Open Mind 2013 National

Labour Law: The dilemma of how construction rules vary from one jurisdiction to another

A FORUM ON OPEN SHOP CONSTRUCTION

Volume 21 • Issue 2 • 2013

Levelling the Playing Field CHARTER CHALLENGE

CONSTRUCTION OWNERSHIP EVOLUTION

Do open shop workers have the same rights as unionized employees?

Canadian companies share lessons learned

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Contents Volume 21 • Issue 2 • 2013

30 5 Message From Merit Canada’s Chair

By Curtis Monsebroten

20 ON THE Cover National Agenda Bill C-377 makes waves across the country and Merit Canada’s role in levelling the playing field

By Terrance Oakey Illustration by Isabelle Cardinal

6 Construction Ownership Evolution

25 The Demographic Cliff The federal government retools its former programs, addressing the country’s shortage of skilled tradespeople

By Bill Stewart

Leadership styles and ownership transitions set the stage for a company’s success or failure

By Carissa Halton

30 Quiet Revolution

12 The State of Labour Law

36 Productivity and Purpose

Construction labour laws vary by jurisdiction and current government

By Peter Pilarski

It’s about more than working harder.

Companies are realizing the benefits of investing in efficiency

By Elizabeth Chorney-Booth

16 Charter Challenge Open shop workers challenge the legality of mandatory union membership requirements on construction projects

By Nicholas Malone

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Quebec’s corrupt construction industry takes the country’s headlines by storm

By Ben Freeland

38 By the Numbers Canadian construction statistics

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That’s a Merit Contractor.

Merit contractors give you the best value and ensure your job is completed efficiently – with quality, budget, safety and on time delivery as the top priorities.

Merit contractors • complete your projects on time and on budget • handle any size project, of any design • have the qualified manpower to get your project done to your specifications • are flexible and dependable • have excellent safety records Representing the voice of open shop construction in Canada, the eight provincial associations that make up Merit Canada focus on the human resource needs of contractors by offering employee benefits, training, retirement programs, tuition refunds, and more. Member companies work in all areas of the construction industry including residential, commercial, institutional, civil, and industrial.

1.877.41MERIT (63748)

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Message From Merit Canada’s Chair

On behalf of Merit Canada, welcome to the 21st anniversary edition of Open Mind magazine and the third edition for Merit Canada.

Volume 21 • Issue 2 • 2013 Publisher

Ruth Kelly

Executive Editor

Stephen Kushner

Associate Editor

Suzanne Pescod

Editor, Contract Magazines

Michelle Lindstrom

Production Manager

Betty-Lou Smith

Production Technician

Brent Felzien

Production Technician

Brandon Hoover

Circulation Manager

Sharlene Clarke

Vice-President Sales

Anita McGillis

Advertising Representative

Shane Kelly

Sales Assistants Karen Crane, Jennifer Rush Art Director

Charles Burke

Associate Art Director

Andrea deBoer

Assistant Art Director

Colin Spence

Contributing Writers Elizabeth Chorney-Booth, Ben Freeland, Carissa Halton, Nicholas Malone, Terrance Oakey, Peter Pilarski, Bill Stewart Contributing Illustrators and Photographers Steve Adams, Michael Byers, Isabelle Cardinal, Dushan Milic, Heff O’Reilly Open Mind is published two times per year by Venture Publishing Inc. for Merit Contractors Association.

Venture Publishing Inc. 10259 -105 Street, Edmonton, Alberta T5J 1E3 Tel.: (780) 990-0839 Fax: (780) 425-4921 admin@venturepublishing.ca www.venturepublishing.ca Merit Contractors Association 103-13025 St. Albert Trail, Edmonton, Alberta T5L 4H5 Tel.: (780) 455-5999 or 1-888-816-9991 Fax: (780) 455-2109 meritedm@meritalberta.com www.meritalberta.com Merit Contractors Association is a non-profit organization that offers human resource services to the open shop construction industry.

Printed in Canada by Transcontinental LGM Graphics The opinions conveyed by contributors to Open Mind magazine may not be indicative of the views of Venture Publishing Inc. or Merit Contractors Association. While every effort is made to ensure accuracy, neither Venture Publishing Inc. nor Merit Contractors Association assume any responsibility or liability for errors or omissions.

Canadian Publications Mail Product Agreement #40020055 Copyright © 2013 by Merit Contractors Association No part of this publication should be reproduced without express permission of Merit Contractors Association.

Open Mind is Canada’s only magazine dedicated

to the open shop construction sector, focusing on issues that affect the livelihood of an industry employing over one million across Canada.

Terrance Oakey has been leading Merit Canada’s advocacy since 2011. The past year has been an interesting and progressive one for changes to national legislation and the construction industry. In the article “Merit Canada’s Progress” (page 20), Oakey breaks down the advancements in Bill C-377, changes to outdated wage legislation, the issues of open tendering and the updates to the Federal Skilled Trades Program. Mr. Oakey’s time spent meeting with federal representatives is one of the reasons Canada is seeing these new progressive laws take shape.

Does the Canadian Charter of Rights and Freedoms protect the rights of open shop or non-unionized construction workers? Merit Manitoba is supporting a group of construction workers who have filed a Charter challenge against Manitoba Hydro for requiring them to associate with a designated union in order to work on government projects. Read about the journey that has brought these workers to court to fight for their right to work in the article “Charter Challenge” (page 16).

“The Demographic Cliff” (page 25) takes a look at the changes to federal immigration policy in order to accommodate Canada’s need for a sustainable labour force. With an estimated shortfall of hundreds of thousands of tradespeople, how are the policy makers and the construction industry working together to address this concern?

“Construction Ownership Evolution” (page 6) is an article that looks at the ways contractors are either building, buying, selling or passing down their businesses. With retirement just around the corner for many founders and CEOs, what are the challenges they face when taking those next steps?

Productivity affects a company’s ability to remain competitive and the article “The Importance of Productivity” (page 36) outlines the strategies some companies use to increase their productivity through communication, planning and scheduling tools.

We hope you enjoy the 2013 edition of Open Mind, and as always we encourage you to give us feedback or suggestions on future topics.

