Labour shortage and unionized market share at root of sheet metal workers’ strike, say employers

Ontario Construction News staff writer

As the strike of thousands of Ontario unionized sheet metal workers enters its eighth week, the dispute has turned into a war of attrition. The issues on the surface: Employers’ demands to change the four day, 36 hour work week to five-day, 40 hour schedule, and to have greater ability to recruit/relocate employees (which the union believes affects its ability to control its hiring halls and employee dispatching processes.)

However, the story gets more complex and even paradoxical when you delve deeper into the story. Darryl Stewart, executive director of the Ontario Sheet Metal Contractors Association and the Toronto Sheet Metal Contractors Association, for the first time outlined the employers’ perspectives about the dispute in an interview with Ontario Construction News on Friday.

His points: Employers are not trying to change the hiring hall rules, but they are asking for them to be written down and included in the contract, and the reason that they are asking for a 37.5 hour to 40 hour work week rather than the current 36 hour schedule in Toronto and some other areas is because of an incredible labour shortage and the fact that, in Toronto at least, there is virtually no unemployment within the union.

Ontario Construction News will endeavour to reach union representatives and allow them the opportunity to give their side of the story in an upcoming issue.

“If there is a 36 hour workweek, and the union cannot supply the manpower, we need immediate relief,” Stewart said. The superficial solution – paying overtime – would put contractors in the position of going broke on fixed price contracts – especially in a business environment where only about 22 per cent of the Industrial, Commercial and Institutional (ICI) market is unionized. Competing non-union contractors and those whose workers are represented by the Christian Labour Association of Canada (CLAC) don’t have these scheduling/cost problems, and can easily outbid unionized contractors, he said.

“They (the union) have less than one percent unemployment,” Stewart said. At present, Sheet Metal Workers’ Union Local 30 in Toronto has about 2,200 members (including apprentices), with only 38 listed as unemployed. “Half of these are inactive, and the other portion are selectively taking jobs,” he said.

On the surface this unemployment level and demand for workers would seem to give the union plenty of bargaining leverage, but Stewart said acceding the union’s demands – without finding a solution to the skilled labour shortage – would result in a “slow death” for the unionized industry, except for the largest integrated companies with long-term big projects.

He said systems where workers can be rotated within four day work shifts ensuring five day coverage make sense for the largest projects, but smaller contractors cannot compete and maintain their work schedule – and when they call the union hall for additional labour – they cannot get the workers they need.

In the current environment, Stewart said, a union member will not generally be interested in taking an eight week assignment to finish up a job when unemployment is so low and he can seek an assignment for something longer and more stable.

Stewart said the sheet metal industry is different from the plumbing industry, where mechanical contractors quickly “caved” within days of the United Association plumbers walking off the job earlier in the month. Most of his association’s members are smaller businesses, which generally work as subcontractors. As the labour shortage continues, they cannot bid on jobs, and if they have hefty overtime costs to complete their projects, they will go bankrupt because they cannot recover the additional labour costs in their own contracts.

Stewart noted that the residential high rise sector of the sheet metal workers union in Toronto (Local 285) has a 40 hour work week, and both its members and employers are doing well – the union has 85 per cent market share.

Employers are seeking to solve the problem in part by recruiting more apprentices, and in this regard, the union has been co-operative, with 150 joining the union in the past year. “But the union is still not able to keep up demands for hiring and it is unable to fill calls,” he said.

Earlier, the union tried to solve the manpower shortage problem by calling out retired workers. “They were dispatching people in their 70s to do work, they can’t perform. It’s difficult as they get older.”

A further problem lurks with the trend to modularization. If the labour shortage persists and employers need to pay hefty overtime to keep their jobs running, the pressure will mount for mechanical and sheet metal components to be factory-manufactured (often offshore) at much lower cost, eliminating most of the work currently done by unionized labour.

Stewart said Local 30 negotiators were misleading their members when they said the employers “abruptly” walked out of the negotiations last week. He said his understanding is that while several of the union’s non-Toronto locals are close to reaching an agreement, the business agent for Toronto has made it clear he won’t budge from the 36 hour position (even to 37.5 hours) with a four-day work week. (The employers also want a 40 hour work week if the union cannot fill its manpower orders – in other words, the hours would be extended if the union cannot deliver from its hiring halls the workers needed for individual jobs.)

Regarding the hiring halls, Stewart made it clear that employers are not seeking a change to existing rules, except in Kingston, where the union has 100 per cent hiring hall control and no employer “naming” is allowed. However, in other markets, including Toronto, employers are happy with the status quo and are ready to entrench it for the duration of the contract – provided the union includes its hiring hall rules/policies in the contract.

(Not doing this, he said, can lead to abuse, where different rules could apply for different employers, resulting in favouritism or discrimination.)

He said employers are ready and willing to resume the negotiations and are awaiting feedback from the union.

“We need to have your monetary offerings, and a feasible practical solution when you can’t fill employers’ needs for five-day coverage,” he said.

The longer the strike lasts, he said, the more the problems for both the union and the contractors, as future projects are won by non-union contractors, existing unionized businesses fail, and the union’s market share diminishes even more, Stewart said.