The Irving Oil Refinery Strike, 1994

Transcription

The Myth of the
Competitive Challenge:
The Irving Oil Refinery
Strike, 1994-96, and the
Canadian Petroleum
Industry
ERIN STEUTER AND GEOFF MARTIN
I
ntroduction When Noam Chomsky was in Saint John and
Fredericton in 1996, he spoke about the phenomenon of
"rollback" whereby once-gained social, political and economic progress was being rolled back as economic instability and
recession created a climate in which corporate and governmental
power could be more directly observed without the impediment of
significant social unrest. He documented how hard-won gains of
the last 50 years were being eroded in this new climate and highlighted the legitimation processes that accompanied this through
various social institutions:
The masters have long sought to contain popular struggles to expand
the range of meaningful democracy and human rights, but now perceive that they can do better. They feel, perhaps rightly, that they can
dismantle the social contract that has been in some measure achieved,
rolling back the threat posed by the "great beast" that keeps trying "to
plunder the rich." The architects of policy can move on to establish a
utopia of the masters based on the values of greed and power, in which
privilege is enhanced by state power and the general population lack
rights apart from what they can salvage on a (highly flexible) labor
market. They are also free to starve or to enter the rapidly expanding
workhouse prisons.'
Studies in Political Economy 63, Autumn 2000
111
Studies in Political Economy
The strike at the Irving Oil Refinery in Saint John, New
Brunswick, illustrates this point and was a sign of the changing
labour relations climate in North America and globally.
The strike began as a result of Irving Oil Ltd. 's effort to depart
from Fordist labour relations and impose the Neo-liberal model,
which meant increasing the "flexibility" of the work force and
ending the security of employment.? The strike was protracted
and painful for New Brunswickers and working people to witness. It involved two years on the picket line, while the company
sought to undermine the bargaining process by laying off workers, and negotiating away from the table. Throughout the strike,
the provincial government sided with the company by refusing to
intervene, and ignored opportunities to pursue "anti-scab" legislation which it had led New Brunswickers to expect) The
appointed mediator, Innis Christie, was bullied by the company
management, who were uncooperative participants in the bargaining process and who refused to appear at the Inquiry hearings. Christie ultimately succumbed to the company's strong-arm
tactics and declared the strike a loss for the union. At the strike's
conclusion, a humiliating and restrictive final contract was
imposed by the company that included the dismissal of the union
executive, and a mandatory ideological re-education programme
for returning workers. The treatment of the strikers during and
after the strike was legitimized in the public eye through the
Irving-owned newspaper chain. Nowhere was the phrase "freedom of the press is for those who own one" more aptly applied.
The Irving Group is the owner and appoints the editorial staff of
every single English-language daily newspaper in the province
and they used this to their advantage.'
In this article, we seek to introduce readers to a contemporary
example of corporate power taking advantage of the current
rhetoric of rollback. We present the 27-month strike at the Irving
Oil refinery in Saint John from 1994-1996 as an interesting case
study of this phenomenon in the Canadian context. We argue that
the Irving family used the rhetoric of competitiveness to do two
things at the refinery: to increase profits and to impose their individualistic corporate ethos on the work force. This effort was also
borne out of the Irvings' obsession with their overall business
security, that they must continue to strengthen their position
despite the absence of immediate threats. To do this, we present
the necessary background for the reader to understand the strike,
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Steuter and MartinlPetroleum
including the nature of the Irving Empire, of its labour relations,
and the milieu of Saint John. Then we show the weakness of the
Irving's claims about competitiveness and the need for flexibilty,
and then describe the protracted nature of the strike and the
Irving's heavy-handed tactics. We conclude by suggesting that
these tactics may spread elsewhere in Canada and North America.
The Irvings in New Brunswick The Irving Group is a large, vertically integrated collection of companies run by the three sons of
founder KC Irving. The group bears the stamp of the sons, just as
surely as it bore the stamp of its founder until his retirement from
full-time activity in the 1970s. There is a history of often bitter
labour disputes between the Irvings and some oftheir workers. To
understand the Irving Oil Refinery Strike, one must understand the
Irving Group as an entity, as well as its significance in Eastern
Canada. The Irving Group is composed of around 300 companies,
with a net worth of perhaps six to eight billion Canadian dollars,
and employs directly one in eight New Brunswick workers. While
it is like a multinational corporation---or a Japanese Keiretsu as
John DeMont has suggesteds-i-the group has always tended to
take on the character of its brain, initially KC Irving and more
recently his three sons Jim (JK), Jack and Arthur. The group has
always been run as though it were a "Mom-and-Pop" small business. These companies are limited in liability and publicly registered, but they are privately held, and the public knows comparatively little about their operations.
In the wake of their father's death in 1992, JK, Arthur and Jack
work together but are also individually responsible for different
parts of the group, which now often means overseeing the work of
the next generation. JK, the eldest, runs the shipyard and the
forestry division, with JD Irving Ltd. at its centre; Arthur runs
Irving Oil and its subsidiaries including the refinery; and Jack, the
youngest, takes the greatest interest in the newspapers, the retail
hardware chain, and the Group's many construction companies.s
In terms of the growth of their holdings, the Irvings have gone
even farther afield. With the acquisition of Cavendish Farms, they
are competing with their cross-province rivals, the McCains. They
continue to expand, such as in the area of information technology.
The general rule has been to expand vertically (by buying or establishing both customers and suppliers in major industries) in a limited geographical area, rather than competing in a narrow field
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across a broader geographical domain. Observers say that if you
want to know where the Irvings will expand next, look at their
accounts payable. Of course, it is expected that Irving companies
will deal with other Irving companies, when possible, and the
ethos of the group is that "Irving families" (i.e., Irving employees)
will patronize Irving companies.