From all of us at Merit Canada, have a great 2013!

Curtis Monsebroten CHAIR MERIT CANADA

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Construction

Ownership

By Carissa Halton

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Expansions, mergers and retirements mean companies may experience significant changes in the workplace. How are these changes being handled by various firms?

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lot can happen to a company in the span of a century.

In 1912, when oil wells were dug by hand at the start of the Texas oil rush, Bill Flint Sr. started a company building wooden barracks in the oilfield. His company grew and when oil gushed from the ground in Leduc, Alberta, the Flint family moved its operations north of the border.

One of the first in energy field construction, Flint Energy Services Ltd. expanded and, in 1998, caught the interest of a venture capital company, SCF Partners. These wealthy, Texas oilmen were consolidators; they bought the Flint family’s Canadian operation and went on to make numerous acquisitions. In 2001, Flint Energy went public on the Toronto Stock Exchange and a hundred years after Flint’s first sales in the Texas hinterland, the company was acquired for $1.25 billion by U.S. engineering company URS Corp.

Ownership changes are often an integral, strategic part of growth for the construction industry. “It’s a very dynamic sector. This is the normal business model,” says Guy Cocquyt, vice-president of communications and research for URS Flint. “Companies are constantly being acquired, consolidated or spun off.”

Changes in leadership also represent a natural transformation for a company. “A company’s evolution of ownership and governance happens often by default,” says Dr. Lloyd Steier, vice-dean and faculty at the University of Alberta’s School of Business.

“Usually in response to the challenge of succession, there comes a time when all owners/founders must confront this important issue. They then seek ways and means to pass it on.”

Sometimes these founders have a son or daughter who is interested in taking the company on. Sometimes founders turn to employees to buy them out. Others seek companies

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Construction Ownership Evolution with whom they might merge or partner with, or they take the company public.

No matter whether the impetus for change is strategy or opportunity, every ownership transition presents different opportunities and challenges irrespective of a company’s own strengths, weaknesses and objectives. A company’s evolution is unique to its position in the local marketplace, the status of the global marketplace, and its company goals and culture.

Three Companies, Three Ownership Transitions

Don Daly started up Territorial Electric Ltd. in 1980 and based it in Edmonton, Alberta.

More than a decade ago, he wondered about how he would transition into retirement.

“A lot of companies I associate with are in the same state as we are,” he says. “The owners are getting close to retirement and looking for ways to sell off their company. At least a half dozen of my competitors have wanted to talk to me about what we’ve done.”

Daly wanted to recognize the work of loyal employees that had stuck with him in good times and bad. After reviewing the options, he presented employees with what his accountant called “golden handcuffs.”

Initially, he sold a quarter of the company to eight employees, after devaluing the company so it was easy for employees to buy in.

Within a couple years, the employees’ initial investments were fully paid out in dividends.

“It’s been a success,” says Daly. Twelve years after the process began, the employees reorganized themselves and are now in the stages to buy Daly out completely.

Clark Builders started in Yellowknife in 1974 with two primary partners. As the company grew, it moved to Edmonton and the initial partnership was extended to senior staff with an offer to buy shares in the company. As the company expanded further, the employees sought to buy out the initial two partners. After reviewing all the options, a strategic partnership was pursued, which allowed the employees to maintain the company brand, management control and employee ownership model they liked. A partnership with U.S.-based Turner Construction Company was completed in January 2012 when Turner bought 51 per cent of the company, and 49 per cent remained employee-owned. The 8

deal provided Turner with a strong presence in the Canadian marketplace. Additionally, Clark Builders has access to additional human resource support, staff development opportunities, expertise in different market types, and emerging technologies.

While Clark Builders sought a partnership with another similar company, Flint Energy Services sought a way to expand its expertise to broader projects within the oil and gas market. Flint shared no overlapping services with URS Corp. when it was acquired in 2012.

At the point of acquisition, Flint was on target to hit $2 billion in revenue. Even at the size and scope of Flint’s operations, the oil and gas company found itself shut out of many larger oilsands projects where Engineering, Procurement and Construction (EPC) contracting was increasingly being used. EPC contracts require contractors to bid on the whole project: design, build and commission. “The only way to do that is with a large engineering company,” says Cocquyt. “Flint couldn’t do

this alone, so we looked at different options: mergers, joint ventures.” At the same time, URS Corp. began looking for new opportunities in the energy sector. A year after the ownership change, Flint URS has already begun to introduce Flint customers to the additional suite of services URS brings to Alberta and, as hoped, the company is now bidding on EPC projects.

Keys to Success

When it came to its strategic partnership, Clark Builders spent approximately two years on due diligence, “We took a deep dive into each other’s business to get an understanding of what is ‘below the clothes,’ ” says Brian Lacey, vice-president construction at Clark Builders.

In this “deep dive” Clark didn’t just look at financials, legal and safety issues; it also broadened the scope to include a review of company culture. “You run a real risk by looking at the financial deal and not paying attention to the cultural concerns,” Lacey says, noting such risks include a company

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Construction Ownership Evolution

coming in and changing things overnight.

Both companies sent staff to visit the other’s sites. Clark Builders brought a range of people, from upper management to day-to-day operators, to Turner projects in Chicago and Seattle. “The day-to-day operators are the ones who have to live with outcomes. They ask the questions that senior management aren’t considering,” says Lacey. “They see the work through a different paradigm and I think it is critical companies value that perspective.” Staff members were also encouraged to go out for dinner, exchange stories and “let their guard down.”

Clark Builders shared its employees’ feedback regarding key symmetries in safety, schedule, quality and budget that was assessed on score cards on a Turner Construction job site. “You can get a good idea of a company’s approach after just a half hour on a job site,” says Lacey.

On site, they asked: What is the level of control and management that’s supplied? Is everyone getting along? Are superintendents getting phone and radio calls about things that could have been organized through planning? It was important to Clark Builders to indicate to its partnering company what was important to its existing staff.

“We found that any one of their people could tell us the end date, which told me

that they were all working towards a common goal,” says Lacey. “That gave us a good feeling for the pulse of the project and the company.”

