Abitibi breaks off talks on contracts

MONTREAL—Forestry and newsprint giant AbitibiBowater broke off talks with its union yesterday after workers flatly refused to agree to wage and pension concessions the company said are desperately needed to lower operating costs.
The Communications, Energy and Paperworkers Union announced negotiations between the Montreal company and 30 CEP locals representing more than 5,000 workers from 13 AbitibiBowater mills ended after five days of discussions.
The two sides had been trying to reopen contracts a year early.
The union said it was willing to extend the contract by a couple of years, and help to improve productivity and efficiencies that would generate “tens of millions of dollars” in annual savings.
“We’ve got a serious problem in Canada and Quebec with the pulp and paper industry but the biggest employer decided it wanted to stick its head in the sand,” union president Dave Coles said in an interview.
Labour peace would have helped the company in their approaches to banks for extended lines of credit, Coles said.
“They kicked us in the butt and said ‘We want concessions out of the pension plan’ and ‘We want to reopen the collective agreement,’ and they walked away from the table and abandoned us.”
Coles said Abitibi wanted $40 million-$50 million in annual concessions by:
•starting less costly defined contribution pension plans for new employees (a defined contribution plan wouldn’t guarantee plan members a set monthly payment on retirement);
•workers giving up all premiums and bonus pay;
•deferring negotiated pension benefit increases for retirees;
•deferring a two-per-cent wage increase due in May; and
•taking unfunded liability for past service out of the pension plan and paying it out of general revenue.
Abitibi spokesman Jean-Philippe Cote declined to detail the concessions the company requested of workers, but said they are needed for the company to weather the dramatic changes that are hammering the industry.
“People have to be realistic and look at the reality,” Cote said in an interview. “What happened is that the dollar drastically changed and demand plunged 10 percent.”
He said the company was disappointed by the break in talks, but blamed the union for refusing to address the real issues.
“We had no choice but to end it because the union clearly said they would not make any concessions,” Cote said.
“There’s no point to meet and just talk about extensions when we all know the extremely difficult financial context that not only the company but the industry is facing.”
The newly-merged company already has announced a series of plant closures and layoffs as it adjusts to slower market demand, but it continues to lose money.
In its first quarter as a combined company, AbitibiBowater lost $250 million.
In trading yesterday on the Toronto Stock Exchange, AbitibiBowater shares fell 32 cents, or 3.1 percent, to close at $9.80.