Coastal Crops Ltd$.($CCL$)$ Case$2$Coastal Crops Ltd$.($CCL$)$ has been unionized since it was founded in $1968.$ It has always operated out in the west end of St$.$ Johns, Newfoundland. While the firm originally farmed the land, in the $1980$s the firm built a number of large greenhouses. The addition of greenhouses allowed CCL to expand its product offerings and grow produce all year long. To better meet the needs of its customers outside of Newfoundland, the firm purchased a $($non$-$union$)$ location in $1997,$ which is located in Phippsburg, Maine.The relationship between the management group of CCL and the United Agricultural Workers of Canada $($UAW$)$ has generally been strong. Wages, benefits, and working conditions have usually been on par with or better than those of the competition. In particular, the firm has tried to pay slightly above the going market rate. To date, there has been only one strike. It took place in $1997$ and was largely centred on the issue of job security, given the poor economic conditions of that period and the concern that the acquisition of the Maine location would result in job losses in Canada. At that time, the Newfoundland economy was performing very poorly, in part due to the collapse of the cod fishery. Given the dramatic decrease in demand for its products, and the need for capital to purchase the new location, the company laid off about $30$ percent of its staff and froze all wages for three years.The early $2000$s gave rise to new opportunities for CCL$.$ With the legalization of medical cannabis, the firm built a production facility on the property in $2003.$ In $2017,$ anticipating of legalization of recreational cannabis, the firm doubled the size of its cannabis production facility. Currently, approximately $65$ percent of CCLs yearly revenues come from cannabis production. The cannabis market has resulted in the firm hiring about $200$ new employees over the past five years. As the parties prepare to enter a new round of bargaining, several key events are taking place.For the union, the last contract $($signed in $2016)$ was ratified by only $54$ percent of the membership. Given the $1997$ job cuts and wage freezes, many members felt that the revenues associated with the medical cannabis should have resulted in greater gains at the bargaining table. In fact, the membership has voted in a whole new slate of union leaders to form this years collective bargaining team. Rumour has it that the membership wanted a more militant negotiations team that would take a firm stand on increased wages, improved vacations and pensions, and job security. It is also clear the union faces a challenge meeting the needs of a diverse membership. The average union member is $38$ and has around $14$ years of service. However, given the downsizing in $1997,$ and the influx of cannabis work, the St$.$ Johns location almost has two different age groups. There are approximately $200$ employees with fewer than five years of service $($most of them are in their twenties$)$; yet there are about $300$ employees with more than $15$ years of service $($most of whom are over $40).$ The current negotiations team will need to balance the needs of its newer members with those of the old guard.Management has just received notice that it is at risk of losing its contract with Premium Cannabis. Premium Cannabis is CCLs largest contract and represents about $40$ percent of its annual revenue stream. There are two reasons why Premium Cannabis may not renew its contract. First, CCL is having problems meeting the production quotas specified in the contract. This is largely due to reliability issues related to CCLs now aging production equipment. When the firm expanded the cannabis production facility in $2017,$ it did not buy new equipment. Rather, it repurposed existing equipment from when the cannabis facility was first built in $2003.$ This equipment is older and less reliable; it is also much less energy$-$efficient than the equipment currently available. Second, CCLs labour costs are higher than those of some of its competitors, which could well take over the contrast. Premium Cannabiss management team is under increased pressure to minimize expenses in all areas, including supplier contracts, to retain profitability. There is a rumour that a new firm may get the contract $($Firm $2$ in the attached comparison$).$ This firm has the advantage of brand$-$new, energy$-$efficient equipment and lower labour costs. It currently runs $24$ hours a day, $7$ days a week. Hence, it is in a better position to meet the needs of the cannabis industry.CCL management is currently examining the possibility of a substantial reorganization to better meet the needs of the cannabis industry. This could include raising production quotas and replacing the present equipment with new, energy$-$efficient, labour$-$saving machines in the St$.$ Johns facility $($cost $==$ $$2$ million$).$ Assuming the current two$-$shift cycle remains, the new machinery would result in layoffs of about one quarter of the staff as well as the contracting out to cheaper labour sources in times of high product demand. Two alternative strategies have been openly discussed. First, purchase the new equipment $($cost $==$ $$2$ million$)$ and begin operating three $8-$hour shifts $($i$.$e$.,24$ hours per day, $7$ days per week$).$ This option would not entail hiring new employees or laying off any current staff; however, the firm would have to find sufficient savings in the first year of the collective agreement to absorb the full cost of the new equipment, and the total annual labour costs could not increase. Second, close the St$.$ Johns facility and move all production to the second facility $($Firm $4$ in the attached comparison$),$ located in Phippsburg, Maine, a cheaper location. This location would still permit shipping of the products to all North American customers, including those in Newfoundland. Closing the St$.$ Johns operation would mean that all management and union employees would lose their jobs, for transferring staff to the American location is not feasible given immigration requirements and so on$.$ The firm is also concerned about the negative community and government reaction associated with closing the operation, as they previously secured government funding to assist with $2017$ expansion. The management negotiations team has been given a clear mandate: $(1)$ the collective agreement must facilitate the renewal of the Premium Cannabis contract; and $(2)$ over the life of the new collective agreement, the firms total annual labour costs cannot increase from the current amount.Other InformationAs is shown in Table $1,$ CCL provides a competitive compensation and benefits package. The average wage at CCL is $$20\mathrm{.}25$ per hour. This compares to an average current wage of $$19\mathrm{.}71$ for the other firms.The benefits are co$-$paid $(70\%$ company, $30\%$ employee$).$ The benefits include dental plan, vision plan, life insurance coverage of two times base salary, medical insurance for hospitalization and prescription drugs, and a sick benefit plan $($coverage up to $66\mathrm{.}67\%$ percent of earnings for any absence due to illness, maximum $52$ weeks$).$ Current cost of the benefit plan to the employee is $$750$ per year; the company share is $$1,750$ per employee per year.In addition, CCL contributes an amount equivalent to $4$ percent of each employees earnings into a retirement fund that can be used by the

employee in retirement.

Based on your experience from this round of bargaining. What bargaining strategy do you think your team and other team would adopt if you entered a second round of negotiations and why $?$