20 September, 2010
The world’s largest newsprint producer, Canadian-based AbitibiBowater, will exit from bankruptcy in mid-October, some 18 months after it sought protection from creditors in both Canada and US. A creditors’ committee last week gave approval to a restructuring plan that includes novel and company-saving collective agreements that were negotiated last spring, preserving pensions and granting unique union rights.
Those agreements on both sides of the North American border between the forest products company and the Communications, Energy, Paperworkers (CEP) of Canada and the United Steelworkers (USW) in the US kept the company solvent and operating. They also gave AbitibiBowater immediate financial relief, yet preserved some of the best union rights language in the North American paper industry.
Last week’s unsecured creditors vote came a day after the province of Quebec announced it would grant relief on contributions to workers’ pension plans in exchange for the company investing C$75 million in new projects over the next five years, as well as to maintain its headquarters in Quebec.
The CEP and its President, Dave Coles, applauded both the province’s and creditors’ actions, but reminded that the federal government has been conspicuously absent from issues to preserve the Canadian forest products industry.
CEP President Dave Coles
“Workers have done more than their fair share to save this company, in marked contrast to our federal government which did nothing to come to the aid of ailing forest communities,” said Coles. “We will remember the Harper government’s inaction at election time.”
The CEP preserved its pattern bargaining for the eastern Canadian paper sector in court-monitored negotiations with AbitibiBowater last spring. Although the five-year agreement contained 10% wage cuts for the first two years, it did protect existing and future retirement benefits with the company contributing C$500 million to a new, union-operated pension fund. In the US, in a four-year pact, USW members took a lesser salary reduction for the same period but won several union rights issues unique in American labour agreements.
In Canada, the restructuring plan under the country’s Companies’ Creditors Arrangements Act (CCAA) now goes before a Quebec Superior Court judge on 20 September for approval, while in the US, a conformation hearing under Chapter 11 of the US Bankruptcy Court occurs 24 September in the state of Delaware.