SUDBURY, Ontario — Last July, the 3,300 unionized workers who normally work deep below this city in the vast nickel mines owned by Vale Inco did something unusual: they went on strike even though they had already been laid off temporarily.
Even before Vale, an iron ore miner based in Brazil that was once state-controlled, completed its acquisition of Inco in 2006, there was a widespread debate in Canada about the “hollowing out” of the country’s corporate sector. Inco had tried to create a Canadian mining giant by offering to buy Falconbridge, a rival that also has extensive operations in Sudbury. But the unsuccessful effort touched off a series of maneuvers that resulted in Inco, one of Canada’s most prominent corporations, being owned by a Brazilian company few Canadians knew and many distrusted.
For Inco’s unions and their supporters, the unusually protracted strike is confirmation of those suspicions.
“This is all about trying to change the community to fall in line with the communities around the world where they do business,” said John Fera, a third-generation Inco worker who is president of Local 6500 of the steelworkers union. “As much as we always fought with Inco, people were always proud to work in the mining industry. That pride just doesn’t seem to be there now.”
Many predictions made by critics during the debate surrounding the takeover of Inco and other prominent Canadian resource companies like Alcan, the large aluminum producer based in Montreal, have not come to pass in Sudbury, which literally grew around Inco’s nickel operations during the 19th century.
John Rodriguez, the mayor and a strong supporter of the strike, acknowledged that Vale had not reduced charitable donations. The company pressed ahead with significant investments in Sudbury’s mines and smelters planned by Inco. And it even won favor with many locals by planting grass on some of the black slag heaps that make vast sections of the otherwise attractive city resemble the surface of a barren planet.
But Jean-Charles Cachon, a management professor at Laurentian University in Sudbury, said that he had observed one significant change since Vale took control of Inco — a reluctance to share information about its books.
After a particularly bitter series of strikes, Inco took a new approach beginning in 1985. Professor Cachon and Mr. Fera said that the company began sharing internal accounts with the union, a move that averted at least one strike. Similarly, Inco opened its books to suppliers. Not long after Vale’s acquisition, however, Professor Cachon said that “they reverted back to what I would call the old-fashioned Inco way. That is: ‘We don’t tell anyone anything.’ ”
Mr. Fera said that the union not only lost its dialogue with the company, it also noticed an increase in disciplinary actions against its members. The two factors, Mr. Fera said, combined to create a tense environment when negotiations began in the spring of 2009. Early last year, Vale Inco announced that it would extend a previously scheduled one-month shutdown of its Canadian nickel operations for two more months, a move that left up to 5,000 employees on temporary layoff beginning in May.
The company cited growing nickel inventories and low nickel prices. After peaking at about $20 a pound in 2007, a year after Vale paid $19.4 billion for Inco in a heavily leveraged deal, nickel had fallen to about $7 a pound. It is trading for about $8 a pound now.
On Wednesday, the union filed a formal complaint against Vale Inco accusing the company of bargaining in bad faith. It asks the Ontario Labor Relations Board to order contract talks restarted under a mediator and to require that the company present new proposals on key issues. It also requests that Vale Inco be required to reimburse the strikers for lost wages.
“The bargaining-in-bad-faith claim is baseless,” Cory McPhee, a Vale Inco spokesman based in Toronto, wrote in an e-mail message. He added that the company had approached the steelworkers “on numerous occasions asking them to sit down with us and explore a path forward. They’ve rejected the idea at every turn.”
Two demands from Vale Inco are, in the union’s view, responsible for the ultimate collapse of the talks. Like some other employers in Canada, the company wants to change its pension plan from one offering guaranteed benefits — the dominant model for many large Canadian plans — to a defined-contribution plan with variable benefits.
Arguably more provocative is Vale Inco’s proposal to modify a profit-sharing plan linked to the price of nickel. Before the current recession, when high demand for stainless steel brought high nickel prices, miners at Inco earned 20 Canadian dollars an hour through the nickel bonus. When nickel prices were low, however, the bonus payments have amounted to as little as 500 Canadian dollars a year. If the miners were working now, the bonus payment would be about 6 Canadian dollars an hour.
Vale Inco wants to raise the minimum nickel price that initiates the bonus — an idea the union accepts, although the two sides disagree on the amount — and set a limit on the maximum payment, which the steelworkers reject.
Mr. McPhee, a longtime Inco employee himself, dismissed union suggestions that the strike was a clash between Brazilian and Canadian business cultures. Instead, he criticized the union for holding what he considered an unrealistic view of Vale Inco’s situation.
“We did not want to be in a strike, but the business has fundamentally changed,” Mr. McPhee said. “We’re in a 100-year-old-plus operation here. It brings challenges in terms of investment in the business.”
Out at the picket line near the Vale Inco Copper Cliff smelter — its 1,234-foot smokestack is something of a national landmark — most of the strikers viewed the situation as a power play by the their new Brazilian owners.
“The other owner, you knew where they were coming from,” said Chris Schroer, a millwright. “These ones just want to show us that they’re the boss.”
The union, however, is not without an international dimension itself. To start with, Mr. Fera’s local is part of an international union based in Washington. Its president, Leo W. Gerard, is a former Inco employee and member of the local Mr. Fera now heads. And throughout the strike, the steelworkers have been working with unions in Brazil and Europe to organize anti-Vale protests and to press other companies not to buy copper concentrate from Sudbury.
While the union’s continental membership has allowed it to endure a long strike financially, Vale’s global nature has also given it a similar advantage. In the past, a shutdown in Sudbury as well as the smaller Vale Inco mine in Labrador in the province of Newfoundland, where 150 to 170 workers also remain on strike, would have virtually eliminated the majority of the old Inco’s revenue. At Vale Inco, by contrast, nickel is only 15 percent of the business.
Professor Cachon views the strike as being more of a clash between mining cultures than one pitting Brazilian values against those of Canadians.
Vale’s iron ore business is based around open-pit mines staffed with large numbers of relatively low-skilled workers. In deep rock mines like Sudbury’s, most low-skilled labor has been replaced by sophisticated machinery. The miners, while well paid, are mainly technicians with several years of training and apprenticeship behind them.
“These people are already trying to find employment elsewhere and won’t be interested in coming back unless they have very good working conditions,” Professor Cachon said. “You just can’t replace people like that.”
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