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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