Lacey is confident that the transition has gone so successfully because they addressed company culture as being an important symmetry. He does caution, “It is a demand on the business – the

has a new ownership team to report to and there is extra work required in educating new people to the business. Also, no matter how much or how little operational overlap there is, it takes time to integrate large accounting and data systems. Flint’s accounting team, for instance, had to convert its reporting system from IFRS (the system for publicly traded companies in the Canadian industry) to the American GAP system. “It went really smoothly,” says Cocquyt, “because we have good people.”

People cannot be overlooked in the success or failure of a transition. Daly hired, retained and rewarded employees who showed passion and trustworthiness. He also relied heavily on his accountant and lawyer so that the ownership transition was done properly.

When it comes to actually making the changes, the key to a successful transition is managing these changes carefully. “We recognized it can be very disruptive,” says Cocquyt. “What I liked about this transition with URS is that Flint’s employees woke up and experienced no management or system changes. With very little distraction, we were able to focus on customer service.”

Poorly managed transitions can threaten the very thing that made a company successful in the first place, such as positive relationships with clients and the community. In the event of making big changes, like integrating operations, Cocquyt recommends doing them as quickly as possible.

Of course, less overlap or redundancy makes for less change in the company, its staff and client experience.

Cocquyt says the successful mergers tend to be the ones with little to no redundancy.

Successful ownership changes take time, not only for due diligence, but also for the transition of new people, processes and expectations.

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time and resources required need to be fully recognized and the time set aside. It could be a year, year-and-a-half, of major disruption, but the investment is in the future success of the company.”

Territorial Electric’s Daly stresses one thing to people who ask him about the success of his company’s ownership transition, “If you think it’s going to take five years, double it. Everyone is busy running a business. If something is going to get pushed to the back burner, this is it.”

Successful ownership changes take time, not only for due diligence, but also for the transition of new people, processes and expectations. For instance, Cocquyt now

It is a Global Marketplace

Alberta’s construction industry is dynamic and growing and, with further instability in global markets expected, companies can be certain that even more international companies will invest in Alberta’s construction industry. “We’ve really been sheltered from recession in Alberta,” Lacey says. “When firms realized loss of opportunity in the U.S. or Europe, everybody has focused on Alberta (and Canada) as a land of opportunity.”

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“Globalization is a fact of life,� Dr. Steier says. “Our industry has to be resourceful and resilient to survive.� Lacey and Clark Builders know this first-hand. “There is no option; we must be economical and efficient in order to compete,� says Lacey, adding that the partnership with Turner strategically positions Clark to achieve this goal.

When it comes to Daly’s goal to retire, he’ll soon realize it ‌ sort of. He was asked by the new owners to stay on to make coffee and steer the ship every once and a while. “I don’t think I can go from 100 miles an hour to one overnight,â€? he says.“Besides, my wife told me I better not plan to sit across the table from her all day: she says one of us won’t survive.â€?

No matter how retirement treats Daly, at least he knows that his company has been left in good hands. It is owned by people he trusts who will not only see that Territorial Electric survives, but thrives.

GOLDEN HANDCUFFS Employee-owned companies represent some of Alberta’s largest construction organizations, like PCL and Graham Construction.

Dr. Lloyd Steier, vice-dean of the University of Alberta’s School of Business, says, “It is often in a company’s best interest to share the profits of a company with those who helped make the profits. It’s simply good business (and) a great way to motivate people who, in turn, work hard and stay with you.�

Often used as a human resources strategy, employee ownership can also represent a growth opportunity. “Look at the example of WestJet,� says Steier. “Their profit-sharing may have been a HR strategy but it is pivotal to their success in the marketplace.�

For Don Daly, founder of Territorial Electric, sharing the company ownership with his employees ensured that his hardest-working employees didn’t leave to start their own companies, effectively becoming competition. “I wanted my long-term, loyal employees to be rewarded. They all demonstrated over the years that they had gone over and above their call of duty. They showed passion and were absolutely trustworthy.�

By keeping senior leaders, the company was able to ramp-up quickly and effectively. “We had trusted people to run field offices on the larger projects,� says Daly. Thanks to the golden handcuffs, this capacity for growth positively impacted the employee-shareholders at the most basic level: financially. For everyone, founder and staff-owners, it made good dollars and sense.

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Provincial governments play a significant role in shaping the construction industry.

How do the political intentions affect the market?

By Peter Pilarski

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anada’s labour laws are different provincially and

federally, with the construction industry generally falling under provincial jurisdiction. As such, laws are subject to change depending on the shifting political priorities of the government of the day. It is not unusual to see labour laws change significantly when a new party is elected and forms government.

When the House of Commons debated and eventually passed Bill C-377, the issue of union financial disclosure became a hot topic in Canada. The bill, “An Act to Amend the Income Tax Act (requirements for labour organizations)” was a private member’s bill introduced by Russ Hiebert, Conservative MP for South Surrey – White Rock – Cloverdale. Assuming its approval by the Senate, Bill C-377 makes it mandatory for unions and related organizations to file an annual standardized set of financial statements and schedules with the Canada Revenue Agency.

This degree of transparency will allow Canadians access to crucial information in a manner similar to that found in the U.S., U.K., Australia and many other countries where unions are held to higher degrees of accountability. Canadians will finally be able to see, in online statements, how more than $4 billion in tax-free dues are spent.

BRITISH COLUMBIA

B.C’s political fluctuations have jeopardized the province’s positive advancements made in its labour code provisions. Although we don’t know which party will form the next B.C. government, Adrian Dix, the leader of the B.C. NDP, said in a November 2012 speech, “I want to make it clear that I am proud of the work I’ve done for years, side by side with labour unions.” He continued, “The labour movement and NDP have done great things, but our best days are still ahead of us.”

In December 2012, Dix supported eliminating the secret ballot when workers vote on whether to join a union. Abolishing this practice eliminates a worker’s ability to fairly express his opinion without fear of intimidation.

ALBERTA

The Alberta government has not changed its labour code since 2008 when Bill 26, the Labour Relations Amendment Act was passed. It dealt with unfair union organizing and job targeting bid-subsidy schemes.

