Arming themselves with homemade signs and Canadian flags, United Steelworkers Local 6500 Vale Inco employees in Sudbury walked off the job and onto the picket lines, 12:01 a.m. Monday.
Eighty-five per cent of the union's 3,100 members voted to reject Vale Inco's final offer in the ratification vote, July 11.
“This proposal, in its entirety, is about putting the Brazilian solution in a Canadian operation,” says Wayne Fraser, United Steelworkers District 6 president.
“I think you need to find a Canadian solution for the operations in Canada.”
The company is using the recession as an excuse to attack the collective agreement, says Fraser.
One of the central issues is a different pension plan for new employees, who would receive a contribution-based plan, rather than the traditional benefit-based pension plan. The new scheme Vale proposed would put the onus on workers to manage their own pensions.
“The whole premise of having two pension plans, having people working side by side with two different rights that don't apply equally doesn't make sense to us as a union,” says Fraser. “We proposed to talk about pensions with the company, but they didn't even want to bother to do that.”
Vale Inco spokesperson, Cory McPhee, defended the company's proposal in a prior interview with Northern Ontario Business.
"Some companies have actually gone under because of their inability to fund these plans and ... it makes more sense to go to defined-contribution," he says. "That's the way the entire world is going.”
The Sudbury operation employs about 4,800 people, while there are almost 15,000 pensioners. No statistics are available as to the amount paid out annually.
Another major sticking point for the union is the company's proposal to reduce the nickel bonus.
“They proposed to destroy the nickel bonus plan that has been in place for 25 years,” said Fraser.
The nickel bonus was put in place instead of wages to avoid fixed costs in the cyclical mining industry. As a result, Fraser argues the nickel bonus counts as a wage, and Vale Inco is therefore attacking wages.
Currently, workers aren't receiving any bonus due to the low price of nickel.
Fraser responded to Vale CEO Roger Agnelli who said last week the Sudbury operation is the "highest-cost operation and it's not sustainable.”
“It's a lot of crap quite frankly. It's the complete opposite of what he said two and a half years ago, so either he was lying then or he's lying now.”
Local 6500 president John Fera said in a release he is, “extremely pleased for the overwhelming support for the Union's bargaining committee and, at the same time, very disappointed that our members were forced to take this action.”
Workers in Port Colborne, Ont. are also on strike this morning. Ninety-five per cent of their membership voted to reject Vale Inco's final offer. Workers at Vale Inco's Labrador operations in Voisey's Bay have already voted to strike on Aug. 1.
The strike comes after the company and the union previously agreed to extend the the contract for a month until July 13, but the parties couldn't come to an agreement on time.
With the strike pulling 10 per cent of the world's nickel production off the market, there may be eventual advantages for other producers, says Terry MacGibbon, CEO of Sudbury nickel producer FNX Mining Company Inc.
"In the long run, if there's a significant reduction in the amount of metal for sale, the price should reflect that," says MacGibbon. "That could be a short-term benefit to other nickel producers in that the price may go up, and historically, that has happened."
However, MacGibbon is concerned that current nickel prices are failing to reflect this eventuality, falling "dramatically" by a dollar to $6.50 in the days leading up to the strike.
The strike also affects FNX in more immediate ways, as the company processed its ore at Vale Inco's mill. FNX is now stockpiling ore in anticipation of finding an alternative site for processing in the coming weeks, potentially with Xstrata Nickel.
Check back to northernontariobusiness.com for further coverage of this story as information becomes available.
