Pulp and Paper Canada

Staying in Touch (December 01, 2001)

December 1, 2001  By Pulp & Paper Canada

No one today denies that globalization is a fact of business, not even the unions that have long been complaining of its harmful effects to local Canadian communities, such as staggering job losses an…

No one today denies that globalization is a fact of business, not even the unions that have long been complaining of its harmful effects to local Canadian communities, such as staggering job losses and erosion of a way of life that took decades to achieve. Not surprising, even as companies have been building global alliances, notably in the last decade, unions have responded to globalization with, well, globalization.

“This is a change in tactics,” said Bob Hebdon, associate professor of industrial relations at McGill University’s department of management in Montreal. “Globalization has been the management toy, but now the unions have gotten together.”


True enough. In October 2000, trade union leaders from the pulp and paper industry, representing 2-million workers in 21 countries, met for two days in a resort in Sainte-Adle, QC, cottage country north of Montreal, with the specific purpose of finding ways to better cope with globalization.

The meeting, organized by the International Federation of Chemical, Energy, Mine and General Workers’ Unions, or ICEM, a global trade union federation with 20-million workers worldwide, ended with an action plan. It had two main components: Form worker networks to exchange information and to take, when necessary, solidarity action; and call on multinationals to commit to global standards in operating practices by signing agreements with the ICEM, based in Washington.

Last year’s announcement came on the heels of a number of cross-continent acquisitions, including two that included Canadian pulp and paper producers: Norske Skog of Norway (parent company of NorskeCanada) taking over Fletcher Challenge and UPM-Kymmene of Finland (who own a mill in Miramichi, QC) buying Repap.

“Many of our major employers in the Canadian pulp and paper industry now have a global reach and we have to respond in kind,” said Brian Payne, president of the Ottawa-based Communications, Energy and Paperworkers Union of Canada, or the CEP. “Our union is actively working to forge alliances with unions in other countries representing employees of these same companies.”

To drive the point home, the American delegate added: “We have witnessed first hand the power of international labour solidarity,” noted Boyd Young, president of the Paper, Allied-Industrial, Chemical and Energy Workers International Union, or PACE. “The globalization of the pulp and paper industry requires that we build global unions.”

As to whether such measures will benefit the industry, Craig Campbell, a partner with PricewaterhouseCoopers’s global forest and paper practice in Vancouver, said, “Such global alliances might have the potential to improve over-all productivity and labour-management relations.”

Strength in Numbers

Unions, by their very nature, want to negotiate global agreements that are mindful of the rights of workers and the communities in which they reside. “We are prepared to wage global pressure campaigns against those employers that choose to violate employees’ rights,” said Fred Higgs, general secretary of ICEM.

From the union’s point of view, it’s time to play catch-up after years of what seemed like concessions to management. Simply put, we might be entering an age of confrontation, or at least one of hard-boiled negotiation not seen since the 1980s. And mill workers have been adding up successes, including at a Smurfit-Stone mill in Illinois. “Smurfit management was stonewalling,” said Kenneth Zinn, North America regional coordinator for ICEM. “We had a meeting with PACE and the head of unions in Canada, Ireland, France, the United Kingdom and the Netherlands, and they took up the call to help the Illinois union — and within a month there was a contract.”

As well, when paper workers in Finland struck en masse last year over stalled contract negotiations, Swedish paper workers and other ICEM affiliates from other countries supported them. The net result of these efforts was that the Finnish union claimed victory. “As unions, we are always stronger united together than when we are acting separately,” said Jarmo Lhteenmki, president of Paperiliito, the Finnish paper workers union.

There’s more. On October 15, 700 workers affiliated with PACE at Purico Ltd.’s paper mill in Brevard, NC, the world’s third-largest supplier of tobacco papers, went on strike. The plant’s management has tabled a contract that the union finds objectionable, including a 20% wage cut, a tripling of employee self-payment for health insurance and paid holidays, and the end of contract language protecting workers’ jobs if the plant is sold.

Rallying to support the workers at the North Carolina mill were unions from Britain, where the parent company is based, and ICEM. “We will not stand by while Nat Puri attempts to destroy the livelihoods and job security of American workers,” said Higgs in no uncertain terms, referring to the head of the holding company that owns the mill. “Puri’s workers around the world demand that the company immediately return to the bargaining table and negotiate a fair and just agreement with PACE.”

It is striking to note that common to all these work actions was that other national and international unions joined the local union in support. One of the chief reasons that unions were able to be so effective is that they had accurate information on the business practices of the companies with which they were negotiating. Often, this information comes from union sources operating at the geographical area where a company’s head office resides. “Sharing experiences is very important,” Zinn noted. “Knowing that a company is adopting a management practice in one part of the world is important for unions in another part of the world when both are working with the same company.”

From the union’s view, the idea behind information-sharing is to resolve problems before they escalate. “The idea is to avert a crisis,” he said. “But if disputes arises, our hope is that we’ll have a united voice against that company worldwide.”

Community Matters

To be sure, one major concern of globalization is how it affects communities. The charge levelled against large transnationals is that they tend to make decisions that show little concern for local communities, closing mills and displacing workers when earnings are below the expectations of the financial overseers on Wall Street or Bay Street.

As much as local issues are important, they ought to be balanced against the interests of shareholders, said Campbell of PricewaterhouseCoopers. “We have a capitalist economy that has to reward its shareholders.”

At the crux of the matter is — what is fair and just? “We think that globalization is a fact of life,” Zinn pointed out. “The question is what kind of globalization do we want. Will workers, in particular, benefit from globalization or is it limited to owners and management?