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The State of Labour Law dations to reform A lberta’s labour relations rules, improving the competitiveness of its construction industry.

Some of these recommendations formed part of the PC election platform.

During the 2012 provincial election, the PC party’s election campaign proposed amending Alberta’s Labour Code.

This included introducing the “Paycheque Protection, Transparency and Freedom to Choose Act”, making it mandatory for unions to provide members with annual financial statements disclosing union spending, providing members the ability to opt out of paying the portion of dues spent on activities unrelated to collective bargaining and grievance administration.

The PC party platform promised to amend the Labour Code banning the imposition of fines against members who work for non-union employers or employers with a non-signatory union and enabling parties to negotiate single collective agreements for all company workers or projects, rather than separate agreements for each trade group.

Since the election, the PC government has not implemented any of these pledges.

SASKATCHEWAN

On May 2, 2012, the Government of Saskatchewan issued a call for submissions, in response to a consultation paper on reforming provincial labour legislation.

The government’s consultation paper asked stakeholders for feedback on 15 pieces of legislation, governing everything from employment standards to occupational health and safety to collective bargaining legislation and the “Trade Union Act.” The government received more than 3,800 submissions.

On December 4, 2012, the Government of Saskatchewan introduced the “Saskatchewan Employment Act,” which consolidated 12 acts into one updated and comprehensive act. The new act included the ability of employers or employees to decertify a union that has been inactive for three or more years and made it more difficult for a union to fine a member for crossing a picket line. Following an unsuccessful application to decertify a union, and after waiting 12 months, employees could apply to decertify the union again.

The new law will maintain province-wide 14

Assuming its approval by the Senate, Bill C-377 makes it mandatory for unions, and related organizations, to file an annual standardized set of financial statements and schedules with the Canada Revenue Agency. bargaining in construction and healthcare sectors.

The “Saskatchewan Employment Act” has yet to be passed.

MANITOBA

A group of construction workers supported by Merit Manitoba is currently taking Manitoba Hydro to court to challenge the legality of project labour agreements being imposed on all major hydroelectric construction projects.

The court challenge argues that the Manitoba Hydro agreements violate the Canadian Charter of Rights and Freedoms by requiring workers who have not selected a union, to join a union and pay union dues as a condition of employment.

The cour t proceed ings a re at a n early stage, and it will take time before a decision is rendered.

ONTARIO

Libera l leader a nd Premier Da lton McGuinty announced his resignation shortly after winning a minority government, and prorogued the provincial legislature. His government is supported

by Working Families, a coalition of unions.

It brought in legislation that revoked the secret ballot vote on unionization elections for the construction industry. The Ontario Liberal Party selected Kathleen Wynne as its new leader. At this time, it’s too early to know her planned approach on labour legislation.

The Ontario Liberal government, also at the behest of unions, introduced legislation creating the Ontario College of Trades – perceived by industry as turning control of apprenticeship over to the province’s unions.

Ontario’s Official Opposition Progressive Conservative caucus released a white paper in June 2012 titled “Paths to Prosperity – Flexible Labour Markets,”

which contained a series of compelling recommendations on labour reform. It suggests that no clauses in any provincial legislation, regulation or collective agreement, should require a worker to become a member of a union or pay union dues as a condition of employment. Also included is that union leaders should be more accountable for how union dues are spent. Further, employers should no longer collect union dues through paycheque deductions and should not have to collect dues on behalf of the union. The paper recommends amendments to legislation ensuring unions provide transparent disclosure on union revenues and union spending.

The PC white paper encourages the restoration of secret ballot voting to ensure workers are shielded from potential intimidation from union organizers and employers – a right taken away in construction by the provincial Liberal government in 2005.

QUEBEC

It is still illegal in Quebec to operate a non-union construction company, even though the province’s high-profile Charbonneau Commission continues to expose the corruption and scandal that defines the way organized crime operates in the construction industry.

The Charbonneau Commission is scheduled to hear evidence for years to come, and it seems unlikely that any changes will be introduced before the commission concludes its work.

NOVA SCOTIA

In 2011, Nova Scotia’s NDP government passed Bill 100 and 102. Bill 100, an “Act to Establish a Unified Labour Board,” effectively guarantees successor rights to public sector unions. And Bill 102 allows an arbitrator or the Nova Scotia Labour

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The State of Labour Law Relations Board to impose a first collective agreement. Merit Nova Scotia fiercly opposed both pieces of legislation as did the rest of Nova Scotia’s business community.

Nova Scotia’s business community is united in its opposition to first contract arbitration and has urged the NDP government to reconsider its legislation.

Progressive Conservative Party leader Jamie Baillie promised that, if elected, he would focus on economic and job creation measures while eliminating the harmful labour legislation brought in by the NDP. Liberal leader Stephen McNeil stated that first contract arbitration is “against the spirit of the collective bargaining process, slanting it in favour of the union,” but he has not committed to any changes should his party form government after the next election.

NEWFOUNDLAND AND LABRADOR

New found la nd a nd Labrador Conservative Premier Kathy Dunderdale

It is not unusual to see labour laws change significantly when a new party is elected and forms government. quickly passed Bill 37 in July 2012, which denies workers basic democratic rights to a secret ballot vote in a unionization election.

Newfoundland and Labrador’s new cardcheck certification removes the requirement for a secret ballot vote if the union submits evidence that 65 per cent or more of employees in the bargaining unit sign a union membership application.

Bill 37 included a one-time final offer ballot option, giving an employer the right to request that its final offer be put to the membership in a provincially supervised vote.

The bill introduced potential access to first contract interest arbitration at the labour board’s discretion. Section 25 of the code was changed to give employers the right to engage in non-threatening and non-coercive

speech, and to give the labour relations board remedial powers to deal with unfair labour practices.

These changes came as a surprise to employers in Newfoundland and Labrador and were introduced quickly after very little consultation.

CONCLUSION

Employee or employer rights can be easily stripped with changes to legislation. Governments need to take time to listen to all stakeholders before considering labour law reform. As we have seen, an election can mean costly changes, and the evershifting political priorities of those in power have a significant affect on industry and the individual.

