Pointless AbitibiBowater merger?

He said representatives from 30 Eastern Canada union Locals met twice with company officials this month to help the company through the industry’s current economic crunch. Eastern Canada, as a whole, which also includes Quebec and Ontario, voted to re-open their collective agreements and potentially extend them for another two years without wage increases.

But it wasn’t enough, he said.

He said this would have saved the company tens of millions of dollars and made it easier for the company to get and rearrange financing to stem losses on the Abitibi-Consolidated Inc. side of the business. He explained financial institutions would have been more likely to lend the company money if it appeared stable - for example, if there was little chance of a strike.

Wentzell said the corporate world of mergers and the company’s set-up is difficult to understand. Top executives, David Paterson, President and Chief Executive Officer, and John Weaver, Executive Chairman, explained the company’s side of the predicament to the representatives.

As Wentzell understands it, he said Abitibi Bowater Inc. acts as the holding company for Bowater Inc. and Abitibi-Consolidated Inc., each of which has numerous subsidiaries as well.

Wentzell said the two executives explained the Bowater side of the business has money but can’t use it to help the Abitibi side of the business because of merger and other business-related laws. He reiterated it is complicated. “The holding company can’t get the money over the wall for all kinds of financial reasons.”

As a result, he said Abitibi-Consolidated Inc. (ACI) shares have fallen rapidly, which further hurts the situation.

The company recently released a $1.4-billion US refinancing plan designed to help the subsidiary avoid bankruptcy protection from creditors.

Wentzell said they were also advised, “If ACI goes into insolvency, it won’t affect the Bowater side.” However, he doesn’t like this scenario either because it could result in numerous job losses for company workers.

Wentzell said all of this was surprising to most representatives at the negotiations, and is even more difficult to explain to members.

He also doesn’t understand why Bowater merged with Abitibi, if the latter company was in such dire straits.

“My question is why the hell did you do it?”

However, he reiterated the union representatives agreed to extend their collective agreements another two years.

In return, they wanted job security for members, and no plant closures unless it was for modernization purposes. Even then, he added, positions would only be lost through attrition, not lay-offs.

He said the company responded by proposing tens of millions of dollars of concessions related to pensions, premiums, bonus pay, and other measures. “When they came back, they wanted everything. They wanted most of the gains the union has got over the last 60 years taken away.”

After the union rejected it, he said, “They told us phase two is coming and plants might be closed and even if we gave them the deal, there would be more closures and job losses, so we said why the hell would we bother?”

He added, “There’s nothing left in the tank. No more concessions from us. We’ve given and given. My membership has said no more, we’ll see you in 2009 (when the collective agreement expires).”

Union members took a wage cut to help pay for early retirement packages after Bowater in Brooklyn decided to cut 49 positions.

Wentzell added this was increased to 50 positions without notice, which he considers “bargaining in bad faith.” He said workers are, therefore, wary of high-ranking company executives at the local level as well.

However, Wentzell said he is reasonably confident about the future of the Bowater side of the business and the Bowater Mersey Paper Co. Ltd plant in Brooklyn, despite the fact in his opinion the current “renewal” plan isn’t working because of employee shortages in what is a busy mill.

“We knew it wouldn’t work but a gun was against our heads.”

He said although he doesn’t wish job losses on anyone, he believes the management to worker ratio is much too high, “and we can see where the duplication is. We look over at their side and say ‘Oh my God.’”

He said many skilled people are leaving the company for Michelin in Bridgewater and he expects this to continue as time and job openings allow.

“We accepted the renewal plan, we’re taking on more work, we’re not grieving (a union term) the 49 and now 50 positions, we’ve agreed to be more flexible, and then we turn around and see the waste and incompetence on the management side.”

He added with a sarcastic laugh he has never heard people wishing they were older before. “A lot of the guys who are 50 wish they were 55.” He explained they would then be eligible for early retirement.

He said the orders are still coming in and, “We’re a very efficient mill at about 97 per cent. We’ve got the cheapest fibre cost in Canada, we have an ice-free harbour and The Washington Post still owns half the company. I can’t see any reasons unless it’s politically motivated, that we are going to be shut down.”

He added if Bowater were able to purchase Brooklyn Power Inc., which would supply about a third of their power needs, the plant should definitely remain open. This process is currently at the Nova Scotia Supreme Court arbitration stage.

A spokesperson at Bowater Mersey would only say, “The renewal plan implementation is proceeding.” Further comments or responses were referred to head office.