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Union, AbitibiBowater Contract Extension Talks Stall

Newsprint manufacturer broke off talks with its union after workers refused to agree to wage and pension concessions that the company claims will help lower operating costs.

MONTREAL (AP) — Forestry and newsprint giant AbitibiBowater broke off talks with its union on Thursday after workers flatly refused to agree to wage and pension concessions that the company said are desperately needed to lower operating costs.
The Communications, Energy and Paperworkers Union announced that negotiations between the Montreal company and 30 CEP locals representing more than 5,000 workers from 13 AbitibiBowater mills ended after five days of discussions.
The two sides had been trying to reopen contracts a year early.
The union said it was willing to extend the contract by a couple of years and help to improve productivity and efficiencies that would generate ''tens of millions of dollars'' in annual savings.
''We've got a serious problem in Canada and Quebec with the pulp and paper industry but the biggest employer decided it wanted to stick its head in the sand,'' union president Dave Coles said in an interview.
Labor peace would helped the company in their approaches to banks for extended lines of credit, Coles said.
''They kicked us in the butt and said 'We want concessions out of the pension plan' and 'We want to reopen the collective agreement' and they walked away from the table and abandoned us.''
Coles said Abitibi wanted $40 million to $50 million in annual concessions by:
  • starting less costly defined contribution pension plans for new employees. A defined contribution plan wouldn't guarantee plan members a set monthly payment on retirement.
  • workers giving up all premiums and bonus pay.
  • deferring negotiated pension benefit increases for retirees.
  • deferring a two-per-cent wage increase due in May.
  • taking unfunded liability for past service out of the pension plan and paying it out of general revenue.
Abitibi spokesman Jean-Philippe Cote declined to detail the concessions the company requested of workers, but said they are needed for the company to weather the dramatic changes that are hammering the industry.
''People have to be realistic and look at the reality,'' Cote said in an interview. ''What happened is that the dollar drastically changed and demand plunged 10 percent.''
He said the company was disappointed by the break in talks, but blamed the union for refusing to address the real issues.
''We had no choice but to end it because the union clearly said they would not make any concessions,'' Cote said.
''There's no point to meet and just talk about extensions when we all know the extremely difficult financial context that not only the company but the industry is facing.''
The newly merged company has already announced a series of plant closures and layoffs as it adjusts to slower market demand, but it continues to lose money. In its first quarter as a combined company, AbitibiBowater lost $250 million.
The company has been in discussions with government, employees and suppliers about a possible second phase of cuts. With the collapse of labor negotiations, the company may be forced to shut more mills or make other unilateral changes to its operations, including asset sales or production cuts.
But Abitibi refused to link the talks with possible further job cuts, saying it will now have to ''work harder to address solutions to be able to reduce our costs and improve our productivity and competitiveness.''
Coles said the company wouldn't agree to protect any jobs in exchange for concessions.
''It doesn't matter what we gave them, they clearly said to us: 'It doesn't matter what you do we can't guarantee you that mills aren't going to shut or machines aren't going to shut.' ''
AbitibiBowater is the eighth-largest publicly traded pulp and paper manufacturer in the world. Following the sale of its Snowflake mill in Arizona to Catalyst Paper, the company will own or operate 27 pulp and paper facilities and 35 wood products mills in the U.S., Canada, Britain and South Korea.
In Thursday trading on the Toronto Stock Exchange, AbitibiBowater shares fell 32 cents or 3.1 percent to close at $9.80.
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