2019 Bargaining Committee Update #12

From Your 2019 USW Bargaining Committee

Thursday, September-12-19                                                                                     Release #12

Good day Brothers and Sisters,

The Final Offer the Bargaining Committee received from Vale has prompted several questions. We understand Vale has issued a Q&A to the membership today and would greatly appreciate if you could attend our evening meeting at 8pm at the Royal Canadian Legion where the bargaining committee intends to answer your questions.

Benefits Questions and Answers – 2019 Negotiations

Earlier today Vale released the following Q&A, The Union will also take this opportunity to give a response to the Questions.

Q: What is Vale’s goal in this negotiation?

Vale A: Our goal is a new 5 year collective agreement that establishes our mining and milling operation with a bright and sustainable future.

Union A: No dispute with this statement.

Q: What is the future of the Thompson Operations?

Vale A: We are in the midst of two important feasibility studies concerning the extension of Thompson Mine which, with approval, will extend the life of our operation for decades. The extension of Thompson Mine involves two projects, which collectively, are expected to cost well in excess of $1 Billion dollars over the coming years.

Union A: While the union recognizes the potential for mining and milling in the area, we are disappointed that Vale has made no significant investments to the existing infrastructure for quite some time. We recognize that major capital investments require substantial finances, however we strongly disagree with the idea that those finances should come directly out of the pockets of the membership.

Q: Why has the Company issued a final offer?

Vale A: Excellent progress has been made in this negotiation and the parties have agreed to many items, including necessary benefits changes. A key issue that separates the parties is providing retiree benefits for employees hired after September 15, 2019. The future we are creating requires significant capital investments over the coming years and providing retiree benefits for future employees is simply not sustainable.

Union A: The Company had no other option but to issue a final offer. Your bargaining committee could not morally and responsibly agree to bring concessions of this magnitude to the membership, we felt it would have been an insult, quite frankly the union believes this offer is an insult, but it is Vale’s insult alone.

Q: Why are benefits so important in this round of negotiations?

Vale A: The retiree benefit liability for the Manitoba Operation is currently $163 million and is growing annually. This is one of our biggest liabilities. Think of this liability like having too much credit card debt - we are constrained to invest in the future of our operations because we are always playing catch up on making interest payments. This $163 million retiree benefits liability is growing at an unsustainable rate and it creates two risks; failure to address this liability puts the long term stability of your benefits and this business at risk and for those reasons benefits changes are needed to protect your benefits and the future of our operations.

Having recently transformed to a mining and milling operation, reducing this liability is absolutely critical to building a healthy and sustainable business where everyone can feel confident in the long-term future of our operation yet also allow the Company to continue to provide you with generous benefits now and for the years and decades to come when you are retired.

Union A: While $163 million sounds like a lot of money, the union can assure you that your health while working and into retirement is worth more. This should never be a point of debate in the industry we work in. This is the cost of doing business for Vale. Not to mention this is the promised money that was to be invested in you when you obtained your employment with Vale. The way this number affects Vale is as follows. It is a costed amount of potential benefit payments that Vale has to account for on their books, therefore when Vale seeks additional money from institutions such as banks this number goes against their lending ability. What Vale intends to do is alleviate themselves of this responsibility this liability on their books. The $163 million does not disappear it will simply be transferred to the membership to pay. Vale’s main argument is that over time this liability number grows like “credit card interest” and they don’t want that responsibility, however they have no issue burdening you with it. The goal for Vale is to offer the membership a one time “benefits transfer” payment and a onetime signing bonus totaling $6000 before taxes in exchange for you to carry the $163 million and growing liability and renege on their promise to you on health coverage. 

Q: What can I expect to happen to my retiree benefits when I retire?

Vale A: You will retain generous retiree benefits in your retirement with the Company’s final offer. The Union Bargaining Committee has accepted all of the benefits changes the Company proposed in its final offer except for the closure of the retiree benefits plan for employees hired after September 16, 2019. Closing the retiree benefits plan to new hires is a necessary step so that the Company can continue to afford to provide you with generous benefits while you are actively employed and for the years and decades to come when you are retired.

Union A: The opening line of this answer by Vale is yet another insult followed by a lie. “You will retain generous retiree benefits with the Company’s final offer”.  These “Generous retiree benefits” are less than what you already have. The next statement is very misleading. The Union Bargaining Committee had not accepted all of the benefits changes.

Q: Why is Vale proposing changes to retiree benefits for future employees?

A: Each new employee that is hired adds to the $163 million retiree benefits liability. Simply put, for each new hire, we are adding debt on top of debt. This is not a sustainable way to run the business. We must take steps now to reduce this liability so that our future as a mine and mill operation is bright and sustainable. Avoiding this liability by not making this important decision will hurt the future of the Thompson Operations and the ability of the Company to provide you with retiree benefits for the years and decades to come when you are a retiree.

Union A: Again, if this debt, which is actually a liability on their books, is somehow not sustainable for Vale, how is it sustainable for the membership? Perhaps it is the way they run their business that should be evaluated for sustainability. Perhaps when Nickel reaches record highs again, which is more likely than not considering when we began negotiating Nickel was in the $5 area and is now in the $8 area, this time Vale should put some of those profits aside to fulfill their promises. The community has taken huge hits with recent closures, lay-offs and retirements. The retirement liability was created with the large work forces of the past and the remaining 600 will not cripple the global enterprise Vale.

Q: What other benefits changes have been made?

Vale A: The Union Bargaining Committee has accepted all of the benefits changes the Company proposed in its final offer except for the closure of the retiree benefits plan for new employees hired after September 15, 2019. We have spent considerable time educating the Union Bargaining Committee on the importance of addressing the $163 million retiree benefits liability and found agreement on the following amendments:

  •  Generic drug coverage when a generic drug option exists – 80% of drugs currently dispensed to employees are already generic drugs.
  •  Eliminating coverage of non-life sustaining over-the-counter medications – it is not sustainable pay a mark up to a pharmacist to cover non-life sustaining medications that can bought directly off the shelf for less.
  •  Payment up to $10 of the pharmacist’s dispensing fee – Safeway and Walmart dispensing fees are below $10 so with wise shopping this change will not impact you.
  •  An employee deductible of 20% of eligible drug costs per prescription with an annual out of pocket out-of-pocket maximum of $1,500 for single status and $2,500 for family status.

Union A: While these are the facts presented on Vale’s Final Offer, they were not “accepted” by the Union.

Please contact the Union with any questions you may have about the bargaining process, and thanks for your ongoing support.

In Solidarity, Your Bargaining Committee Warren, Scott, Matt, Keith, Dave and Todd.