THANK YOU

Merit Contractors Association, Alberta Venture and the Alberta Roadbuilders and Heavy Construction Association extend their thanks to the generous sponsors and to everyone who attended the Contractor of the Year Awards Gala!

CONGRATULATIONS TO ALL THE FINALISTS AND WINNERS OF THIS YEAR’S CONTRACTOR OF THE YEAR AWARDS!

Presented by

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ILLUSTRATION BY: michael byers

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CharteR

Challenge Manitoba construction workers question having to join and pay union dues to be able to work on government hydroelectric projects

By Nicholas Malone

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o what extent can a government require an

individual to become a member of a union, and to pay dues to that union, as mandatory conditions of employment? Does the Canadian Charter of Rights and Freedoms protect the right of open shop or nonunionized construction workers? Does it allow them to work on hydroelectric projects without being compelled to join and lend financial support to a union they have never belonged to? These questions are at the core of a legal action filed in the Manitoba Court of Queen’s Bench last summer.

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Charter Challenge

Five local construction workers, with the support of the Merit Contractors Association of Manitoba as co-plaintiff, are challenging Manitoba Hydro’s authority to require them to join and pay dues to a union in order to work on hydroelectric construction projects.

Does the Canadian Charter of Rights and Freedoms protect the rights of open shop or non-unionized construction workers?

Although focused on the provisions of two collective agreements imposed

by Manitoba Hydro on open shop contractors and their employees, the case should serve to highlight a widespread and deeply entrenched labour policy in Manitoba that puts the interests of trade unions over the charter-protected rights of workers who chose to remain non-unionized.

The Floodway Expansion Project The case can trace its origins to the Manitoba government’s decision to impose a collective agreement on a construction project known as the Floodway Expansion project in 2005. The original proposal attempted to force open shop contractors to have their employees sign union cards and pay union dues as a condition of employment. The government justified its decision by asserting that these clauses were necessary to complete the project “on time and on budget” by preventing strikes or lockouts. However, faced with prolonged media attention and lobbying efforts by local industry partners, the government eventually agreed to remove the mandatory union membership clause from the agreement. As much as they found the remaining provisions of the agreement distasteful with respect to the mandatory payment of dues, a number of open shop companies nevertheless decided to bid on the project.

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Unfortunately, this relatively successful challenge to the terms of the Manitoba Floodway scheme failed to produce any longterm change in the government’s labour policy agenda. In fact, as recent developments have shown, the use and imposition of restrictive Project Management Agreements (PMAs) are likely to continue to affect large-scale public infrastructure projects in the province for years to come. Of even greater concern to open shop contractors is the lack of any meaningful consultations or compelling justifications for these policies, which, to a large extent, primarily impact the rights and employment prospects of thousands of open shop or nonunionized workers in the Manitoba construction industry.

The East Side Road Project Decisions surrounding the East Side Road Transportation Initiative illustrate the ongoing concerns and frustration that open shop contractors and their employees experience on this issue. With a budget of approximately $3 billion, and with more than $50 million in awarded tenders, the East Side Road project will lead to the construction and maintenance of an all-season road running 156 kilometres along the east side of Lake Winnipeg. This project is among the most significant and ambitious transportation initiatives in recent Manitoba history, both in scale and by reference to the extent of public and environmental consultations involved. This project undoubtedly holds significant opportunities for a wide range of Manitoba com-

panies and workers, whether union or open-shop, and should have attracted bids by a number of open shop contractors.

It was only after the tendering documents for some of the initial East Side Road projects became available in 2011 that contractors first became aware that another PMA (largely modelled on the Floodway agreement) would again subject open shop contractors and their employees to mandatory union dues and fees as a condition of employment.

Manitoba Hydro By 2011, open shop contractors and their employees learned that another government-directed collective agreement would apply to the Bipole III Transmission Line Project, a project Manitoba Hydro undertook for the construction of converter stations and a new transmission line spanning over 1,300 kilometres from the Lower Nelson River generating station to southern Manitoba. The

construction and maintenance of Bipole III is expected to create economic opportunities for local and out-of-province companies for years to come. The Bipole III PMA not only requires its workers to pay union dues and fees but also forces them, as mandatory conditions of employment, to join either IBEW Local 2034 or IUOE Local 987. The government made the decision to impose this collective agreement on open shop contractors and their employees, once again, without any prior consultation.

Open shop contractors immediately expressed their concern that, absent any compelling justification, these offensive and restrictive provisions amounted to a breach of their employees’ charter rights.

Merit Manitoba urgently requested to meet with the premier or the minister responsible for Manitoba Hydro, but the government

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denied the request. Instead the government provided a letter stating its rationale for requiring open shop or non-unionized workers to join IBEW or IUOE, and to pay dues to these unions, as conditions of employment on the Bipole III project. Aside from an unequivocal position that this policy was simply “good business” for Manitoba, the letter also disclosed a familiar set of justifications, namely to ensure workplace safety and to prevent strikes or lockouts. Needless to say, these purported justifications proved even more perplexing to open shop contractors. Manitoba contractors, whether union or open-shop, are all subject to the same Certificate of Recognition safety standards program, which is administered by the Manitoba Construction Safety Association.

Both in form and substance, the Bipole III collective agreement is not without precedent. Beginning in the late 1960s, major hydroelectric projects in northern Manitoba were traditionally subject to mandatory (and similarly restrictive) collective agreements. These ad-hoc agreements, as negotiated between local trade unions and the Hydro Projects Management Association (a negotiating and contracting agent for Manitoba Hydro) are now embodied in a model PMA known as the Burntwood Nelson Agreement (BNA), providing for union membership and the payment of dues as mandatory conditions of employment.

The practical and intended effect of the BNA and Bipole III agreement on open shop contractors and their employees became clear when employees reported to a BNA-covered project last spring. One of these employees, a coplaintiff in the case launched last summer, signed a union membership card only under threat of being removed from the worksite if he didn’t. Mirroring the experience of most, if not all open shop contractors who worked on the Floodway project, the employee’s refusal to consent to the deduction of union dues from his wages also forced his employer to make

these payments on his behalf.

