Most of the roughly 200 Steelworkers Local 6500 striking mine workers who have retired and taken their pensions over the last six months will not be replaced by Vale Inco, according to a spokesperson for the company.
Vale Inco spokesperson Steve Ball made the statement while commenting on an internal company document sent to Northern Life by an anonymous source.
The document is a power point presentation, entitled “Vale Inco Limited Ontario Operations — Sudbury Mines Strategy Workshop June 15-16th, 2009,” which outlines the discussions at a Vale Inco management workshop last year.
The document proposes reducing the workforce in Vale Inco's Sudbury mines from 2,000 employees to 1,800 — or even 1,500 — down the road. The reason for the cuts is cited as improving cost structures.
“If we don't change now - we will look like Xstrata in five years,” said one line in the document.
The document was produced, with the backdrop of the recession and the end of Local 6500's contract, to look at reducing the workforce in the company's Sudbury mines through attrition, Ball said.
The goal of 1,800 employees in the mines has already been achieved because so many strikers have taken their pensions over the last few months, Ball said.
“What we basically need to do is see if we can achieve the same production, or better, and reduce costs, with the people we have left,” he said.
“Our intention is we are not going to go out and replace one (employee) for one. Obviously once the strike is over, we will see what kind of skill sets we have left after all the retirements and quits, and so on. Basically, we are not intending to replace all the people who have retired.”
Steelworkers Local 6500 president John Fera said he is “pretty disappointed” that Vale Inco held the workshop in the first place.
Fera confirmed that the document is the same one quoted in the bargaining in bad faith complaint against Vale Inco, which the Steelworkers filed Jan. 13 with the Ontario Ministry of Labour.
“When we first received it, we really didn't know what to do with it because it's not something that the company had talked to us about. Certainly they didn't talk about it during negotiations, and they didn't talk about it after negotiations,” Fera said.
“We were pretty disappointed that the company had this thing in their back pocket.”
Fera said the document was included in the Steelworkers' bargaining in bad faith submission because “it looked like their plans were a little different than trying to negotiate a contract.”
The document outlines goals at each of Vale Inco's Sudbury mines. With Garson Mine, it states that the “workforce is about double what it should be for the production rate (300 versus 150).
Regarding Creighton Mine, the document says that “to be at benchmark levels (we) would have to go down to 200 people, plus or minus from 500 people currently.”
The document says the labour force at Coleman Mine needs to be reduced by 10-20 per cent, and that management “could take out 40 people without impacting production” at Stobie Mine.
Another section of the document, entitled “Opportunities to Improve in FY 2011 and 2012,” poses the question “How do we properly reduce union people?” under the heading of “downsizing.”
Fera said “it certainly looks like they're trying to target union activists, union stewards and health and safety activists.”
He said he finds it puzzling the company would want to reduce Local 6500 members, given that the union is known “around the world” for improving mine safety.
Ball said that when the document refers to reducing union people, it is actually “talking about the workforce that we have. The majority of employees are unionized employees. We all know that.”
Vale Inco staff employees were also reduced in 2009 through attrition and layoffs, Ball said.
The document also speaks about a creating a “one-mine” approach at Vale Inco's Sudbury operations.
“We have five operating mines. Really, it's been well-known that those mines have typically done business in different ways. The ore bodies are different, and we have to mine them differently in some regards,” Ball said.
“It's to look at if we have a best practice at one mine, why don't we do it at all the mines?”
At the time that the document was produced, nickel prices were significantly lower than they are now.
According to KITCO metal charts, nickel was valued at between $4.00 and $6.00 US a pound between Jan. 09 and June 09. But since Nov. 24, nickel prices have ranged from a low of $7 US a pound to as high as $9 US a pound and recently in Jan. 2010 have stayed above $8 US a pound. Inventories on the London Metal Exchange though continue to remain high at over 150,000 tonnes, substantially higher than levels of 100,000 tonnes in Nov. 09.
Ball said the higher nickel price will not affect Vale Inco's plans.
“It's not a question of what the nickel price is. We're not looking at the nickel price today and tomorrow. We're looking for a sustainable, long-term operating, understanding that nickel prices will increase and decrease over that time,” he said.
“Today's nickel price is not relevant to the strategy that we're looking at for long-term operation.”
Dick DeStefano, executive director of the local area mining supply and service companies (SAMSSA), e-mailed his membership of 103 companies about the document, indicating his concern, as cutting costs by Vale Inco will not only mean layoffs, but reducing costs for supplies.
However, despite lower volumes of work, mostly due to the current labour dispute and the general economic situation, his members are quite busy, he said.
“Our guys believe in going global. This sector is huge and has a lot of potential to grow,” he said. He has heard of only one firm going bankrupt out of approximately 300 mining supply and service companies in the northeast.
DeStefano himself was not sure how important the document really was in predicting what strategic plans Vale Inco had.
“It was prepared by a university professor, Peter Richardson from Queen's University. There is a lot of vagueness in the document.”
One comment he made is that there is a feeling by many in the city that Vale Inco operations are overstaffed.
“Maybe they realized that themselves and that is why they are considering staff reductions,” he said. Another issue is the change of pension plans for new employees, a main issue for the company.
“Maybe they have focused on that as a way to significantly reduce labour costs.”
((With files from Bill Bradley))
