Unifor says deal with Resolute to bring back jobs but not undo past concessions

MONTREAL – The union representing Resolute Forest Products workers in Ontario and Quebec says it was able to reach a four-year deal that will bring back jobs and set a pattern for negotiations with other forest sector companies.

“We were really able to put into place language to bring back some jobs which are so important and really start to put into place some security for people that have been in an industry with very little security for years,” Unifor president Jerry Dias said Friday.

The tentative agreement, which must be ratified by workers in the coming days, includes undisclosed wage and benefit increases. It covers about 2,000 unionized workers at 11 of Resolute’s mills in the two provinces.

Dias declined to say how many jobs could be restored, noting that some of the company’s mills are doing better than others. But he described the numbers as “significant” given the sacrifices and downsizing that took place several years ago as the Montreal-based producer formerly called AbitibiBowater was restructuring under creditor protection.

“Our members had significant wage cuts, benefit cuts and job losses. So this time around it wasn’t about getting back everything that we lost, but it was really about putting into place a mechanism to move forward and one of the key pieces of course was jobs,” Dias said in an interview.

Resolute (TSX:RFP) said it was satisfied with the agreement in principle.

“This agreement allows Resolute to continue productivity improvements and also to offer our employees good working conditions in several regions of Quebec and Ontario,” president and CEO Richard Garneau said in a statement.

The agreement covers seven mills in Quebec: Amos, Baie-Comeau, Dolbeau, Gatineau, Kenogami, Laurentide and Saint-Felicien, and four mills in Ontario: Fort Frances, Iroquois Falls, Thorold and Thunder Bay.

It follows a deal reached in February with the union representing 1,500 of its workers at four U.S. sawmills.

Forestry sector analyst Paul Quinn of RBC Capital Markets said he was surprised how quickly a deal was reached, suggesting that the union recognized, unlike some competitors, that Resolute honoured its pension plan obligations which hurt cash flows and reduced the company’s flexibility.

“It sounds like they’re at least on the same page in terms of what’s facing the industry,” Quinn said from Vancouver, adding he thought a recent union document outlining it’s take on the state of the industry was “refreshingly realistic.”

Quinn said Garneau knows his costs well and what he needed to achieve. The analyst said options talked about by the industry have included creating a two-tiered wage structure at mills that would protect senior workers but start new hires at significantly lower wages.

“The fact that he’s agreed to something at this point says that the union understands his position and that’s a positive thing,” Quinn said.

Canada’s largest private sector union said the negotiations were its first with a major sector since Unifor was created following the merger of the Communications, Energy and Paper Workers Union and the Canadian Auto Workers Union.

Unifor targeted Resolute to help establish a pattern agreement for some 10,000 Unifor members at companies across the sector in Eastern Canada.

“The deal we did with Resolute is going to go right through the entire sector from coast to coast to coast,” added Dias, who said he personally played a “major role” in closing the agreement.

The union said the company also agreed to join in efforts to get the federal government to discuss ways to improve the health of the forestry sector.

After years of job cuts and uncertainty, the union claims the industry is on the rebound as lumber demand rises for U.S. home construction and companies seek to boost paper exports.

Despite permanently closing its mill in Fort Frances, Ont., Resolute is investing to restart sawmills in Ignace in northwestern Ontario that have been idled since 2007. It’s also building new operations in Atikokan in northwestern Ontario and increasing capacity at several other operations in Ontario and Quebec.

J.D. Irving Ltd. recently announced it will spend $38 million to modernize its sawmill production in New Brunswick, while Irving Pulp and Paper plans to spend about $450 million to modernize a mill in Saint John. The projects are expected to help creation 1,000 full-time and seasonal jobs.

But Quinn said the fundamental problem facing the pulp and paper industry is declining demand, with a lower Canadian dollar providing only temporary relief.

“Lumber is doing better and pulp is doing better but where the bulk of the jobs are for this it’s doing terribly. Let’s not sugar coat it. It’s brutal. It’s less than half it was in 2000. It’s a really tough climate.”

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