September 3, 2008

Industrial Construction

British Columbia construction unions sign collective agreement, ensuring steady labour supply

RICHARD GILBERT

staff writer

A number of B.C. construction unions have signed a deal to modernize an aluminum smelter in Kitimat, B.C.

The new owners of the Alcan smelter, Rio Tinto Alcan, recently decided to go ahead with plans for a $2.5 billion replacement of the aging smelter.

It will be one of the largest private investments ever in an industrial construction project in B.C.

A significant milestone in the plan was the signing of a unique collective agreement on Aug. 28.

“Traditionally, or in the recent past, this type of agreement has been done through an arm of the government,” said Mark Olsen, business manager of the Construction and Specialized Workers Union Local 1611.

“What makes this unique is that we are looking at a private company, which approached the coalition of unions and was able to put together an agreement.”

The agreement contains the standard no-strike, no-lockout condition for projects.

It also facilitates the supply of qualified building trades workers to the project, by making a commitment to hire local workers, including First Nations groups.

Members of the Kitimat Modernization Employer Association, which was formed by Bechtel Canada Co., contractors and a coalition of 16 building trades unions, are included in the agreement.

“The real work started in the middle of May, when we had preliminary talks with Bechtel about labour supply and the business climate,” said Olsen.

“It was all done in a four-day period, when all 16 unions and Bechtel sat down together in the Boilermaker’s auditorium.”

The non-concessionary agreement that emerged from these negotiations in May is based on the standard industry package of wages and benefits for all 16 unions.

This was important because it allowed negotiators to focus on other issues.

“The considerations of concern were the travel in and out, holidays, a local hiring provision and all other attendant issues that were separate in other agreements,” said Wayne Peppard, executive director of the B.C. and Yukon Building and Construction Trades Council.

“When you have a major project manager like Bechtel and 16 unions to deal with, this (the negotiations) could have been an imposing barrier to reaching a common agreement.”

He said that it demonstrates how much times have changed, as well as the unions, because they were willing to pull all this together in such a short time period.

“What they (the employers) got from the agreement is cost certainty, labour stability and supply certainty,” explained Olsen.

“All 16 unions are international with members across North America.”

Peppard said the unions are committed to providing the labour force to get the job done on time and on budget.

He is also confident that the unions will be able to source the required workforce within North America.

“In terms of the provision of labour, we will start with the local market and move to regional, provincial, national, the U.S. and then offshore,” he said.

“We have agreed to work with the employers to facilitate the use of foreign workers in the event of a labour shortage.”

Bechtel received an initial contract in June 2007 for preliminary engineering, feasibility and construction pre-work activity.

“There are 150-250 people on site at the moment,” said Tom Draeger, senior vice president with Bechtel Corporation.

“All of the construction and engineering on site are local.”

Rio Tinto Alcan earlier awarded a US$200 million contract to Bechtel to conduct the complete engineering, procurement and construction management of the modernization project.

“The tight construction market has been a concern for the Kitimat Modernization Project and this agreement directly addresses that key issue as we go forward for final board approval,” said Jean Simon, Alcan Rio Tinto’s president, Primary Metal North America.

The $200 million investment and the new collective agreement pave the way for a decision on Oct. 20 by Rio Tinto Alcan to proceed with the project.

Once approved, work on the project will pick up next spring, with more hiring and the beginning of construction. The next phase will involve relocations and demolitions.

According to Draeger, the project will require seven million man hours of labour and a workforce of up to 2,000 people.

The project includes upgrading the existing 54-year old smelter, using new technology that will increase aluminium production capacity by 40 per cent, up to 400,000 tonnes per year.

The agreement also makes provisions for establishing a 1,500-person work camp.

The recently negotiated agreement between the Construction Labour Relations Association of B.C. and the British Columbia Building Trades Council Unions for substance abuse testing and treatment will be adopted for all workers on the project for the first time ever.

The modernized smelter is expected to begin production in 2011.

Rio Tinto acquired Alcan Inc. in October 2007 for US$38.1 billion.

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