Social Policy in Ontario

One by one they’ve toppled: Stelco, Dofasco, Inco, Falconbridge, Noranda, Domtar. Since Stephen Harper took power, more than 600 Canadian companies have fallen into foreign hands.

Since 1985, when foreign investment rules were loosened, Ottawa has approved more than 1,500 takeovers and blocked just one. (Former industry minister Jim Prentice refused to let an American munitions firm acquire the space division of MacDonald Dettwiler — maker of the Canadarm — saying he could see no “net benefit” to Canada.)

Business leaders say these takeovers have been good for Canada. They have accelerated the pace of technological change, brought badly needed capital into the country and encouraged Canadian companies to become aggressive global hunters.

Community leaders say they have hollowed out Canada, stripping the nation of its industrial icons and destroying livelihoods.

This week, the consequences of one of the biggest foreign takeovers of the Harper era are playing out in Sudbury.

In 2006, Inco, which had provided five generations of miners with a middle-class income, was taken over by the Brazilian multinational Vale.

The new owner publicly promised not lay off any workers for three years. It also made explicit commitments to Ottawa’s investment review agency. They have never been revealed.

Shortly before reaching the three-year mark, Vale announced it would lay off 423 Canadian workers; 261 in Sudbury and 162 at its other locations in Port Colborne and Voisey’s Bay. The next month, it said it was shutting the Sudbury mine for eight weeks, beginning June 1, 2009. Workers hoped it was a response to weak commodity prices.

But Vale chief executive Roger Agnelli quickly put that to rest. He said Sudbury was his company’s highest-cost operation — it has mines in 35 countries including Indonesia, Malaysia, China and South Africa — and it had to become globally competitive.

That was reflected in the company’s subsequent contract offer. It called for a substantial reduction in the “nickel bonus” that miners had received for 20 years. (When the price of nickel exceeded $2.25 a pound, workers were eligible for a share of the profits.) It also proposed the phasing out of the employees’ defined benefit pension plan.

Rather than give up these hard-won gains, 3,100 workers, represented by the United Steelworkers, went on strike on July 13, 2009.

This week, a tentative settlement was reached.

The five-year contract calls for rollbacks in workers’ benefits. The threshold for the nickel bonus would be raised to $3.75 and the amount would be capped at 25 per cent of a worker’s wages. The pension plan was restricted to those already in it.

To soften the blow, the union won a $2,000 signing bonus and a minuscule wage increase. Its original rallying cry — “a Canadian solution, not a Brazilian imposed solution” — fell by the wayside.

If the deal is ratified, Vale will have achieved its two main goals. It will have downsized its Sudbury workforce (approximately 1,000 striking workers took early retirement or found other jobs). And it will have demonstrated its ability to rewrite the rules of labour negotiations in Canada.

Workers will have salvaged some of what they had. Their pensions will be grandfathered and their nickel bonus — while reduced — will still be there.

Is this takeover of “net benefit” to Canada? It is hard to see the gains. Employment hasn’t gone up. Economic activity hasn’t increased. The only case that could be made is that productivity at the Sudbury mine may go up.

Is Vale meeting its undertakings to the government? It’s hard to tell since Ottawa insists on keeping them confidential.

Should Canadians ask whether this is the future they want? Yes.

< http://www.thestar.com/article/833950–goar-where-s-the-net-benefit-to-canada >