The Rural Voice, 1998-02, Page 49PERTH votk
County Pork Producers NEWSLETTER
The strike at Maple Leaf Foods
Any opinions expressed herein may not
necessarily reflect the views of the Perth
County Pork Producers' Association.
What a difference a few months make
to the marketplace! In a short period of
time prices have plummeted. At the time
of writing, $1.22 per kilogram is the
going rate. Anyone using a red marker at
sorting time might as well keep it in their
hand to make entries in their farm
account book. Whatever happened to the
"new era" of higher grain and livestock
prices that some believed we were in?
Once again the cyclical nature of the
market is being demonstrated. Let's not
whine too much though! We should be
thankful for the two excellent years we
have just enjoyed. For some, maybe the
best ever!
Still, when your fingers are getting
tired from taping $20 bills to the backs of
hogs going up the loading chute, you
wonder how much the strike at Maple
Leaf Foods is eroding the price. "Six per
cent", was the reply when I asked a
friend lately who co-ordinates a large
production loop. Incidentally, they have a
contract with Maple Leaf Foods.
Speaking of contracts, I expanded my
French vocabulary recently. "Force
majeure" lodged in there after a producer
meeting. Literally it means an
"unforeseeable course of events excusing
from fulfillment of contract". More
loosely translated for the contract holder
it means you are up the creek. Maple
Leaf Foods invoked "force majeure" on
existing hog contracts in mid-November
when their workers walked out on strike.
Producers with contracts could no longer
zip their hogs down the 401 and the 403
to Hamilton. Instead they had to scramble
. to make arrangements with other
processing plants up to 10 hours away.
At the time the strike started I felt no
particular sympathy or anger for either
side. Maybe I didn't understand the
issues. I am more angry now! The strike
has affected everyone in the industry, not
just contract holders. A six per cent
depression in pool price is significant.
And with a price of $1.22 per kilogram a
six per cent improvement would get us a
lot closer to break-even.
Why are the producers being held
ransom with this dispute dragging on?
There are some that say it should not
have been allowed to happen in the first
place. In other words, make the act of
shutting the plant down illegal. Some
countries have apparently adopted this
rule, but I don't know the details of how
management/labour disagreements are
worked out. Others can't understand why
the government hasn't intervened to at
least appoint an arbitrator and, failing
that, legislate the workers back. But to
quote the report "Cost Competitiveness
of the Canadian Pork Processing
Industry" issued by the George Moms
Centre in October, 1997, "... this is not a
standard labour -management issue over
wages. It is far more complex and more
fundamental."
The previous quote does not refer
specifically to the situation at Maple Leaf
Foods, but I believe management there
has recognized the glaring difference in
cost competitiveness between the
Canadian and U.S. pork processing
sectors. They are unwilling to expand to a
double shift or invest in new facilities
until wage rates are more in line with that
of the U.S. worker. That is not to say that
the $6.65/hour (Can.) difference in
average wages accounts for all the
additional processing costs. In fact, of the
estimated $20 per 100 kilograms higher
cost in Canada, the 40 per cent
differential in wage rates accounts for
$4.08 to $6.37 per 100 kilograms. Other
factors like plant size, double shifting,
ability to handle larger carcasses and the
investment in new, more efficient
equipment accounts for the rest.
However, expenditure on the latter items
becomes very risky when a competitive
company could enter the marketplace and
negotiate a labour contract at a rate
similar to the U.S. It would take less time
than you think to drive the former
company out of business.
Where is the other side of this coin,
you ask? Why has the union representing
Maple Leaf workers been paying for ads
on prime time television to encourage
consumers to boycott Maple Leaf
products? Obviously, they have a lot to
lose! In fairness to the workers, they are
trained, skilled meat processors who have
a reputation for doing an excellent job.
There is Tess employee turnover in
Canada than in the U.S. and thus less
time is spent on training. Some would
Perth County Pork Producers Bonspiel
February 7, 1998
Walter Bosch, President
519-356-9000
• The Rural Voice is provided to Perth
County Pork Producers by the PCPPA.
also argue that because the cost of living
is higher in Canada, wage rates should
reflect that.
Getting back to the Ontario
production situation, the strike is costing
the industry an estimated $600,000 to
$1,000,000 per week. A farm marketing
2200 hogs per year would forego
$16,500. This week 45,000 hogs will
move to U.S. plants. What a tragic loss of
value to the Ontario economy! Last year,
it was estimated that the total value of
pork production including farm gate
receipts, transportation, and processing
was $4.51 billion. If half our production
is going south, well ... you do the math.
As an industry, we lose the ability to
promote a Canadian product. (ie. we do
not have it) and we also lose our
international reputation as a consistent
supplier of high quality pork. If that is
not enough, rumours of trade retaliation
are heating up because our 45,000 hogs
are competing for shackle space against
the 2,000,000 per week in the U.S.
Clearly, we need to see an end to the
dispute at Maple Leaf Foods. Too much
is at stake here! For those of us who want
to see a thriving Ontario industry,
prolonging this strike can only inject fear
into potential investors. Rather than
conflict, we need to promote stability and
co-operation. For the bosses at Maple
Leaf, they had better realize that
producers who hold contracts with them
may still be feeling the bitter sting of
being shoved aside when it comes time to
resume shipments. Later on, during new
contract negotiations, those same
producers may want to pursue other
business contacts made during the strike.
For the workers, I hope that in stubbornly
refusing to accept lower wages, they are
not shaping their own path to
unemployment. Taking a little less now
may mean more job opportunities in the
future if investment is made in more
efficient plants. It is still close to the
beginning of 1998. May the people at the
bargaining table make it their New
Year's resolution to resolve their
differences and get on with processing
high-quality pork.0
- Submitted by Larry Skinner
OPPMB
ANNUAL MEETING
March 18 and 19
International Plaza
FEBRUARY 19'38 4i