For Canadian companies, globalization has changed the way of life for many of the 350 communities that have mills, a thought put forth by Payne of the CEP. “As companies become larger, there is less community pressure on them, and it’s conceivable that companies can walk away from an asset today that they’ve just invested in yesterday.”

One notable example is Abitibi-Consolidated, which is carrying more than $5-billion in debt, much of it accumulated the last few years to finance its acquisitions. The pressure on it to liquidate assets becomes stronger in a pared-down economy. “We’re still concerned, whether it’s Abitibi, Norske Skog or Weyerhaeuser, on what globalization will hold, particularly its effect on communities and mills, he said. “When companies become large, governments have less influence over them,” Payne said.

In a global arena, things change very quickly. For example, a few years ago, few people in North America had heard of Norske Skog. Today, it holds a huge chunk of the industry in North America.

One area that Payne would like to see given more government oversight is the use of fibre, a public resource. As such, it ought to be linked to Canadian jobs. “If you are going to use a public resource, you have an ob
ligation to create jobs out of that resource. You don’t have the right to off-load secondary and tertiary manufacturing elsewhere,” he pointed out. “We are going to become more vigilant about the exploitation of that resource.”

While that might sound tough-talking, Payne advocates negotiation rather than confrontation. “I’m hoping that through lobbying and negotiation that we can drive our point home.”

One of these points is that, although the Canadian industry is changing — from a commodity-based producer to a specialty-based one — mill owners have to invest in their mills when the economy picks up again.

Different Strategies

Still, for all the talk of globalization, companies still operate in different ways around the globe. For example, when Scandinavian firms buy North American companies, they rarely impose their progressive ideas on their new holdings, ICEM’s Zinn said. “Those more enlightened European companies that have decent labour-management relations, when they come to North America, tend to adopt North American models of behaviour.”

Such is typical, said Hebdon of McGill. “Companies tend to follow the rules and social norms of the country in which they operate.” Not surprisingly, the goal of unions is to ensure that companies adopt the higher standards — not the lower ones — and to curtail the over-all downward pressure, which happens with globalization.

And while Zinn is sympathetic to what management is contending with in the wake of September 11 terror attacks and the resulting economic downturn, he said, “We don’t want to see management take it out on the hide of employees.”

To be sure, many contentious issues will be discussed in the next few years, including workplace health and safety, cross-training or multi-tasking, and outsourcing. A bigger one looms, as well — an ageing workforce (see sidebar on Ageing workforce.). No doubt, these are trying times. But the industry also faces a golden opportunity to make changes in labour-management relations that will put the industry in good (and hopefully secure) footing. “We care a lot about the industry,” CEP’s Payne pointed out. “And we need a good working relationship to make the industry successful.”

Perry J. Greenbaum is an award-winning business and technology writer. He can be reached at saltpub@sympatico.ca.

The end of globalization?

One major aim of globalization was that multinational companies could turn out generic products, usually by setting up shops in developing nations and then targeting a global community of hungry consumers. In short, the approach can be boiled down to one-size-fits-all.

Yet, in a recent article in the Globe and Mail, Karl Moore, a professor at McGill University’s faculty of management, said that, rather, national and local markets still wield considerable influence on how consumers buy products. “The real picture is somewhat different. Multinationals have to adapt their products for national markets.”

He cites the example of North American makers of household appliances like stoves, refrigerators and washing machines, which have had poor success selling their products abroad, despite low prices. “Culture still matters when we wash our clothes.” Moore pointed out.

In short, multinationals that are culturally aware of local tastes will be more successful in selling their products, he said. “Managers, for their part, need to take into consideration not just the global environment, but also the city clusters, nations and regions.”

— Perry J. Greenbaum

Somewhere in the middle: Canada

It’s telling: many Americans consider Canadians socialists for relying on government-run programs. For proof, they cite such policies as socialized medicine and our safety net, which although might be in disrepair, is a departure from the American way of self-reliance and corporate enterprise.

Such differences partly explain why membership in unions among the private workforce is double in Canada: the percentage is 10% in the US, and 20% in Canada. And it’s likely to remain low in the US. “There is very little move for labour reform in the United States,” said Bob Hebdon, associate professor of industrial relations at McGill University’s department of management.

The US stands in sharp contrast to Europe, where union membership among workers approaches 60%. There, some unions are signing agreements that are based on the standards developed by the Swiss-based International Labour Organization, or ILO.

The ILO’s contract language limits the number of hours an employee can work, a ban on child labour, sets fair compensation and has a built-in dispute-settlement mechanism. “It’s a new direction that labour in Europe is taking,” Hebdon said.

— Perry J. Greenbaum

Ageing workforce

Canada, the Unites States and Britain face a shortage of skilled workers by 2012, said a study by the British North America Committee, a employers group in Ottawa. It added that these countries have been slow to recognize and do something about it.

Much of the shortage is attributed to changing demographics — an ageing population combined with fewer working age young people to fill expected positions. “Half of the tradespersons will retire in five to 10 years,” said Brian Payne, president of the Communications, Energy and Paper Workers Union of Canada. “And the industry is not planning for it.” (Payne gave similar sentiments at last year’s annual meeting, when he spoke at one of the Open Forums.)

Among the recommendations of the employers-group is that companies re-examine their practices, which includes matching pay with productivity and redesigning benefits packages to better accommodate older workers.

— Perry J. Greenbaum

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