Resolute workers have done 'enough,' union says
Company and unions have 9 months to agree on corrective measures for pension plans
A union leader at Resolute Forest Products in Thunder Bay says workers have given up enough to keep the company in operation and that Resolute should not expect more worker concessions to prop up the pension plans.
The company recently told its employees the plans are underfunded by $1.9 billion, according to Gary Bragnalo, president of Communications, Energy and Paperworkers Union Local 39. He said that's up from $1.3 billion when Resolute emerged from creditor protection two years ago.
"We did enough," Bragnalo said. "They went and bought Fibrek for a hundred-million bucks. They could have put that in the pension plan. So, if they're gonna come back and ask for more from the workers, well, I don't think it's going to be too long of a conversation".
Bragnalo said Resolute employees surrendered 16 per cent in combined pay and benefits to help the company recover. He said the company is now looking at some corrective measures related to the pension plans.
CBC News in Thunder Bay obtained a copy of an update on the pension plans that was distributed to company workers. It said "the company has no intention of terminating the plan. However, if it were to become necessary to terminate the plan while it has a solvency deficiency, and where the company was not in a position to eliminate the deficiency, your benefits would be reduced."
The phrase "has no intention" was printed in bold in the company letter.
The letter noted that when the company emerged from protection under the Companies' Creditors Protection Act in 2010, there was a 10-year plan to fund the aggregate solvency deficit of $1.3 billion dollars. It went on to say that "the solvency deficit has increased significantly [since then] because of the significant decrease in interest rates used to estimate the pension obligation. These low interest rates increase the liability of all Canadian pension plans".
A company spokesperson declined an interview with CBC News.
However the letter stated the company is "deeply concerned about the deterioration of the financial position of our pension plans. The funding regulations adopted [by the Ontario and Quebec governments] provide that in such a situation ... the regulations give the parties a period of nine months [July 2012 to March 2013] to agree on corrective measures."