Vale Inco president and CEO Tito Martins seems puzzled as he speaks about the failure of recent negotiations with Steelworkers Local 6500 and the subsequent rejection of the company's contract offer by union members.
“If you ask me what they (the Steelworkers) want, I don't know,” he said.
During negotiations between the two parties earlier this month, Vale Inco made compromises on all the major issues, Martins said.
“We spent 10 days trying to get them (the Steelworkers) to accept that,” he said.
“They didn't want to negotiate. Then the mediator came to us, and said 'There's no deal.' We put a second offer on the table. It was improved a little bit more and increased the DB (defined benefit) pensions, increasing wages and everything.
“And nothing. They said 'OK, we will not be recommending this.'”
Martins met with a group of journalists from Laurentian Media (Northern Ontario Business' parent company) at the company’s corporate office in Toronto March 24.
He answered questions about a number of topics, including the past and future of the business and the more than eight-month-long strike by Steelworkers Local 6500 members.
The union left the most recent bargaining session complaining about several issues, including return-to-work protocol, Martins said.
“They asked us about return-to-work and we said 'between four and six weeks.' They went back talking about six months ... They lied. Six months is a big lie.”
Martins said the union was also informed the company could not guarantee job security for all of its members for five years.
However, they were also told that there are no layoffs immediately planned.
Martins said about 500 strikers have already retired, many more won't return to work after the strike because they’ve gotten new jobs and the company is planning to open Totten Mine in 2011, where 300 more workers will be needed.
He said there are currently only 2,500 workers left on strike in Sudbury. When the union went on strike last year, it had more than 3,000 members. The most recent number of strikers provided by the union is 2,850.
Martins said he guesses the union is in a power struggle with the company.
This is a statement that angers Steelworkers international president Leo Gerard.
When asked if the strike is about a power struggle between the union and the company, with the workers being caught in the middle, Gerard said, “The fact is this — our members have voted (against the recent contract offer). Do you understand that? ... Our members are the union. The only thing that will resolve this are not dumb questions like that, but collective bargaining.”
Gerard said he recently tried to contact Vale Inco officials, but nobody responded to his phone calls.
After members rejected Vale Inco's offer earlier this month, the Steelworkers stated they're ready to get back to the negotiating table at any time. “If it's a matter of who will phone first, that shouldn't be a problem.”
Gerard said he would not discuss the union's major negotiation sticking points with the media. “The place for negotiations is at the bargaining table,” he said.
At the same time, the union has published several op/ed pieces in local media and on its web site and most recently published a 12-page document called “Vale's unsustainable approach to Canadian mining,” which was distributed through local media sources.
Gerard said the union had not been informed by Vale Inco that there will be no layoffs in the near future.
“If the company's position is that not only is there going to be a layoff, but there's going to be a hiring ... I would have appreciated if they'd tell us that.”
In January, the Steelworkers filed a bargaining in bad faith application against Vale Inco with the Ontario Labour Relations Board.
Part of that application was an internal document put out by the company last year, which stated that the company wanted to reduce the number of miners in Sudbury from 2,000 to 1,800, or even 1,500 down the road.
Gerard said Vale Inco has failed to answer questions about this document during negotiations.
“They've said that there will be less people and we've asked that they share their strategic plan so that we could review that and include that whenever we get to a final settlement with our members. That information has been denied.”
Vale Inco's Sudbury operations are currently being run by 1,200 staff employees, he said. Although re-starting operations during a strike is unprecedented in Inco's history, Martins said he had to do so to keep his business going. There are currently no replacement workers employed by the company, but there are plans to eventually hire these workers to increase production.
Martins said the productivity in the smelter, which is currently being run by staff employees, is “much higher today that it was before.”
The smelter is currently processing copper concentrate, “which is easier and needs less people (to produce),” he said.
We are not against the union. We never were, actually. Since the beginning, we told the unions 'We are going to propose changes.'
Tito Martins,
Vale Inco president and CEO
He said the staff workers are currently receiving 20 per cent bonuses to work in production, averaging 20 per cent of their yearly salaries. On an average salary of $60,000 a year, that works out to $12,000.
When asked how he expected the people of Sudbury to respond to replacement workers, based on the city's culture, Martins said he wasn't sure because he doesn't know much about the city's culture.
“But actually, from what I hear and I am reading, a lot of people actually are supporting us,” he said.
Martins said he has had very little interference during the strike from the provincial and federal governments.
“The federal government is more neutral. It doesn't want to be involved. This is our perception. The province has been more in touch with us.”
According to Martins, Greater Sudbury Mayor John Rodriguez does complain to him often about the company's actions during the strike.
However, he has never talked to him about the impact Vale Inco operations have on local infrastructure, such as roads.
“He complains about the way we are treating the union. But he doesn’t complain about our relationship. Not at all. He maybe complains that he’s not receiving (mining royalties) because we are not producing. Then I want produce and he says ‘You should not be producing because you’re causing problems for us here.’”
The CEO also spoke extensively about the need for changes within the company to improve sustainability.
Beginning at the end of the 1990s and the beginning of the 2000s, mining companies started merging because they needed to get bigger to raise capital, Martins said.
But as these mergers happen, changes needed to be made to improve sustainability and competitiveness.
Martins said if Inco hadn't been bought by Vale in 2006, the former company would likely be making many of the same changes as his company is.
“We are not against the union,” he said. “We never were, actually. Since the beginning, we told the unions 'We are going to propose changes.' It's one thing that everybody asks. 'Are you trying to break the union?' No.
“We always thought we should have a very transparent way to tell the unions 'It's not working anymore. You've got to change your mindset, as you have done with other industries, like the car makers.'”
Gerard said Vale Inco shouldn't be worrying about profitability because the company just made $4 billion in the last 30 months.
Giving the Steelworkers a fair deal would not be terribly expensive for the company, he said.
If the company's position is that not only is there going to be a layoff, but there's going to be a hiring ... I would have appreciated if they'd tell us that.
Leo Gerard,
Steelworkers international president
He referred to the union's recently published 12-page document.
“In the year that nickel was at its highest average selling price, which was 2007, the ... price was $16.98 per pound,” Gerard said.
“The cost of the nickel bonus was 1.3 per cent (compared to the nickel price), or 21 cents a pound. Over eight years, the average cost of the nickel bonus towards the price of nickel was 9/10 of one per cent.
“Clearly, this is not about sustainability. This is about reducing the return that comes to our members and to the community. Ninety per cent of what our members make is spent right here in the Sudbury community.”
Martins said that when Vale bid on Inco in 2006, it was only able to view publicly available information about the company's finances. This was because Vale had put in an unsolicited bid.
“(We found out more) when we were negotiating the undertakings with the government, because they had to open (the finances) to us. I’m not saying (we made) a mistake. We did not. We like what we bought. But we didn’t know a lot of things.”
Vale eventually paid $19 billion to purchase Inco. When asked if Vale over-paid for Inco, Martins said “if we manage to achieve some efficiencies, and I’m not talking about employees, we can cope with that. We can overcome any negative result.”
Martins was also asked if Vale would sell the part of its operations that was formerly Inco if the right offer existed.
He said, “I don’t think — no. There’s no reason to sell it.” However, he did say he is currently receiving a lot of offers for the purchase of the former Inco.
When asked what he thought about the possibility of Vale selling the former Inco, Gerard said he didn't want to respond to rumours.
“The most important thing is we want to have a constructive relationship with this company, with a fair deal,” Gerard said.
“Our members want to go to work and use their terrific mining and smelting skills. They want to be able to use their brains to do their work. They want to be able to retire with dignity. They want to be able to raise their kids.”
