[1984] OLRB Rep. June 791
0303-84-U Amalgamated Clothing and Textile Workers Union, Local 1332, Complainant, v. BCL Canada Inc., Respondent
BEFORE: G. Gail Brent, Vice-Chairman and Board Members H. Kobryn and J. A. Ronson.
APPEARANCES: Norman L. Jesin, Ken Smith and Richard Drouin for the complainant; W. J. McNaughton, K. Bradbury and R. Lauzon.
DECISION OF THE BOARD; June 19, 1984
The complainant has alleged that the respondent has violated sections 3, 15, 64, 66 and 72 of the Act. In the course of its submissions to the Board the complainant did not argue that there was an unlawful lockout of employees, therefore, we will not consider section 72 of the Act in the course of our reasons.
The respondent made several submissions to us by way of preliminary remarks asking us to dismiss the complaint. By agreement of the parties, and in order to ensure the case could be dealt with fully by the Board, there was no ruling given on any of the preliminary matters raised and the Board heard the merits of the case while reserving on the preliminary matters. Since both the preliminary matters and the merits rely to some extent on the same set of facts, we will set out all of the facts as we find them before determining any of he issues raised by the parties.
The parties have a long-standing collective bargaining relationship. The respondent is in the business of producing cellulose film. The prime product is sold to its customers in rolls. The product is originally produced in basic rolls and is then trimmed, coated and re-rolled according to customer specifications. After this process is completed the respondent is left with residual film some of which is the by-product of trimming and some of which is excess film left on the original roll. Some of that residual film is used to produce cellulose sheets which are then sold.
It was clear from the evidence that the respondent's sheeting operation only exists to convert what would otherwise be waste into something that can be sold to try to recoup the costs of producing the by-product. The uncontradicted evidence is that the sheeting operation has never been profitable for the respondent but has been carried on because the end result produces less of a loss than simply discarding the material as waste. Over the years the respondent has aimed at minimizing the amount of film which must be sent to sheeting and the complainant has been aware of the respondent's desire to reduce the amount of material which goes to its sheeting operation. The subject has been discussed in meetings which the parties have held during the life of the collective agreement. It was not disputed that the complainant was aware that if the respondent were successful in reducing the film for sheeting to its desired minimum levels, some jobs would be lost in the sheeting area. There were eleven employees in the area at the time of the complaint.
The current collective agreement between the parties (Exhibit #1) covers the period July 1, 1983 to June 30, 1984. Negotiations were successfully concluded in July, 1983 and the collective agreement was executed on November 3, 1983. To start those negotiations on April 28, 1983 the respondent sent the complainant a list of proposals for collective bargaining (Exhibit #2) and on April29, 1983 the complainant sent its proposals to the respondent (Exhibit #3). The existing collective agreement contained some provisions regarding contracting out, and technological change (articles 1.07(b), 13, and 14). Neither proposal set out any substantive changes to the language of those closures.
In March, 1983, during the open period which preceded those negotiations, the respondent had contracted out the work of its trucking operation between Cornwall and Montreal. One job was affected. The parties met then and the complainant was advised of the respondent's plan to contract out the trucking. The change occurred at the same time as a general manpower rationalization which led to a total of eight to twelve layoffs including the loss of the trucking job. As pointed out above, in the ensuing negotiations there was no proposal regarding changes in the contracting out language.
Dealing with the sheeting operation in particular, the respondent was first approached in March, 1982 by a retired employee who indicated he had heard that it was considering eliminating its sheeting operation and was interested in doing the work. No serious discussions took place regarding that inquiry (see Exhibit #11). In March, 1983 the respondent placed one advertisement in a trade publication to try to ascertain whether anyone might be interested in doing sheeting on its behalf (Exhibit #12). It received one response to that advertisement but did not follow it up because it was not interested in doing business with the party who responded. The advertisement listed a box number for responses because the respondent wanted to maintain confidentiality so as not to affect its market.
Sometime between March and May, 1983 the respondent approached a sheltered workshop (ARC Industries) to determine if it was interested in doing sheeting. A tour of the sheeting operation was conducted and it was concluded that ARC Industries could not perform the sheeting operation safely. In May, 1983 a firm known as ECCO Packaging approached the respondent concerning its sheeting operations and the respondent conducted a tour of its sheeting operation then. During both of these tours the sheeting operation was being performed by bargaining unit employees. As of May 18, 1983 or shortly thereafter, the ECCO proposal regarding subcontracting the sheeting operation was rejected as not being an economic solution to the problem (Exhibit #14).
Based on the evidence before us it is apparent that the respondent's objectives after that were to effect savings by reducing the amount of film going to sheeting by one half. (See Exhibits #15, 16, 17 and 18.) It attempted to do this by tracing and controlling the sources of the material which ended up in sheeting.
In October, 1983 the respondent received another unsolicited approach from a former employee who was interested in taking over its sheeting operation. Nothing was done to pursue that proposal (Exhibit #19).
The complainant was not informed of any of these subcontracting overtures or of any of the respondent's thinking about contracting out sheeting. The respondent's evidence was that it saw no need to inform the complainant because it was just exploring the concept and not making any plans.