We should also note that the rise of the Irving Group was based
not only on the hard work of KC Irving, his sons, and his thousands of employees, but also on the start that KC got from his own
family and from New Brunswick taxpayers. In the case of his family, his initial foray into business was supported by his father, a
successful merchant and lumber baron. In the case of the provincial government, most of the major initiatives have been supported by municipal tax concessions, cheap water, government grants,
and low-interest loans)
The Irving Group has a certain "character," a particular corporate culture, inherited from its founder and still present. The culture is based on individualism, and a strong commitment is
expected from all employees. The Irvings have not favoured job
titles within the "Group of Companies." The Irving brothers who
now control the group have a reputation for the time spent at the
office, and their employees will often put in long hours too. The
Irving Group is not a nine-to-five operation. Its success is
explained by this fact, in addition to its advantageous market position over the last several decades.
The refinery strike should also be situated in the context of the
Irving Group psychology. The Irvings have always been concerned
about the security and stability of their main operations, particularly Irving Oil Ltd., the forestry operation (JD Irving Ltd.), and the
shipyard (Saint John Shipbuilding). The Irvings are clearly "big
fish" in Eastern Canada, but they have tended to see themselves as
underdogs, as outsiders, relative to the federal government and the
Canadian business elite. Consequently, the refinery strike was also
about securing the future invulnerability of Irving Oil and its refinery in an uncertain business environment. Above all else, Irving
wants to remain a major player in the Canadian oil industry, and
breaking its own work force was seen as one way of doing this.
Saint John: The Context As we have said, the Irving Group has
a culture, a corporate ethos of hard work and individualism, within a number of resource-extraction and manufacturing industries.
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Steuter and MartinJPetroleum
This ethos sits comfortably in the city that represents its core,
Saint John, New Brunswick. Saint John and its people share many
of the characteristics
of Maritimers,
and especially New
Brunswickers. A few of these key characteristics were well presented by David Elkins and Richard Simeon, based on a major
survey conducted in the late 1970s. They argued that New
Brunswickers in particular have low political efficacy and low
trust, but have a high level of involvement in public life.s This
means that relative to other Canadians, New Brunswickers do not
see themselves as able to have an effect on politics; they do not
trust political, social or economic elites; yet they do participate
quite actively in politics in terms of voting, political organizing,
party membership, and so on. This latter activism is explained, in
part, by the continuing presence of the patronage system.
Individuals may get involved in politics, by supporting a potential
governing party, in order to secure for themselves and their relatives employment, contracts, or other benefits, as opposed to a
sense that they can improve society.
Saint John is both an Irving town as well as a union town, and
it contains the only provincial riding which elected a New
Democrat in three successive elections. Saint John also has the
strongest tradition of industrial militancy in English New
Brunswick. In cultural terms, Saint John is both socially conservative and economically social democratic, combining opposition
to social change with a belief in people's economic entitlements.
The city has a Roman Catholic flavour.? especially in its central
core-it
contains the seat of New Brunswick's one English
Catholic diocese-which
we argue is connected to the economic
and social values just mentioned. Saint Johners are suspicious of
the Irvings (who are Presbyterians) but they are prepared to live
with them. They respect the rights of an employer, the top of the
hierarchy, but they want their share of the production. It is in this
context that the Irving Group and their employees interact.
Labour Relations in the Irving Group The Irving ethos has
clear implications for labour relations in the group, and the Irving
attitude toward trade unions. One can imagine, based on the above
discussion, that KC Irving and his successors prefer to work without unions. Trade unions represent everything the Irvings have
worked against. Instead of individualism, unions represent collectivism; they establish rules and restrict management rights rather
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than allowing wide-open discretion; from the Irving perspective,
to the extent that unions regulate the shop floor, they undermine
flexibility and limit the commitment of workers to the firm. The
various biographers of KC Irving and the Irving Group note, at
best, an ambivalence toward unions. Douglas How and Ralph
Costello, the authors of the authorized biography ofKC, claim that
KC actually encouraged the creation of a union at Irving Pulp and
Paper in Saint John in 1966,10yet they concede that KC proposed
"what amounted to a company union" at Irving Oil's bulk storage
facility at Courtenay Bay in 1987.11As John DeMont has noted:
The warmth KC felt toward the working man had its limits. His clashes with organized labour over the years were legendary. He wasn't
exactly against unions: "When they are well led they are excellent for
labour and management both," he said. Trouble was, the way he saw
things, they were rarely wellled.J2
There has been a long history of labour strife at many of
Irving's operations, especially its largest ones, including the
Refinery. These include the Canada Veneers strike and its relocation to Ontario; the Irving Oil Courtenay Bay strike; the 1963-64
refinery strike; the 1991 Pulp and Paper strike; and the more
recent "low intensity" tactics employed against Irving truck
drivers and the workers at Kent Homes.
The most relevant strike is the 1963-64 refinery strike, especially because the employers' tactics from that era made their
return in the 1990s. On 16 September 1963, the workers at the
Irving Refinery Ltd. oil refinery went on strike, which lasted six
months and did yield some positive results for the workers. The
major players were from an earlier era but the issues bear a striking, even eerie, resemblance to those of the more recent strike. In
its early days, the oil refinery was owned by Irving Refinery Ltd.,
a legally separate entity from Irving Oil Company, and KC was at
the height of his power and control.It (Irving Oil Company and
Irving Refinery Ltd. were amalgamated in Irving Oil Ltd. in
1973.) The workers were represented by Local 691 of the Oil,
Chemical and Atomic Workers' International Union (OCAW). The
key issue was the question of conformity to the wage scale of
national competitors, which in later years would be referred to as
the National Bargaining Pattern. The Irvings said that they could
not afford to meet national refinery pay standards, though they
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would offer modest pay increases, largely in the form of a merit
pay scheme.lThe fascinating aspects of this strike are the similarities
between the Irving tactics employed then and those of the 199496 refinery strike. First, the Irvings attempted to communicate
directly with the workers, which KC Irving did on the first day of
the strike. On 16 September, he sent a letter to all workers warning them of the consequences of going on strike, and in a radio
address on 19 January 1964, he reiterated the same themes.i> In
the 1994-96 strike, the company sent notices to striking workers
urging them to cross their own picket lines. The other similarities,
including some of the basic provisions of the Company position
and the use of legal action to hamper the strike, deserve to be discussed in slightly more detail.
