MONTREAL — Thousands of Quebec sawmill workers have rejected an agreement negotiated between their union leadership and AbitibiBowater Inc. that would have chopped their salaries and tied wage recoveries to the market price of wood and the currency exchange.
About 2,000 sawmill workers in Quebec voted 56 percent against the proposal, the union announced Monday.
The Communications, Energy and Paperworkers Union said workers rejected the seven-year proposal to cut wages by 10 percent. The proposed salary reductions could have been recovered with a rise in the market price of wood and depreciation of the Canadian dollar.
The union represents the bulk of the company's 5,000 sawmill and wood products employees.
''It's obvious that the confidence of our members has been shaken,'' union vice-president Renaud Gagne said in a news release.
''Lately, not a day goes by without an announcement of lost jobs or closures.''
Gagne said the union leadership had agreed to the agreement following repeated demands by the company since last summer to reduce production costs and wages. In the context of the challenges facing the industry, it wasn't unreasonable to have a system to regain the salary reductions, he added.
AbitibiBowater, a company formed last year by the merger of Montreal-based Abitibi Consolidated and Bowater Inc. of South Carolina, said it is studying its next steps.
''It was rejected by the membership and we are disappointed with that outcome,'' Abitibi spokesman Seth Kursman said in an interview.
''But we must emphasize that with the continued difficult conditions in this sector of the business in particular, we must continue to work collaboratively to find solutions.''
Meanwhile, negotiations between the company and national representatives are continuing.
In December, the union offered to reopen collective agreements at Abitibi's paper plants in a bid to find long-term solutions to the industry crisis, but remained loath to endorse wage concessions.
Abitibi announced in November the first of two possible rounds of plant closures that would force more than 1,600 workers in Quebec, Ontario, New Brunswick, British Columbia and Texas out of work. They would join 1,000 already idled.
The cuts are part of a wave of streamlining that has afflicted the Canadian forestry sector in the last year or so, particularly lumber mills across Canada.
In recent months Vancouver-based Canfor Corp., Montreal's Tembec Inc. and Domtar, as well as others, have cut jobs and reduced production because of slumping demand from the U.S. housing industry.
U.S. housing starts dropped by a third after the subprime mortgage mess last summer reduced demand for housing in many parts of the country as riskier borrowers couldn't get financing for home purchases.
Major defaults are expected this year as U.S. homeowners refinance their purchases at higher interest rates and many experts don't see a recovery in U.S. housing until 2009.
On the TSX, Abitibi shares gained seven cents to $24.93 in trading Monday.