unions is that they don’t need two sets of executives to hammer out a deal with one company any more than Inco needs two presidents and two human resource departments. The unions can fight one another, they can endure the expense of two executives to negotiate deals that should take only one, or they can enter into a joint venture. It will be interesting to see what emerges.

For the community, the most important issue will be whether this company will do for Sudbury what it has done for itself. Will it strengthen the city or just cut expenses?

The most important measure to watch will be where goes the research and development.

Falconbridge has a tech centre in Sudbury. Inco has a tech research centre at Sheridan Park in Oakville. Will it be Sudbury or Oakville? The Sudbury community will have to fight with all its heart and soul to attract those jobs. If I was mayor of Sudbury or the minister of Northern Development and Mines (who comes from Sudbury), I’d be immediately putting together a road show to be taken to the premier, the prime minister, the competition bureau and anyone else over the age of 12 who would listen to me. The quid pro quo of this deal must be the concentration of research and development in the North. If it is left to chance, our politicians shall have failed us miserably.

The new Inco deserves our enthusiastic support, including our understanding they have to bring economies of scale to the purchase. The new Inco needs to understand the wealth they are mining is coming from communities that have not been overpaid for their loyalty and service.

More thinking and planning must come north as part of this deal.

Previous NOB Columns by Michael Atkins


Michael Atkins is the president of Northern Ontario Business. He can be reached at
matkins@laurentianmedia.com.




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