Over the past decades, the Canadian economy has witnessed plants closing or lockout actions taken by foreign companies against employees in Canada. Plants and offices have laid off thousands of people or closed because of bankruptcy, consolidation, or transfer of operations to other lowerwage countries. In some cases, management advised unions that the only way that they could avoid closing would be substantial concessions in wages and other changes in existing contracts. American-based heavy equipment maker Caterpillar Inc. ended a one-month standoff with lockedout workers by closing its 62-year-old Electro-Motive plant in London, Ontario, eliminating about 450 manufacturing jobs that mostly paid twice the rate of a U.S. counter- part. Caterpillar spokesperson Rusty Dunn summed up the reasoning as follows: "All facilities must achieve competitive costs, quality, and operating flexibility to remain viable in the global marketplace. Expectations at the London plant were no different." The closing angered former CAW president. Ken Lewenza. Caterpillar had demanded pay cuts of 50 percent in many job categories, elimination of at defined-benefit pension plan, reductions in dental and other benefits, and the end of a cost-of-living adjustment. "I've never had a situation where I've dealt with such an unethical, immoral, disrespectful, highly profitable company like Caterpillar," said Lewenza. During bargaining he told the company's negotiators. "If it's in your business plan to close us, don't punish us, let's work out a closure agreement. They said, "We have no intention of closing the facility." Givebacks are not being asked just by foreign-owned companies. For example, when Air Canada came out of bankruptcy protection in 2004, it received concessions in the areas of wages, jobs, and pensions from its unions as part of its restructuring conditions. Eight years later, union members grew tired of givebacks and voted to go on strike. The federal government stepped in and threatened the unions with back-to-work legislation before imposing binding arbitration in some instances. Keep in mind that non-unionized employees also saw tens of thousands of jobs eliminated. For example, in 2001 Nortel Networks Corporation had more than 90.000 employees worldwide. Ten years later, and after a couple of rounds of bankruptcy, no one had a job. Nortel's union and former employees failed to persuade an Ontario appeals court they were entitled to retirement and severance payments. No employees are safe as companies try to remain competitive in the marketplace. Union leaders and their members are in a quandary when faced with such decisions. Sometimes they think management is bluffing. Sometimes they are reluctant to give up contract conditions they fought long and hard for. Accepting wage cuts or benefit reductions when the cost of living continues to rise is not easy. Agreeing to staff reductions to save other jobs is also a tough decision. Unions worry about where these concessions will end. Will there be another round of layoffs or even worse in a few months? These examples highlight some of the dilemmas facing unions and employers. The business environment demands that companies become more efficient and productive. However, this will not happen unless there is mutual respect between management and labor.

2. Is there some alternative to cutting wages or closing down? What is it?

Answer rating: 100% (QA)

Yes there are alternative approaches that companies can consider instead of solely relying on cutting wages or closing down operations Some potential ... View the full answer