In defending its position against wage parity with other
Canadian refineries, Irving Refinery stated that the economics of
the Maritime provinces should determine wage rates; that
"increasing wages by blanket increases is inherently wrong and
merit should be almost the sole test;" and that the company cannot
afford to meet the wage demands.!e During a public speech, KC
Irving made the claim, which would be repeated again by Irving
management in the 1994-96 strike, that the refinery is "operating
since the beginning of the strike by non-union personnel better
than ever before, with more experienced persons doing the same
job in half the previous man hours."!"
The Irvings also undertook significant legal manoeuvring in the
earlier strike in order to gain the advantage. The first move came
two days after the strike, when the Irvings were granted a temporary injunction to prevent workers from secondary picketing at
Irving gas stations, based largely that picketing a "third party"
encouraged Irving Oil Ltd. to breach its contract to buy gas from
Irving Refinery Ltd. This injunction became permanent, and the
union appealed to the New Brunswick Supreme Court, arguing
that Irving Refining and Irving Oil should not be considered separate entities. The Supreme Court upheld the restriction on picketing gas stations. At roughly the same time, there were allegations
of violence at the refinery, and Mr. Justice West of the provincial
Supreme Court also limited the number of pickets to three at the
refinery's main gate and two at other entrances, with a provision
that Irving Refinery could apply for a complete ban on pickets if
"there was any further violence."18
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Unlike the 1994-96 strike, the Industrial Inquiry Commission
was appointed before the 1963-64 strike started. Alan Sinclair was
appointed on 22 July 1963, and he reported on the following 29
August, roughly two weeks before the strike began. While the
Commissioner took issue with the union's desire for immediate
wage parity with other refinery workers, he also rejected the
Irving claim that it does "not want to upset the economic picture
ofthe area by paying higher wages than most." Sinclair did in any
event recommend significant pay increases and benefit improvements, even if they did not amount to meeting labour's position.
However, the Irvings rejected this set of recommendations out of
hand, and in response the workers went on strike. During the six
month strike, the Irving workers stuck together and enjoyed significant public and union support. By the end they had managed to
achieve wage increases that would take them close to the national
average. The terms of agreement on 8 March 1964 were simple.
Labour would receive the pay increase offered at the beginning of
the strike, and there would be a merit pay system, to be directed
"by the company subject to a right of grievance," 19 which allowed
KC Irving to save face but did provide de facto pay increases.
Explicit recognition of the National Bargaining Pattern would
come in successive contracts, and until the 1990s labour relations
at the refinery were relatively uneventful. The 1994-96 strike represented a sea change in Irving Oil labour relations, because the
employer's tactics harked back to the policies of 1963-64, after
thirty years of much more harmonious relations.w
Analysis of the Irving Position in the 1994-1996 Refinery
Strike On 12 May 1994 at 4:30 pm, members of Local 691 ofthe
Communications, Energy and Paperworkers (CEP) union at the
Irving Oil Ltd. Refinery went on legal strike. Management took
over the refinery with plans to run it, and refinery Manager Bob
Chalmers commented that without union concessions, the Saint
John facility might join the 25 North American oil refineries that
had shut down since 1970. Larry Washburn, President of Local
691, said the Irving company was mostly interested in trying to
lengthen the work week without paying overtime rates.
Though none of the strikers knew it then, they would be on
strike for over two years, and further, none of them would have
guessed that not all striking workers would have the right to go
back to work. A strike lasting 27 months is itself quite significant,
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especially when it involves the interests of the Irving Group, a
major player in the Canadian petroleum industry. But this strike is
even more important because of what it says about the 1990s, a
period of expansion and growth for the few and "restraint" and
"restructuring" for most. This strike was not only about wages,
hours worked, and the most familiar topics of labour negotiation.
It was also about the rules of the game, and who sets them. Would
the longstanding seniority principle govern the employment status
and roles of workers, or would the employer be able to insert
another principle? Do striking workers have the right to their jobs
after the strike, or is this just a "convention" that rests only on the
balance of power between workers and management? In exchange
for their willingness to be employees, and to refrain from challenging the legitimacy of the employer and its private accumulation, do the workers "own the work," or does the employer own
the work in addition to the worker's product?
Throughout the 1994-96 Refinery strike, the Irvings insisted that
for the refinery to remain competitive, there had to be changes in the
collective agreement. Workers would have to take pay cuts and
work more hours on "straight time" rather than overtime rates. The
company justified this by pointing to the fact that this was a highlypaid workforce, in which the average worker received gross income
of $70,000 per year. Most importantly, the company said that there
was a need for greater flexibility in the work force. This meant that
rules in the collective agreement defining what a worker could and
could not do would have to be changed, and further, the principle of
seniority would have to be altered to allow management to make
judgements about which worker should be trained to work on new
equipment, or be promoted, and so on. Presumably, given the outcome of the strike, management also wanted the ability to terminate
employees based on a principle other than "last hired, first fired."
The reader should note that the Irvings advocated a roll back to the
status quo ante bellum of 1963.
Clearly though, the issue of "competitiveness" was the key
issue, since the demand for "flexibility" was really based on a
claim that to be competitive, the work processes at the refinery
had to be changed. As a privately-owned corporation, Irving Oil
Ltd. is understandably secretive about its operations. Since it is not
traded publicly and since no one outside the Irvings own shares,
the company does not have to answer to anyone. However, material that is publicly available casts doubt on whether the drive for
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competitiveness really required the concessions that the Irvings
demanded. Rather, given the strong competitive position in the
region of Irving Oil, it seems more likely that the strike was about
increasing profitability, ensuring invulnerability, and imposing the
Irving Group ethos rather than simply keeping the company's
head above water.
