Labour dis­pute boils on at Que­bec smelter as pall moves over alu­minum in­dus­try

Calgary Herald - - FINANCIAL POST - GABRIEL FRIED­MAN gfried­[email protected]­tion­al­post.com Twit­ter.com/ GabeFriedz

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

CHRISTINNE MUSCHI/BLOOMBERG FILES

A locked-out worker watches as a truck ex­its the Alu­minerie de Bé­can­cour Inc. plant in Bé­can­cour, Que., in Au­gust. Al­coa Corp., which owns 70 per cent and op­er­ates the smelter, plans to re­place work­ers with sub­con­trac­tors amid grim mar­ket con­di­tions.

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