The legal action filed in June 2012 will focus on the provisions of the BNA and the Bipole III PMA. The action puts forward two principal arguments.

The first argument is that the requirement to join a designated trade union in order to work and/or to remit dues to that union, whether or not the employee wishes to be a member of that union violates the affected employee’s freedom of association under section 2(d) of the charter. This argument follows a 2001 decision by the Supreme Court of Canada (R. v. Advance Cutting & Coring Ltd., [2001] 3 S.C.R. 209, 2001 SCC 70), which recognized that the freedom of association guaranteed under section 2(d) of the charter includes an individual’s right not to associate.

The second argument is that, having been compelled to join a union or to remit union dues in order to work on the project, the employee’s freedom of expression, protected under s. 2(b) of the charter, is violated. This is because unions publicly support political parties or policies that employees do not nec-

General Contracting Project Management Butler Building Systems Design/Build Contracting

A co-plaintiff in the case signed a union membership card only under threat of being removed from the worksite if he didn’t.

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essarily support. Employee-compelled union dues sometimes provide financial support to political or ideological causes not supported by the employee.

Preliminary motions filed by Manitoba Hydro and other co-defendants are scheduled for May 2013. The law firm of Heenan Blaikie LLP is representing the plaintiffs, including Merit Manitoba, with a team of counsel led by Peter Gall, Q.C., who appeared before the Supreme Court of Canada representing open shop contractors from outside Quebec in the Advanced Cutting and Coring Case.

Open shops are eagerly awaiting the results.

Elan Construction Limited #100, 3639-27th St. N.E. Calgary, AB T1Y 5E4 Tel: (403) 291-1165 Fax: (403) 291-5396 elanconstruction.com

5/2/13 9:34:30 AM

ILLUSTRATION BY: isabelle cardinal

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Reviewing the progress of Canada’s open shop sector and Merit Canada’s work

By Terrance Oakey

he open shop sector and the forces of free enterprise

saw another year of substantial progress in 2012. Merit Canada’s progress was met with opposition at every turn by the leadership of the building trades unions and their allies in the broader left-wing labour movement. Positive reforms took place dealing with immigration reform, union financial disclosure, the Federal Fair Wage Act and open tendering.

Union Financial Transparency

The House of Commons passed an important piece of legislation in December 2012: Bill C-377 (An Act to Amend the Income Tax Act – Labour Organizations). It was sponsored

by British Columbia MP Russ Hiebert and will require unions and other labour organizations in Canada to file annual public reports detailing their financial statements, salaries paid to top employees, time spent on lobbying and political activities, and certain information about expenditures over $5,000. If this legislation is passed by the Senate, it will shine a light on the more than $4 billion that unions collect annually in forced contributions from workers and bring Canada’s union financial disclosure laws in line with those in Australia, New Zealand, Germany,

France, Ireland, the U.K. and the U.S. Canada’s union leaders spent vast amounts of money trying to defeat this bill – a massive lobby that is expected to continue as the Senate reviews the legislation. This is despite the fact that the House of Commons already amended Bill C-377 to address most of the concerns union leaders raised. The interventions from union leaders that resulted in amendments made it a better piece of legislation, and contrary to union rhetoric, the reporting requirements are not onerous and will be easy to implement with basic accounting practices. Yet union leaders still oppose the bill, suggesting the real motivation for their campaign against it is a refusal to concede that they need to operate in a more transparent manner.

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Merit Canada’s Progress

While union leaders applied intense pressure on MPs who supported the legislation to change their position, those MPs recognized something that labour leaders did not: 86 per cent of unionized workers support greater financial transparency for unions. Therein lies the fundamental disconnect between union leaders and Bill C-377. The disclosure provisions of the legislation should empower union leaders since their members will easily be able to see how the union spends their dues.

In fact, the whole union model of forced contributions and generous tax breaks will be enhanced when the general public is able to see how unions spend their money.

1930s to regulate the wages and hours of labour for construction workers engaged in projects funded by the Government of Canada. Back then, there were few, if any, laws and regulations in place at any level to protect the interests of workers. The world is much different today and there are a host of provincial and territorial measures in place to enhance and protect working conditions, employment standards, labour relations, wages and hours of labour.

There is no longer any valid need for federal government regulation in this area. According to Statistics Canada, construction workers are paid an average rate of $28.35 per hour in our country. This

Repealing the Fair Wages and Hours of Labour Act sets the stage for millions of dollars in savings for government, open shop companies and taxpayers.

If unions want to continue to benefit from the public trust, they need to earn it by operating in a transparent manner.

We should applaud the members of Parliament who voted in favour of Bill C-377 for their support of transparency and accountability. They recognize that unions cannot benefit from the public trust through forced contributions from workers while simultaneously receiving generous tax breaks worth more than $400 million annually. To argue that unions have no public disclosure obligations simply defies common sense.

Federally Regulated Wage Rates

In the 2012 spring budget, the Harper government repealed the Fair Wages and Hours of Labour Act, better known as the Fair Wages Act. This was a long overdue policy change that treats the construction industry like any other industry that does business with the federal government. It was a good policy change for workers, governments and taxpayers.

Merit Canada is a strong supporter of the government’s decision as Merit believes that construction contracts, employment and individual compensation in the construction industry should be based on merit, regardless of employee affiliation.

The Fair Wages Act was adopted in the 22

makes them the second-highest-paid workers, exceeding the national average by some 30 per cent.

After 80 years, the Fair Wages Act was outdated, created unnecessary administrative costs for the government and the construction industry, infringed on the jurisdiction of the provinces and territories, and significantly increased the burden on Canadian taxpayers.

The Fair Wages Act obliges companies to establish dual-wage structures for private- and public-sector work. Many small and family-run open shop construction companies simply refuse to bid on federal projects because of this costly and burdensome legislation.

And what is the result? Lower levels of competition and increased construction costs for the government.