There are many facts about the oil refining industry in Canada
which, taken together, lead us to question the Irvings' claims of
uncompetitiveness. First, though, we should emphasize that refined
petroleum products is a big industry in Atlantic Canada. In 1991,
for example, Atlantic refineries produced 18.6 million cubic metres
of product, 11 million of which was sold within Canada, mainly in
the Atlantic provinces.u Refined petroleum is a major export item
for the Atlantic region as a whole, and the export figure represents
41 percent of total production. Specifically, Atlantic refmers
exported out of Canada, under the category of refined petroleum,
coal and chemical products, merchandise valued at $984.6 million
dollars, which amounted to fully a quarter of Atlantic exports.P In
all likelihood, probably most of the exports are produced at the
export-oriented North Atlantic Refinery at Come-by-Chance,
Newfoundland.v though Irving is also a significant exporter.>' The
reader might also be surprised to know that fully 42 percent of
these exports went to the European community, while 10.4 percent
was bound for New England and 2.45 percent for the rest of the
US,25 In the same year, another source indicates that exports from
New Brunswick to the other Atlantic provinces in "refined
petroleum" and "chemical products" amounted to $307.9 million.26
This is also significant, since the Irving Refinery is the only refinery in the province.
There can be no doubt then that oil refining (e.g., the Irving
refinery) is a significant industry in New Brunswick. However,
there should be considerable doubt whether the 27 month strike at
the Irving refinery was necessary to maintain and improve competitiveness. The seeds of doubt are, in the first instance, sown not
by the Communications, Energy and Paperworkers Union, but by
the Canadian oil industry and the Canadian government. First,
numerous publications are quick to note that in the fifteen years
since 1980, the oil refining industry went through cost cutting and
rationalization having nothing to do with long strikes. A helpful
sectoral study produced by Industry Canada in 1996 notes that
Canada has moved from 40 refineries in the early 1980s to 21 in
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1995.27 In the four Atlantic provinces, there are now two domestic-market refineries (the second is located in Dartmouth, NS),
down from four in the late 1970s. The Canadian Petroleum
Products Institute (CPPI) notes in its 1993 Annual Report that:
CPPI members have announced the closure of three refineries for
1993. These shut-downs will improve the industry's competitiveness
by reducing operating costs and possibly increasing the efficiency and
production utilization levels of the remaining refineries-f
In the last ten years, the industry has also cut costs by 18 percent, and only 10,900 workers are employed in the oil manufacturing sector, compared to 22,500 in 1985,29A 1997 report, written by
a Select Committee of the New Brunswick Legislative Assembly,
noted that in New Brunswick, the cost of refining and delivering
gasoline to retail stations declined from 12.3 cents per litre in 1991
to 7.5 cents per litre in 1995)0 Canada has twice the number of service stations relative to the US, and the number of service stations
is dropping. Yet one gets the sense, from advertizing of franschise
opportunities in regional newspapers, that the Irvings are still
expanding their number of stations)!
Oil refming is a very capital intensive industry, perhaps the
most of any manufacturing industry. The average worker at a
Canadian oil refinery produces $186,000 in value, compared to
the manufacturing average of $55,000. The industry is profitable
in Canada, since industry-wide armual final profits were $1 billion. Return on capital invested was 6.6 percent in 1994, which is
acceptable for an industry facing "competitive challenges."
Though the five refineries in Quebec and the Maritimes are, as a
group, less profitable than the Canadian average.v these figures
do not account for oil profits realized offshore as the result of
transfer pricing, in which profits are accounted for in the lowest
tax jurisdiction. In fact, according to Industry Canada, a refinery
operating at 85 percent of capacity will maintain "adequate profitability." In fact, the eastern Canadian refineries as a group ran at
93-94 percent capacity in 1995 and 1996, and the Industry Canada
consultants anticipate that this will increase to 96 percent by 2000
and 97 percent by 2005.33 Perhaps this anticipated growth in the
industry explains the Irving's armouncement of an $800 million
expansion and upgrade of their refinery, as well as the recent interest of a private-sector
firm in establishing a synthetic oil refinery
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at a cost of $600 million in the port of Belledune, in northern New
Brunswick.34 In any event, the Industry Canada report sums up the
situation by saying that: "In the past decade, the petroleum products industry has managed to improve its productivity ..."35
It is important to note that nowhere in this government report,
which was designed to help the industry remain competitive, do
the authors point to "rigidities in the labour force," or excessive
employee compensation, as in any way connected to the challenges that the industry does face. In the mean and lean 1990s,
there should be no doubt that Industry Canada would recommend
"restructuring" of the work force if it was in fact "necessary."
But of course what one can say about an industry is not necessarily true about an individual operation. There is reason to
believe that the Irving refinery is probably in a better position than
the industry average. We can conclude this in part from the limited information that Irving Oil does give out. The fact that it is the
largest refinery in the country suggests that it benefits from
economies of scale, in which its size allows it to produce its product at lower cost than smaller operations. We know that the refinery is the largest "and most advanced" in Canada, with a capacity
to process 250,000 barrels of oil per day, and that the upgrading to
this capacity took place in the mid-1970s. The refinery operates 24
hours per day, 365 days per year. "The refinery can handle a wide
variety of crude oil types and has the capability to produce highoctane gasolines, jet fuels, diesel fuels, home heating oil, propane,
kerosene and asphalt.28" In October 1999, Irving Oil Ltd.
announced that it was now meeting the 2002 sulphur emission
reduction regulations, over two years ahead of schedule. By producing gasoline with sulphur content below ISO parts per million,
Irving Oil also became the first Canadian oil company to be granted the "Auto Maker's Choice" seal of approval by eight of
Canada's major car companies.36
The significance of the Irving Refinery is confirmed by Purvin
and Gertz Inc. 's work on the Canadian industry. These industry
consultants remark that "Irving has good flexibility on crude supply, and utilizes a wide range of varying quality crude oil."37 The
Irving refinery is a "Deep Conversion" refinery, with the capacity
to refine oil through thermal cracking, residual catalytic cracking,
and hydrocracking.ts This point, that the refinery can handle a
wide variety of crude oil, suggests that the refinery has an inherent advantage relative to other Canadian operations, especially its
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regional competitor, Imperial Dartmouth, which is much smaller
and runs on more expensive "light sweet and light sour crude
oil."39 Industry Canada has noted that one of the advantages of the
US industry is that its refmeries have a greater capacity to process
heavy crude, which is a cheaper input than light crude. However,
the Irving refinery is among the best equipped of Canadian
refineries to handle heavy crude.
