Steel Mills

Algoma Unions Unhappy with Contract Negotiations

January 16, 2018

Union workers at Canadian steel mill Algoma are seeking a cut of the company in return for concessions in contract negotiations.

“It was made clear…during the December 2016 negotiations with the consenting creditors that if the members were called upon to make monetary concessions and/or to help Algoma mitigate business risk, then in keeping with prior restructurings they would want to receive some form of equity interest in the restructured entity that was commensurate with the concessions being made and/or risk being assumed,” said union local president Mike Da Prat in an affidavit on Friday, as reported by Soo Today.

According to Da Prat, the conditions were not well received by the creditors who halted negotiations shortly afterwards.

Union representatives complained that negotiations were attended by creditors’ representatives only sporadically or by video and negotiating discussions were deferred to Algoma management and Jim Rennie, Algoma’s vice-president of human resources.

Lisa Dale, president of the salaried employees union at Algoma, local 2724, found this strategy unusual. “Bidders typically do their own negotiating and do not typically defer to the leadership of the entrenched management that captained the failure of the business,” she told the court.

Health and safety continues to be the main issue of contention between management and the union. The nature of steelmaking involves the operation of heavy equipment and working in the vicinity of high temperatures creating major safety concerns for steelworkers.

Da Prat and Dale say health and safety practices at Algoma suffered under Essar and during the restructuring period.

“Due to the highly safety-sensitive nature of the workplace, Algoma and Local 2251 have an extensive history of negotiating and resolving safety issues and safety policies at the facilities,” said Da Prat. “Prior to and since obtaining protection under the Companies’ Creditors Arrangement Act, Algoma has repeatedly violated the negotiated health and safety provisions of the collective agreement.”

Da Prat also expressed concern about communication restrictions imposed by Superior Court Judge Frank Newbould during bargaining sessions last year. Open and candid communication with members is essential for Local 2251’s negotiating efforts, said Da Prat. Any communication blackouts should be decided by the union and not the court, he added.

The collective agreement for the salaried workers expired in March 2016 and workers have been continuing under the prior contract.

“It appears that Algoma is done negotiating with us and wishes instead to impose…unilateral changes to the terms and conditions of employment of the union’s employees, and/or to present a final offer for a vote by the membership,” Dale advised the court.

Although Local 2724 has a history of resolving labor disputes with management, Dale says the current contract offer to the union is unacceptable and a strike by both locals may be inevitable.

One of the issues of concern is pensions, which no longer “have a safety net,” said Dale. “Therefore, a failure by Algoma to maintain payments to the pension plans is of even greater concern to the union’s members than would normally be the case.”

A strike, said Dale, would have a “drastic impact on both Algoma’s ongoing business and its effort to restructure,” she said and may cause a significant exit of Local 2724 members from the company.

Dale advised the term lenders and senior noteholders to “revisit their approach to ownership and bargaining.” If they cannot do so, she suggests previous bidders for the company may still be interested.