Repealing the Fair Wages and Hours of Labour Act sets the stage for millions of dollars in savings for government and taxpayers. The antiquated wage regulations needlessly increased the marginal cost of labour. This, in turn, discouraged employers from hiring additional workers, even during times

of peak demand. Who gets hurt here? New job seekers, in particular, young people and other groups under-represented in the construction trades, such as women and First Nations. The construction industry is vital to Canada’s economic health. We need competition governing legislation that reflects the society and market conditions in which we live today – conditions far different than those of the Great Depression.

Open Tendering

What rules should the federal government use when spending federal monies on infrastructure projects? As governments across the country face financial pressures, there is a renewed need to take action on outdated regulations and red tape that increase construction costs. While the federal government requires open and competitive bidding for its own infrastructure projects, the same is not true for all jurisdictions across the country.

Instead of allowing open tendering, many jurisdictions have rules that allow only certain companies, with agreements with pre-selected unions, to get all of the contracts. Non-union construction companies or companies with members of the wrong union aren’t even allowed to bid.

In Hamilton, Ontario, of approximately 260 contractors, only 17 contractors had workers registered with the proper union that city rules require. Ninety-four per cent of the available companies aren’t even allowed to bid on projects. In one case, the city disqualified four out of seven bids for a

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multimillion-dollar construction contract because bidders weren’t affiliated with the proper union.

This also creates problems for workers.

If the companies they work for aren’t even allowed to bid on construction projects, how can their company compete and keep workers? As Penny Allen, the Greater Essex County District School Board’s superintendent of business argues: “It’s not fair. All contractors pay taxes, but we, as a publicly funded body, can only put our tenders out to certain contractors that are unionized.”

It is surprising that in 2012, so many Canadian cities still have rules on the books that allow contracts to only be bid on by those affiliated with certain unions and exclude all others. Cities such as Toronto, Hamilton, London, Oshawa, Thunder Bay, New Westminster and Burnaby, and provincial agencies such as Ontario Power Generation and Hydro

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One, and even school boards have rules in place that restrict open bidding.

Recent media reports on the Toronto District School Board’s problems with repair work show all too well the consequences of such restrictive bidding processes. Costs are inflated ($143 to install a pencil sharpener), productivity is reduced (bills were inflated to cover workers who did not show up), and who is left with the bill? The taxpayer.

Canadians know that allowing only one pre-selected bidder on every single construction contract is not the best way to go. No Canadian family would operate that way with their own home renovation projects. Opening up bidding allows for competition and leads to lower costs and higher productivity.

The Canadian government is investing $2.275 billion under the ProvincialTerritorial Base Fund. Considering that labour costs amount to as much as

40 per cent of a construction project, and that open-shop contractors offer the same services at up to 10 per cent lower costs, savings to Canadian taxpayers from this policy could amount to up to $91 million – and that’s just one infrastructure agreement.

U.S. studies suggest that closed tendering rules increase the cost of construction between 12 and 18 per cent. The City of Hamilton estimates that restrictive clauses inflate the prices of its construction projects by up to 40 per cent. By allowing provinces and municipalities to spend federal funds through their closed tendering processes, the costs of projects increase, fewer projects get funded and fewer jobs are created. Higher costs mean lost opportunities and wasted tax dollars. Providing equal opportunity for all contractors to submit their best bids will increase competition and ensure that Canadian taxpayers receive the best value for their money.

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Merit Canada’s Progress

As governments across the country face financial pressures, there is a renewed need to take action on outdated regulations and red tape that increase construction costs.

Federal rules would ensure that local governments would behave more equitably when spending federal tax dollars.

Federal Skilled Trades Program

According to the Construction Sector Council, there will be a shortage of over 300,000 skilled tradespeople in Canada by the end of the decade. Merit Canada strongly supported the new Federal Skilled Trades Stream announced by Citizenship and Immigration Minister Jason Kenney.

This change is long overdue.

Canada’s immigration system must respond better to the needs of employers to ensure those immigrating to Canada have the skills required to obtain long-term sta-

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ble employment. It is sound public policy to have an immigration system that works to ensure long-term growth and prosperity for Canada.

Merit also welcomed announced changes to the Skilled Worker Program.

Changes to the criteria for acceptance of admission outlined by Minister Kenney ensures immigrants will have jobs waiting so they can provide for their families.

The final changes to the Federal Skilled Worker Program selection criteria include: Minimum official language thresholds and increased points for official language proficiency, making language the most important factor in the selection process;

•

emphasis on younger immi• Increased grants who are likelier to acquire Canadian experience, likelier to adapt to changing labour market conditions, and who will spend a greater number of years contributing to Canada’s economy; Introduction of the Educational Credential Assessment (ECA), so that education points awarded reflect the foreign credential’s true value in Canada; Changes to the arranged employment process, allowing employers to hire applicants quickly, if there is a demonstrated need in the labour market; and Additional adaptability points for spousal language ability and Canadian work experience.

Merit Canada’s Ottawa office has been operating for almost two years, yet its impact to industry has already been substantial. Merit Canada will continue to liaise with government officials on these and other priorities of concern to the open shop contractor.

• • •

5/2/13 9:41:18 AM

Cliff

Federal immigration reforms can help the construction industry cope with a shortage of skilled workers

by Bill Stewart

D

espite the best efforts of governments, business associations

and contractors to promote apprenticeship programs, improve productivity and reach out to under-represented communities, forecasts continue to indicate that there is an imminent and significant shortfall in domestic human resources. In short, Canada’s labour force is dangling on the edge of a demographic cliff.

According to Human Resources and Skills Development Canada (HRSDC), the median age of Canada’s population in 1971 was 26.2 years old. As of 2011, the median age was 39.9 years. Our working-age population is expected to decrease by 13 per cent over the next few decades.

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2013-05-02 10:10 AM

The Demographic Cliff

More than 20 per cent of the current annually came in under the Federal trades training were admitted to Canada construction industry workforce is Skilled Worker sub-category. Changes annually while countless numbers of expected to retire over the next seven in immigration legislation in 2002 foreign-trained doctors, accountants and years. According to the Construction established selection criteria based on nuclear physicists were underemployed Sector Council, this will contribute to the theory that the more education an as janitors, caretakers or taxi drivers. The a nationwide shortage of 300,000 law at the time also stipulated that all construction workers, and our applications be processed in the order industry will feel the impacts.