The crisis of competitiveness justification is also undermined
by the vertical integration of the Irving Group. Apart from anything else, because of its strong retail position in the Maritime
provinces, Irving Oil has a captive market for its product. Along
with Imperial Oil, it controls 60 percent of the gas outlets in New
Brunswick (there were 683 in early 1997), and this figure probably understates the share of sales that these two companies enjoy.
Irving Oil, along with Imperial, counts the Government of New
Brunswick, including its schools, hospitals and municipalities, as
major customers.w The other advantage enjoyed by Irving Oil is
that the rest of the Irving Group, and probably most of its 25,000
employees, consume Irving gasoline, propane, diesel and home
heating fuel. Irving Oil is the price leader in the province, a
province in which gas prices in the city of Saint John are consistently higher than prices in other major Canadian centres.O Also,
Irving Oil swaps oil in the region with its competitors in exchange
for the same quantity of oil produced by its competitors in another province, such as Nova Scotia or Quebec.s- In addition, Irving's
retail expansion into New England also creates a ready-made market for Irving products, since those stations will only sell Irving
gas and oil. According to John DeMont, by 1991 Irving Oil controlled 25 percent of the Maine retail gasoline market.O
The Irving Effort to Break the Union Not long after the
strike's formal beginning on 12 May 1994, the two parties were in
court, a place they would visit often during the bitter strike. On 16
May, however, it was for the company to request, successfully, an
injunction limiting numbers on the picket line and to prevent
impeding of traffic. By 16 June, the union was in court on contempt charges for allegedly violating the order of 18 May, but this
battle ended with only a warning from the judge. Shortly after this,
realizing that they were in for a long strike, the union launched its
local boycott, designed to put pressure on Irving Oil Ltd. to come
back to the bargaining table. The New Brunswick Federation of
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Labour and the Canadian Labour Congress pledged their support.
Strikers began handling out leaflets in front of Irving gas stations,
and refinery Manager Bob Chalmers stated that the refinery was
maintaining its level of production. Chalmers also said that no
matter how badly the boycott cuts into sales, it would not force the
company to change its bargaining stance.
By August and September, with still no bargaining, the union
and its allies held a rally and announced their province-wide
boycott. In mid-October, the provincial government allowed the
refinery to go over pollution emission levels during periods of
equipment maintenance, and Environment Minister Marcelle
Mersereau said she did not expect the levels to be so high. On 19
October, after complaints by local residents, the union leadership
stated that the refinery should never have been allowed to break
normal pollution limits. The union said the problems were due to
the inexperience of non-union people running the refinery.
The union was in court again in October, but contempt charges
were dropped once the union Local agreed to pay $500 for alleged
damages to tires, and once it agreed to reduce the number of picketers at the back gate to eight strikers at anyone time. On
November 23rd, while the union executive was at the CEP
National Convention in Toronto, management sent a letter to all
striking workers encouraging them to come back to work through
their own picket lines, and at the same time the company withdrew
a number of key concessions from its bargaining position.
Refinery management offered work to anyone willing to cross the
picket line, and also claimed that business at the refinery had
never been better, with production and sales up by 15 percent.
In December the first "superscab" crossed his own picket line,
while the second crossed in January 1995. These were the first two
of many. In union parlance, a superscab is a member of the union
who crosses his or her own picket line, while a scab is a member
of management or an "independent contractor" (the company's
term) who does a striking member's work. In January 1995, the
Refinery management sent out a letter to the striking workers saying that there would be no point in negotiating unless the strikers
agreed to the company's last offer.
By March 1995 the conflict took on more explicitly political
overtones. During that month the union filed unfair labour prac-
tices charges against management arguing that Irving Oil was bargaining in bad faith. Larry Washburn said the union tried to meet
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with management ever since Bob Chalmers wrote a November 21
letter saying the company was prepared to meet with the union at
any time. In the Legislative Assembly, pressure was growing for
the government to do something. Elizabeth Weir, the province's
lone NDP MLA, introduced Bill 21, which would ban the use of
replacement workers during a strike. The United Steel Workers
say that Premier Frank McKenna promised this to them in 1992,
during the Brunswick Mining and Smelting strike, but the government did not introduce it into legislation.s- Weir's bill passed first
and second reading and then was sent to the Law Amendments
Committee for hearings. Advanced Education and Labour
Minister Camille Theriault said he would not ban the use of
replacement workers during strikes.
In May 1995, the two sides met face-to-face for the first time
since the strike began, and despite the fact that the two sides went
through government-sponsored
conciliation before the strike,
there was no government conciliator or mediator present. After
this session, management brought forward new demands, including a "Voluntary Severance Package," which encouraged striking
workers to apply for severance during the strike. Local 691 took
management to the Labour Relations Board on the grounds that
management was negotiating "away from the table," by dealing
directly with CEP members. The union won this complaint, and
Irving Oil was told to go back to the negotiating table. During the
second summer on strike, labour representatives took the Irving
boycott into Maine and leafleted tourists at the Maine-New
Brunswick border. Nearly two thousand union supporters participated in a Saint John rally in support of the strikers. The union
leaders commented that pressures created by the prolonged strike
were taking their toll on workers. Two of the union members suffered heart attacks, which Larry Washburn attributed to financial
and family pressures arising from the strike. By the summer of
1995,45 union members of the initial 264 had crossed their own
picket lines.
