Industry association head cites potential instability in the US over NAFTA's future while auto and housing sectors slow.
MONTREAL — The lockout of workers at a Quebec aluminum plant comes at a perilous time for the Canadian industry because of uncertainty over the future of NAFTA and slowing US demand, says the head of Canada’s aluminum trade association.
“We find ourselves in a very fragile situation,” Jean Simard of the Aluminum Association of Canada said after the ABI smelter in Becancour, Que., locked out workers who rejected a contract offer.
Simard didn’t want to wade into the labour dispute itself, but said market conditions are challenging because of the potential instability in the US over NAFTA’s future while the auto and housing sectors begin to slow.
“The annual growth in demand in our key market based on fundamental indicators is also slowing down so it’s not the best of times to have a labour situation like this,” he said in an interview.
The sixth round of NAFTA negotiations will resume later this month in Montreal, but Foreign Affairs Minister Chrystia Freeland said the government is also preparing for the worst-case scenario _ a decision by President Donald Trump to withdraw from the three-way, continental trade pact.
Quebec smelters make 90 per cent of Canada’s 3.2 million annual tonnes of the lightweight metal, 90 per cent of which is exported south of the border.
ABI Becancour said it locked out 1,030 unionized employees at around 3 a.m. Thursday. It plans to use non-unionized workers to maintain operations at one of three production lines.
Since opening in 1986, the plant’s only other work stoppage was a four-month strike in 2004.
The smelter about halfway between Montreal and Quebec City has the capacity to produce about 430,000 tonnes of aluminum annually. The smelter is 75 per cent owned by Alcoa and 25 per cent by Rio Tinto.
Becancour Mayor Jean-Guy Dubois said he’s very concerned that the labour dispute could lead to a complete shutdown of the region’s largest employer which contributes nearly 20 per cent of the municipality’s tax revenues.
“You can imagine the catastrophe in the worse scenario that I don’t even want to think about which is the closure of the company,” he said in an interview. “I’m really worried about what happens next.”
Dubois said he hopes both sides will make a final negotiating sprint to reach a deal that would prevent psychological harm for the town’s residents.
The lockout was launched less than 24 hours after members of United Steelworkers Local 9700 voted more than 80 per cent to reject what the company called its final contract offer.
The union said the key issues in the dispute are a company plan to introduce a new member-funded pension plan instead of a defined benefit plan and recognition of workers’ seniority, particularly regarding employee transfers and turnover.
Clement Masse, president of the union local, denounced the company’s “heavy-handed” action.
“This is a cavalier act by this company, right after we held out an olive branch and proposed that we resume negotiations,” he said in a news release.
The two sides were convened by a government mediator to meet Thursday in a bid to replace the five-year collective agreement that expired in November.
While there is an excess global supply of aluminum, Americans used three million tonnes more last year than was produced in Mexico, Canada and the U.S., said Simard.
With Canadian smelters running at full capacity, any reduced output will be gobbled up by competitors from Russia, the Middle East, China and India.
“We’re competed against on our neighbouring turf by metal that comes from all over the world more and more. So when we pull out of the game the others come in.”
Although the global price of aluminum has improved to US$2,100 per tonne, it is far below where it was before the 2009 financial crisis.
Without a signal that demand and selling prices will get stronger, Simard said producers have to keep costs to the lower possible level to compete.
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