In January, 1984 the respondent received a proposal from Frontenac Packaging Ltd. One of the principals of Frontenac is related to the respondent's comptroller and Frontenac learned of the respondent's concerns with its sheeting through a conversation between these two individuals. The Frontenac proposal (Exhibit #20) dated January 23, 1984 cited the respondent's cost to produce sheeting at around 60 per pound and undertook to produce sheeting for around 44 per pound. It was accepted sometime after January 23rd.
On March 26, 1984 the respondent notified the complainant that it was going to contract out its sheeting operation on or about April 30, 1984, that approximately ten employees would be laid off as a result and that two new positions would be created. It also invited the complainant to discuss these matters (Exhibit #4). On April 5, 1984 notice of layoff was posted (Exhibit #5); this was later rescinded and on May 24, 1984 a new notice was posted (Exhibit #10) effective June 22, 1984.
On April 24, 1984 the respondent submitted its proposals for collective bargaining negotiations to the complainant (Exhibit #6). On April 27, 1984 the complainant submitted its proposals to the respondent (Exhibit #7). The complainant's proposals include a contracting out provision. The parties are currently bargaining to renew the collective agreement which expires June 30, 1984.
On April 30, 1984 the complainant filed a grievance (Exhibit #8) alleging a violation of article 14. This grievance is proceeding through the various steps of the grievance procedure.
Based on the evidence before us we consider that the most probable conclusion to be drawn is that after mid-May, 1983, when the ECCO Packaging proposal was rejected, contracting out ceased to be regarded as a likely avenue to be actively pursued by the respondent. We accept the evidence of the respondent that while the collective agreement was being negotiated in 1983 there was no decision, firm or otherwise, to contract out and that there was a decision made to realize savings by reducing the amount of material which had to be used in sheeting. As a consequence, we can see no basis for the application of the reasoning in Westinghouse Canada Limited [1980] OLRB Rep. April 577 or Consolidated Bathurst Packaging Ltd. [1983) OLRB Rep. Sept. 1411 to give rise to any obligation to make an unsolicited disclosure about contracting out.
We can see no basis in the evidence for drawing any inference that the respondent had made a de facto decision to contract out while negotiating for the 1983/84 collective agreement. There is ample evidence to the effect that the respondent viewed the sheeting operation as a necessary evil which it required to reduce the cost of its production waste. It seems to have been an open secret that it would get out of its sheeting operation if it could be presented an attractive viable alternative. That seems to have been the extent of the respondent's planning. It did nothing to invite proposals after May, 1983 and all of its actions after that date were aimed at improving its production of film so that the sheeting operation would get less material. This is exactly the sort of planning situation that both the decisions in Westinghouse, supra, and Consolidated Bathurst, supra regarded as being beyond the scope of any duty to volunteer information.
In view of this factual determination we consider that it is not necessary to determine whether the complaint is untimely. Timely or otherwise, there is just no factual framework on which one can fit any duty of voluntary disclosure during bargaining here. Any decision which had been made was so nebulous that disclosure could not possibly have put the complainant in any better position during bargaining than it was already in by knowing the general arbitral jurisprudence on contracting out and the existing provisions of its collective agreement. We can therefore find no basis for finding a violation of section 15 of the Act.
The arbitral jurisprudence regarding contracting out is generally accepted and is clear. In interpreting collective agreements, contracting out is allowed for valid business reasons unless it is specifically limited or prohibited. As recorded in Sunnycrest Nursing Home Limited, [1982] OLRB Rep. Feb. 261 at paragraph 25, employers are free to contract out under the Act provided that they are "motivated by genuine business considerations, rather than a desire to defeat or impede his employees in the exercise of their statutory rights".
In this case the respondent's evidence was that its labour cost in producing the sheets was in excess of 50% of its cost of the operation. There is no dispute that it was anxious to cut off the supply of film to its sheeting operation and to maximize the use of the film it produced in the major production area. It never regarded the sheet operation as anything but a way to cut down the financial loss associated with waste film. There was more modern, less labour intensive equipment which could be used in sheet production but the respondent's evidence was that it did not wish to invest capital in acquiring such machines for its operation. There is no suggestion in the evidence that the decision to contract out the work was made for any reason other than valid business reasons. The more probable conclusion is that the only reason for the contracting out was connected with a desire to take advantage of a situation which could either make the sheeting operation profitable or at least minimize loss from it as much as possible. Given the complexities of determining the cost to the respondent of an operation based solely on the utilization of a waste by-product, and the fact that the operation had never been profitable, it is difficult to conclude that a factor in the respondent's decision was a desire to avoid its negotiated wage rates and other obligations in the collective agreement. When all of the facts are examined, the more probable conclusion is that the sole reason for the decision was a genuine business consideration associated with minimizing the loss from having waste material. Therefore, given that the Act does not prohibit contracting out, per se, and given all of the evidence, we must conclude that there has been no anti-union animus and no violations of sections 3, 64 and 66.
The parties are now in the midst of negotiating a new collective agreement. They are in a position to deal with the impact of the particular decision to contract out the sheeting operation as well as with the issue of contracting out generally. They should be left to do that. There have been no allegations of bad faith in connection with this round of bargaining and we should not interfere with their collective bargaining for a new agreement without good reason.
For all the reasons set out above, this complaint is dismissed.