By November 1995, management brought a new package to the
table. Surprisingly, it contained a list of 86 striking workers that
the company wanted to terminate, along with other demands. The
workers rejected this by a 90 percent vote, and the New
Brunswick government took the unusual step of appointing an
Industrial Inquiry Commission, headed by Mr. Innis Christie, a
prominent Nova Scotia labour lawyer and law professor. Christie
125
announced that he would hold public hearings in Saint John in
February 1996, at the same time that management was sending
termination notices to 54 striking workers. Before the hearings
took place, the Irvings tried to quash the authority of Christie and
limit his mandate. The hearings began, but Bob Chalmers, the
refinery Manager, did not appear despite his summons. A warrant
was issued for his arrest, but the process was stalled until late
March while the Irvings made four unsuccessful bids to quash the
summons and the warrant. Mr. Justice Michel Bastarache of the
New Brunswick Court of Appeals (now of the Supreme Court of
Canada) threw out the Irving appeals and ordered Chalmers to
attend or go to jail.
Despite the pressure generated by the public hearings, the
Irvings appeared to be too big to lose. More and more workers
were defecting from the strike, either by taking ''voluntary separation" or by crossing their own picket lines. This was also a local
manifestation of the current crisis on the Canadian left, in which
labour solidarity is found among union leaders but is much less
common among the rank-and-file.s>The refinery was also running
sufficiently well to meet the company's sales, largely by using
management and scab labour. Management and labour returned to
the table a number of times, but it was clear that for this strike to
end the workers had to make virtually unprecedented concessions.
In his [mal report, Christie told the workers they lost, and they
should settle for the best deal they could get. Finally, on 16August
1996, after 27 months, a majority of Local 691 voted in favour of
a new contract, which still provided for significant concessions on
seniority, flexibility, and for the termination of 37 workers (of
roughly 150 left on strike), including all of the union executive.
Not only did the strike end with the imposition of a humiliating
and restrictive final contract, but workers who remained had to go
through a mandatory ideological re-education programme for
returning workers. This process of ideological re-education was a
means for the company to win (or control) the hearts and minds of
its now-broken labour force. While there is significant pressure
against employees speaking out about this process because to do so
would jeopardize their buy-outs or jobs, we do know the basic outlines of the programme. Employees had to spend two weeks at a
local hotel with facilitators from a US consulting firm, called the
Boston Innovation Group. According to a draft of the programme,
entitled Expect Excellence, employees were slated to go through a
U6
Steuter and MartinJPetroleum
re-orientation agenda which included "venting emotions," "problem
people" and a participation in a "public declaration." Successful
completion of the first week of this program was a prerequisite for
being "invited" to week two, which involved ''team building" exercises for union members and their fellow workers who crossed the
picket lines, as well as replacement workers who had been kept on.
Week two in turn was followed by a practical test at the refinery
lasting up to four weeks. Workers were assessed every day and did
not get full pay until they passed the entire program.
Among the required reading for the course was American psychologist Judith Bardwick's book, Danger in the Comfort Zone:
How to break the entitlement habit that's killing American
Business. A "must-read" book for corporate managers, this work
describes the phenomenon of a "culture of entitlement" whereby
workers are apparently pre-occupied with their rewards rather than
their responsibilities. Returning workers at the refinery say that in
reality the reorientation program combined a "bitterness test" and
"attitude alteration" exercise. Workers were told that they were
misled by their union President, Larry Washburn, and to doubt the
credibility of the executives of their national and local union.
Bob Hicks, President of the New Brunswick Federation of
Labour, has stated that "Reorientation, in our estimation, would
involve a simple retraining or reintroduction to the work force. It
has nothing to do with the kind of cleansing and brainwashing
that's going on there now."46 It seems clear that this strike was a
test case for the Irving Group of Companies and for industries
throughout the country, which were gauging their ability to rollback labour rights and increase corporate power.
The Irving Empire in Global Context So far in this article we
have seen the high human cost of the Irving Oil refinery strike. In
addition, we have shown that we have not been told the whole
story by Irving Oil, and that in any event claims about competitiveness are more complex than they first appear. We can understand that Irving wanted to increase its profits, and perhaps also
put an organized work force "back in its place." But these motives
do not explain how it was possible. To answer the how question,
we need to look at the changes in the global economy and the
increasing tendency in the last ten years of Canadian federal and
provincial governments to abandon their populations in the face of
these economic changes.
127
For the purposes of understanding the Irving Oil Refmery
Strike, there have been two major changes in the global economy
in the last ten years: One is the development of persistent "surplus
capacity" in the global economy, while the other is the "globalization of production." The idea of surplus capacity refers to the fact
that the world has been going through a crisis of demand over the
last 15 to 20 years, and that in virtually every industry the ability
to produce outstrips the demand for production. This means that in
most major industries, including oil refining, ship building, forest
products, and so on, there is a tendency toward idle production
facilities.s? The world economy, and most of its major industries,
are not running at full capacity.
"Globalization" itself is an over-used term, and one that is often
used vaguely. The world has been globalized for decades, even
centuries, if we mean only the movement of people, money, goods
and even services across borders. What is much newer, however,
is the globalization of production, which has developed only during the last 20-30 years.sf Globalization of production refers to the
tendency of firms to separate and relocate specific tasks of production among many different jurisdictions
and countries.
Resources may be extracted in one country, processed in another
country, manufactured in a third, by a company with a head office
in a fourth. The second has been to push for free trade agreements.
To some extent this push, manifested in North America in the
Canada-U.S Free Trade Agreement, the North America Free Trade
Agreement, and the Uruguay Round Agreement within the
General Agreement on Tariffs and Trade.s? has been more a result
of these changes than a "cause" of further change. What they have
done, however, is lock in a regime of declining barriers to trade,
which provides predictability to firms. More importantly, they
have also greatly restricted the purview of governments to protect
their societies from the vagaries of the world economy.
