The federal government has taken seemingly different approaches to two iconic industries in Canada.
On the one hand, Industry Minister Tony Clement gave Brazil-based mining giant Vale a pass in issuing temporary layoffs during the recession despite job guarantees made at the time of its acquisition of the storied Inco company a few years back.
On the other hand, the government has been battling United States Steel Corp. in court over decisions that decimated the workforce at the former Stelco Inc.’s operations in southern Ontario.
Issues stemming from Vale’s obligations under the Investment Canada Act have figured prominently in the debate over the government’s response to the year-long strike at its operations in Ontario.
Besides decrying the lack of information about the conditions of sale to Vale, workers wondered why they didn’t benefit from the same aggressive action the government displayed towards U.S. Steel.
At the same time, they complained that both federal and provincial officials were silent during the protracted labour dispute, which has come to an end following the recent announcement of an agreement between the union and the company.
The complaints have merit. Mining is a key industry in this country, so the fact that the government would let Sudbury suffer for so long is an obvious concern.
Nevertheless, intervening in a labour dispute is a far different matter from upholding the company’s obligations under the act.
On the first count, leaving the two sides to work out the contract issues themselves - notwithstanding the pain the strike caused - was the right thing to do. Given the global restructuring taking place in recent years, particularly since the recession battered the province’s economy, it has become obvious to many that labour unions need to show some flexibility to help companies remain competitive, an issue the Canadian Auto Workers found itself having to face last year when it agreed to concessions as major car producers found themselves on the brink of shutting down. In some cases, that means accepting bitter medicine.
On the issue of forcing foreign-based companies to adhere to job guarantees, Clement has said he refrained from taking action against Vale because it had spread the pain of layoffs across its global operations. That, too, seems reasonable given the importance of allowing companies to respond to changing market conditions.
The steel case, however, is more difficult. In taking U.S. Steel to court, the government has rejected its arguments about the impact of the recession.
If the company ultimately faces penalties for the layoffs, will that scare off foreign investment? Shouldn’t companies have flexibility, at least temporarily, when the economy tanks?
If we truly want to open our borders to foreign capital, taking companies like U.S. Steel to court is probably the wrong move. Nevertheless, it’s true that the U.S. giant has in fact recalled many of its workers since the layoffs, an indication that the court action isn’t such a threat after all.
Whether the government’s move was a good one, then, will be more evident once the legal battles wrap up. In the meantime, it’s good that, at least in the Vale case, both the union and the company have found a way forward.
- Glenn Kauth
