Posted by Northern Life Reporter Bill Bradley
The global economic meltdown is taking its toll on Greater Sudbury.
Gone are 686 full-time jobs at Xstrata Nickel, after the company recently announced a major restructuring of its Sudbury operations.
"Demand for our product has collapsed," said Marc Boissonneault, vice-president Xstrata Nickel, Sudbury on CBC Radio One, Monday morning.
"We can't carry on business as usual."
"Our leadership team is taking proactive and decisive
measures during challenging
times," said Ian Pearce, Xstrata Nickel chief executive.
"The continued decline of the economic environment and deteriorating commodity markets, coupled with high operating costs, particularly at our older mines, are negatively impacting our Sudbury operations."
Two unions are affected. Mine Mill and Smelter Local 598/CAW will lose 50 per cent of its members, 578 positions, while the Steelworkers office and technical will lose 20 per cent of its bargaining unit, 40 employees, said Peter Fuchs, corporate affairs for Xstrata. Another 68 staff positions were cut, he said.
As a result of the Xstrata announcement, the following will
occur:
- 686 permanent employee positions will be made redundant,
affecting both union (600) and salaried (86) employees;
- three-day shutdown will take place immediately to implement
restructuring and talk to employees;
- 300 employees will be moved to the higher-value Nickel Rim
project, displacing some contractors;
- Fraser Mine will be placed on care and maintenance for now;
- accelerated closure of Craig and Thayer-Lindsley operations;
- Strathcona Mill will be reduced from four shifts to two;
- Fraser Morgan development project will be deferred to be
evaluated and possibly re-initiated.
Richard Paquin, unit chair for the union, said he was shocked development work at Fraser Morgan was deferred.
"This is a lot more severe than we anticipated," said Paquin.
But Fuchs said Fraser Morgan was a higher cost operation than Nickel Rim South.
"Its viability is not good in these market conditions," he said.
There is also little chance of recall for laid off workers, added Paquin.
"The company's new vision is (to use) the manpower they have."
Last week newly-appointed Mine Mill and Smelter union president, Dwight Harper, said the company was marshaling all its resources for its new development projects like Nickel Rim South.
According to a recent company press release, the project remains on schedule to ramp up to 60 per cent of its ultimate 1.25-million tonne per annum production capacity in 2009, equivalent to approximately 7,400 tonnes of nickel.
"Nickel Rim South will become a low-cost, cornerstone operation in Sudbury, generating annual production of approximately 18,000 tonnes of recoverable nickel by early 2010," the release continued.
The company has invested $627 million for the project's first phase, which came in on time, and on budget. The remaining $300 million for the completion of mine development and infrastructure has been approved.
Boissonneault said the early retirement package offered to employees, and accepted by 216 of them, helped avert even more layoffs.
He said in a CBC Radio One interview that there would not be another early retirement offer given at this time.
"We gave a very generous package. There was a high acceptance rate. We have done as much as we can," he said.
Union layoffs were governed by the collective agreement and staff cuts were decided upon by the skill levels and transferability of individuals affected. Paquin said his colleagues were reviewing the layoffs for compliance with the agreement.
The Xstrata restructuring announcement is not all bad, said Jean-Charles Cachon, Laurentian University professor in the School of Commerce.
The companies are still profitable but having more trouble selling their products, especially for stainless steel, he said.
"The companies told us that their production costs were in the $2.80 to $3.00 range so they are still making money when nickel is in the $5 per pound range. If world demand had kept up, they might have extended the period of operation for their older mines or made plans to start them up again."
Both companies are still using their smelters for ores from their other operations, he noted.
Cachon said the impact of the job loss is still mostly psychological at this point.
"The economic multiplier for mining job loss affecting other jobs is overrated. I estimate it at 1.6. Strong demand will come back. The depth of the economic crisis has been larger than expected."
But Dick DeStefano, executive director of the mining supply and service cluster association, said the city will be hit by the loss of the Xstrata payroll loss. He also noted that with fewer mines to service, his members will be affected.
"Over the next few weeks we will determine the impact. There will be a drop in business for them. Our members did not expect this to be so dramatic."
Cachon did say the city's future was bright because it was the hub of the north. Vacancy rates are still very low and continuing to drop. People who are laid off still have severance packages and employment insurance, he added.
"They are not left without any money. I don't see a strong impact from this announcement." He said, for example, the much touted drop in enrollment at his university was nonsense.
"Six years ago we had 4,500 students. Now we have dropped from 8,500 to 8,100. We are still ahead. If you look at the growth of this city recently then we are still strong compared to the past."
Northern Life's sister publication, Northern Ontario Business, also has a story on this subject. Click here to read the story.
