Labour dispute boils on at Quebec smelter as pall moves over aluminum industry
Snowflakes fell early Wednesday morning along the banks of the St. Lawrence River in Bécancour, Que., where Jennie Vallé-Boucher is one of about 1,000 workers from an aluminum smelter, who is preparing to spend a second winter on the picket line.
In January, Alcoa Corp., which owns 70 per cent and operates the Bécancour smelter, locked out its unionized workers in a labour dispute that continues to boil over even as a cloud of uncertainty has settled over Canada’s aluminum industry.
One thing is clear, however: If and when the lockout ends, market conditions are unlikely to be the same as when it started. In the nearly 10 months that have passed since the dispute erupted, the U.S. enacted 10-per-cent tariffs on aluminum imports, which remain in place despite negotiating a new trade agreement with Canada and Mexico.
“At least in the aluminum industry, this is totally uncharted territory,” said Jean Simard, president and chief executive of the Aluminum Association of Canada. “We’ve never gone through this.”
On Tuesday, Simard travelled to Ottawa and testified to the House of Commons’ International Trade Committee that U.S. tariffs are making it difficult to plan investments, and jeopardizing growth of Canada’s aluminum industry.
He said he fears the U.S. will try to replace the tariffs with quotas on the amount of aluminum that could be imported from Canada — a move that runs counter to his free market preferences.
The fact that the U.S. is gearing up for an even larger trade war with China has only created additional worries, said Simard.
“You don’t know where the economy is going,” he said. “The system around tariffs and quotas is not set. It’s very volatile.”
Justin Bergner, an analyst with Gabelli & Co. who covers Alcoa, said aluminum smelters nearly everywhere in the world are facing the same issue: Making a tonne of aluminum requires two tonnes of alumina, which has increasingly become an expensive raw material. Aluminum prices are up in the past two years, but the increase has not kept pace with the rise in alumina prices, which have nearly doubled since 2016.
So as alumina prices rose, aluminum producers’ profits fell. Except in China, where Bergner said alumina continues to be available at a cheaper price.
For Alcoa, which also produces alumina, it’s not been an unwelcome shift.
“If you look at the value of Alcoa now, and it’s not really hard to see, it’s almost all from their alumina refining business,” said Bergner, who estimated its alumina business accounts for 70 per cent of its roughly $10-billion enterprise value, by his calculations.
That may explain why last week Alcoa announced its intentions to close down two aluminum smelters in Spain, and reorganize into a single plant there.
The company also has said it opposes the U.S. tariffs on aluminum, and has applied for exemptions on imports from one of three smelters in Quebec that it operates. But not Bécancour.
Jim Beck, an Alcoa spokesman, said that the company is evaluating whether to apply for exemptions there. Rio Tinto Group owns the other 30 per cent of the Bécancour smelter but is not the operator.
The company won’t say exactly what it wants in negotiations from workers there, but said the facility has not performed as well as others and that it wants “better collaboration with the workforce.”
It also said it wants to reduce the workforce through natural attrition in the next few years, as nearly a third of the 1,030 workers there become eligible for retirement.
Meanwhile, workers at the Bécancour smelter, who belong to United Steelworkers Local 9700, have said they conceded to make changes to their pension so that active union members assume more risk, but that the negotiations have stalled over company plans to replace workers with subcontractors.
“We are ready to cut jobs,” said Dominic Lemieux, assistant to the union’s Quebec director, in Montreal. “We have no problem if you bring new technology things like that.”
But he said the union will fight against plans to cut jobs and hire subcontractors as replacement workers.
Earlier this month, Lucien Bouchard, the former premier of Quebec, who was appointed by the province as a special mediator on the case, called off negotiations saying the two sides are still too far apart.
Thus, the fight rages on: Union members say they maintain a picket line 24 hours a day outside the smelter, and occasionally show up in front of a manager’s house.
Last week, the company called the police after it said 40 union members showed up at on offsite meeting for its managers, and began protesting the lockout. No one was arrested.
In recent weeks, Lemieux said the union has taken to writing letters to Alcoa shareholders and board members, explaining all the concessions they are willing to make.
For Vallé-Boucher, who has operated heavy machinery at the smelter for a decade, and who stands in the picket line, she said the hardest part has been people in the community who post on Facebook that the union members should accept minimum wage and cuts.
“Behind Facebook you can do whatever you want,” said Vallé-Boucher. “They say stuff they may not necessarily say if you’re in front of them.”
Still, she said her union members will continue to picket, even though it’s not always easy.
“It’s quite hard and winter is coming,” said Vallé-Boucher. Financial Post