There have been two major responses of firms to these new
conditions. One has been to relocate production to serve emerging
markets, to minimize costs, and to maximize profits. The other has
been to press governments for free trade agreements and other
pro-business policies. The Irvings have pursued the second strategy, and have emphasized control over the New Brunswick provincial government. Admittedly, the Irving Group is one of the least
globalized conglomerates for its size that one is likely to find.
While Irving buys its crude oil from its own "middle-man"
128
off-
shore company, thus giving it the ability to transfer profits to the
lowest tax jurisdiction.w it is otherwise geographically concentrated rather than dispersed. The vast majority of Irving operations
occur in one country, Canada, with a workforce located largely in
the three Maritime provinces. But surplus capacity and the globalization of production are important background explanations for
how the Irvings were able to get away with putting its refinery
workers on the picket lines for 27 months. The Irvings asked for
concessions at the refinery that could only be obtained in an era of
high unemployment. High unemployment of labour, one of the
major consequences of surplus capacity, depresses wages and
salaries, because management can put pressure on workers by
contracting out work or simply by pointing to all of the unemployed workers who would "love to have your jobs." Further, in
an era of high unemployment it is incredibly easy to find qualified
replacement workers, especially in light of the decline in employment levels in the Canadian refining industry. The strike lasted 27
months because the Irvings were able to run the refinery at a sufficiently high level to meet their obligations. Without high unemployment generally, and without the restructuring in the Canadian
refining industry in the 1980s, Irving might have had trouble finding the sufficiently skilled workers to go into the refinery to work
in unpleasant circumstances. As for the question of globalization
of production, both workers and governments feel the constant
pressure that employers may simply leave the jurisdiction. A consequence of surplus capacity is that every political jurisdiction in
existence is trying to attract new industry. Even if it is completely
impractical for the Irvings to move their refinery, they will threaten to do so in response to an "unfavourable climate." No doubt
this is one reason why New Brunswick does not have an "antiscab" law-business told the government that such a law would
make it difficult to attract new business and keep existing ones.
Conclusion In this article we have noted that striving for "competitiveness" had led the Irvings to demand "flexibility," but we
questioned whether the competitiveness of the refinery was ever
in jeopardy. New Brunswick, and the Atlantic region, are net oil
exporters, which suggests that the refinery is internationally competitive. Further, there was a major restructuring in the Canadian
refming industry in the 1980s and early '90s, which left the
remaining refineries in a much better competitive position. Irving
129
Oil's leadership position in the Atlantic region, its vertical integration, and its ability to win large tendered supply contracts, suggests the refinery's competitive challenges were not as serious as
the Irvings claimed.
The consequences of this strike extend beyond the lives of the
refinery workers in Saint John. It can be seen as a clear and early
step in the rollback of labour and democratic bargaining rights that
may be increasingly eroded. Shortly after this strike was settled, the
much larger work force at Saint John Shipbuilding Ltd. agreed to
concession-filled contracts with the Irvings. In addition the parallel
legitimization of this rollback, internally through the ideological
re-education program, and externally through the media, not only
obscures our understanding of this particular labour issue, but it
serves to endorse a defeatist mentality in the face of corporate and
governmental intimidation. One can conclude from this case that
the House of Labour in general relied too much on the political and
legal processes, and did so at the expense of organizing a social
movement to challenge the employer as well as the biased legal and
political process. This points to the need to rethink how solidarity
is organized and expressed in these situations.
Notes
The authors are grateful to David Frank and Martha MacDonald for their attention
to an earlier version of this article.
I. Noam Chomsky, "Rollback III: The virtual collapse of civil society," Z
Magazine (April 1995), pp. 17-18.
2. A classic statement of the rise and decline of Fordism is found in Alain
Lipietz, Mirages and Miracles: The Crises of Global Fordism (London and
New York: Verso, 1988).
3. On 6 July 1993, for example, then-Minister of Labour Vaughn Blaney was
quoted as saying that he anticipated that anti-scab legislation would come forward in the coming legislative session. Liz MacQuade, "Blaney says province
can do little about Dairytown lockout," Telegraph Journal, 6 July 1993.
4. For an analysis of the media coverage of the strike see Erin Steuter, "The
Irvings Cover Themselves: Media Representations of the Irving Oil Refinery
Strike, 1994-1996," Canadian Journal of Communication, 23/4 (1999),
pp.629-647.
5. J. Demont, Citizens Irving: KC Irving and his Legacy (Toronto: Doubleday
Canada Limited, 1991), p. 220.
6. Ibid., pp. 142-43.
7. In 1951, Irving Pulp and Paper was given a thirty-year schedule of fixed, low
municipal taxes, cheap water rates, and protection against "nuisance" complaints about its operations. The same kinds of concessions were received for
the establishment ofthe refinery, Rothesay Paper, and most of the other large
operations. See Russell Hunt and Robert Campbell, K. C. Irving: The art of
the industrialist (Toronto: McClelland and Stewart, Ltd.), p. 115.
130
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
David J. Elkins and Richard Simeon, Small Worlds: Provinces and Parties
in Canadian Political Life (Toronto: Methuen, 1980), pp. 40-45.
Fully 39 percent of the population of greater Saint John identify themselves
as Roman Catholic, as compared to 31 percent of English-speaking
New
Brunswickers. Put another way, Saint John is home to one-sixth of Englishspeaking New Brusnwickers, but 34 percent of New Brunswick's Englishspeaking Catholics live there. See Statistics Canada, Religion in Canada:
The Nation, (Ottawa, 1993), Catalogue No. 93-319, pp. 82, 236.
Douglas How and Ralph Costello, K.C.: The Biography of K. C. Irving
(Toronto: Key Porter, 1993), p. 84.
Ibid., x.c; p. 99.
DeMont, Citizens Irving, p. 61.
RJ. Bertrand, The State of Competition in the Canadian Petroleum
Industry Vol. I (Ottawa: Supply and Services Canada, 1987), pp. 187-88.
H. C. Jain, "Irving Refining Limited and the Oil, Chemical and Atomic
Workers' International Union, Strike of 1963-64," Canadian Cases in
Labour Relations and Collective Bargaining (Don Mills, ON: Longmans
Canada, 1973), pp. 50-86.
Ibid., pp. 70-71.
Ibid., p. 55.
Ibid., p. 71.
Ibid., pp. 76-78.
This strike is covered briefly by Wayne Roberts in Cracking the Canadian
Formula: The Making of the Energy and Chemical Workers' Union
20.
21.
22.
23.
24.
25.
26.
27.
28.
(Toronto: Between the Lines, 1990), pp. 84-89. See also Jain, "Irving
Refining Limited ... ," pp. 81.
We are grateful to David Frank for suggesting this interpretation.
Statistics Canada, Refined Petroleum Products (Ottawa, 1991), Catalog
No. 45-004, p. 6. We are using 1991 data because we have the most complete
data for this particular year.
Pierre-Marcel Desjardins, "Trade in Atlantic Canada: Trends and opportunities under trade liberalization," Discussion Paper No.1 (Moncton: Centre for
Research on Regional Development, January 1994), p. 10.
G. R Crandall, B. T. Eskew, and S. J. Kelly, "Canadian Market and Refinery
Background," Phase 1(Dallas, TX: Purvin and Gertz, Inc., May 1997), p. III. This and subsequent studies under the authorship of Crandall et at. were
prepared for Cost and Competitive Assessment Panel of Manufacturing and
Processing Technologies, Industry Canada.
G. R Crandall, B. T. Eskew, and S. J. Kelly, "Pricing Dynamics of the
Canadian and International Product Markets," Phase 2 (Dallas, TX: Purvin
and Gertz, Inc., May 1997), p. V-9.
Desjardins, "Trade ... ", p.l2.
Pierre-Marcel Desjardins and George J. De Benedetti, "A Study of Atlantic
Canada's Interprovincial and Foreign Exports for 1991," Research Report
No. 11, Moncton: Centre for Research on Regional Development, March
1993, p. 18. This category usually includes "coal," but the entirety of New
Brunswick coal production covered by this data is sold to NB Power.
Industry Canada, Petroleum Products: Pt 1 Overview and Prospects
(Ottawa: Minister of Supply and Services, 1996), p. 6.
Canadian Petroleum Products Institute, Annual Report 1992, p. 5. Oddly, as
of the year of this report, Irving Oil was not a member of the CPPI, nor was
it a member of the Canadian Petroleum Association, nor was it a supporter of
the Petroleum Communication Foundation.
29.
Industry Canada, Petroleum, pp. 19,21.
131
30. New Brunswick Legislative Assembly, Select Committee on Gasoline
Pricing, Final Report (Fredericton: Queen's Printer, 1997).
31. For example, see an advertisement in the Moncton Times and Transcript
5 June 1997, p. C6, calling for individuals interested in becoming Irving franchisees in the Shediac, NB, area.
32. G. R. Crandall, B. T. Eskew, and S. J. Kelly, "Competitiveness and Viability
Impact on Canadian Refining Industry of Investments to Reduce Sulphur in
Gasoline and diesel," Phase 3, (Dallas, TX: Purvin and Gertz, Inc., May
1997), p. 11-8.
33. Crandall et al., "Competitiveness and Viability," p. 11-3.
34. "Belledune Possible site for oil refinery," Moncton Times- Transcript 27
June 1997, p. 1.
35. This material is found in Industry Canada, Petroleum, pp. 24, 25, 30, 32.
36. The material in this paragraph comes from Irving Oil Limited's web site,
found (at the time of this writing) at <http:/www.irvingoil.caJ>. See also
Michael MacDonald, "Automakers encourage clean fuel use," Halifax
Chronicle-Herald 15 October 1999.
37. Crandall et al., "Canadian Market," p. VI-7.
38. "The Costs of Reducing Sulphur in Canadian Gasoline and Diesel," (Ottawa:
Industry Canada, March 1997), pp. 2-4.
39. Crandall et al., "Canadian Market," p. VI-7.
40. In Fiscal Year 1996, for example, Irving Oil sold more than $4.2 million in
product to the New Brunswick Department of Transportation alone. See
Public Accounts for the FY ended 31 March 1996 (Fredericton: Queen's
Printer, 1996), Volume 2, p. 270.
41. Select Committee, Final Report.
42. DeMont, Citizens Irving, p. 126.
43. Ibid., p. 208.
44. Charlie Gillis, "Weir vows to table anti-scab legislation," Saint John
Evening Times Globe 24 October 1994.
45. This is a worthy subject of further research in its own right, but addressing it
here is beyond the scope of this paper.
46. C. Morris, "Irving Bitterness Test Hard for Workers to Take," Halifax
Chronicle Herald 30 January 1997, p. A12.
47. This discussion relies on the path-breaking work of Susan Strange,
"Protectionism and World Politics," International Organization 32/2
(1985), pp. 233-260, and other works.
48. This discussion relies largely on the writings of Robert Cox, one of the pioneers of the study of global production relations. See his book Production,
Power and World Order: Social forces in the making of history (New
York: Columbia University Press, 1987); and various chapters in R. W. Cox,
Approaches to World Order, T. Sinclair, (ed.), (Cambridge, UK and New
York: Cambridge University Press, 1996).
49. The World Trade Organization was brought into being by the Final Act of the
Uruguay Round, thereby replacing the GATT.
50. For a description ofthis, see DeMont, Citizens Irving, pp. 123-28.
132

The Irving Oil Refinery Strike, 1994

Transcription

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