Our working-age population in which they were received, which The Construction Owners resulted in a backlog of hundreds of is expected to decrease by Association of Alberta (COAA) thousands of applications. is a major group of purchasers of With apprenticeship training 13 per cent over the next construction services – many of programs running at unprecedented few decades. which are involved in developing levels and the industry experiencing oil- sands in northern Alberta. The full employment, many contractors – Human Resources and industry estimates current and were forced to resort to short-term Skills Development Canada intended investment to be $250 international recruitment through billion, and COAA members have the controversial federal Temporary a significant interest in construction immigrant had, the more likely he or she Foreign Worker (TFW) program. However, workforce issues. In 2011, they estimated would be to succeed in resettling. this program was fraught with bureauConsequently, 46 per cent of admissions cratic red tape and delays too. that industry would need almost 160,000 offshore construction workers over under the Skilled Worker program held a Many of the problems associated with the next seven years to meet projected master’s degree or PhD whereas only three the TFW program are attributed to it per cent of admissions held a formal trade being jointly administered by two federal construction needs.

For years, most of the 250,000 certificate. The result for construction departments. Prior to offering temporary permanent immigrants coming to Canada was that fewer than 700 immigrants with employment to a foreign national, 26

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2013-05-02 10:10 AM

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2013-05-02 3/5/13 1:44:18 10:11PM AM

The Demographic Cliff

instead of their place in the queue.

In April 2012, HRSDC Minister Diane Finley announced the Accelerated Labour Market Opinion (A-LMO) program to expedite the processing for targeted TFW applications. The program enabled employers with a positive compliance record of two years to have new applications fast-tracked. This new approach is working exceedingly well.

In July 2012, Minister Kenney announced the extension and expansion to the Alberta Pilot Project. Employers no longer need HRSDC approval and an LMO to recruit internationally for skilled workers in seven high-demand occupations. This move significantly helps companies – particularly construction and maintenance companies – to respond more quickly to the needs of resource developers.

In most cases, TFWs brought in under this stream are allowed to move between employers in Alberta over a two-year period – a feature unavailable in other TFW streams. While the pilot project provides the employer must obtain a Labour Market That Was Then, This is Now Opinion (LMO) from HRSDC. HRSDC’s In spring 2012, the federal government much-welcome relief in expediting interrole is to certify that the employer made began retooling its policies and procedures national recruitment, it is for the most part only available to construction companies reasonable efforts to recruit within Canada for permanent and temporary workers. first and that the terms and conditions of To reduce a backlog of 300,000 applica- and not other industries experiencing employment are not fraudulent and in tions, Immigration Minister Jason Kenney acute shortages. Moreover, it is restricted to Alberta operations only. Industry accordance with prevailing local wage is also critical of provincial regulatory rates and employment standards. rules that create different credential Once the employer obtains the The C.D. Howe Institute recognition streams and the process LMO, the employer and prospective recently calculated that and length of time it takes to recognize employee must then satisfy both CIC trade credentials for optional and and provincial regulatory authorities immigration numbers would compulsory certified trades. responsible for accreditation, that need to increase to between To deal with the bias in the FSW they are eligible to work temporarily program favouring applicants with in Canada.

625,000 to one million university education over those Employers experienced tremenannually to fully address with trades skills and experience, dous difficulty with the TFW a new, dedicated skilled trades program. The Auditor General of Canada’s aging workforce class was created in 2012 within Canada (AGC) delivered a scathing and the shortage of workers. the permanent immigrant stream. critique of how the LMO process Rather than having to qualify under was administered. An audit noted, the “points” system, applicants in “We found that directives on how to assess whether employers meet some announced that all applications received this class are now assessed on whether or all of the factors outlined in the prior to February 28, 2008, under the they have a valid long-term employment regulations are not clear or incomplete; Federal Skilled Worker program, would be offer or appropriate working credentials interpretations vary from one regional returned to applicants. This paved the way and experience in a trade. They must also office to another and even within the for the Immigration Department to process demonstrate that they have language same office.” applications based on labour market needs, skills appropriate for their occupation.

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TRANSFORM In December, Minister Kenney announced that 3,000 spots were being allocated to applicants under this stream.

The introduction of this new and distinct category coincides with a series of other proposed changes to the Federal Skilled Worker program point-system grid the government implemented in January 2013. The changes included: •M aking language the most important selection factor including introducing minimum language fluency thresholds and increasing the number of points awarded for linguistic ability; • I n c r e a s i n g p o i n t s f o r y o u n g e r immigrants on the basis that younger immigrants are more likely to “gain valuable Canadian experience” and will be in the workforce and contributing to Canada’s economy for longer; • I ncreasing points for Canadian work experience and reducing points awarded for foreign work experience; •S implifying the arranged employment process to prevent fraud and allow employers to more quickly fill vacancies; •A warding additional points for spousal language ability and Canadian work experience.

While both temporary and permanent immigration are important tools in helping employers meet their human resource needs, immigration is not a stand-alone “silver bullet” solution to solving the shortage of skilled workers in Canada. The C.D. Howe Institute recently calculated that immigration numbers would need to increase to between 625,000 to one million annually to fully address Canada’s aging workforce and the shortage of workers. While other strategies and policies, in terms of apprenticeship, improving productivity and outreach engagement are all key to solving human resource problems, 2012 will be seen as a watershed year since the federal government made remarkable progress in reforming our immigration system to making it more responsive to the needs of Canada’s changing labour force.

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2013-05-02 10:12 AM

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The

Coming

Quiet

Revolution

For nearly half a century, Quebec’s construction industry has been held hostage by overregulation, opacity and heavy-handed big labour machinations. For most Quebecers, an open shop revolution is long overdue

By Ben Freeland

I

n October 2010, Maclean’s magazine released an issue with an

inflammatory cover image that caused all hell to break loose in the province of Quebec. The cover featured the beloved Bonhomme Carnaval snowman carrying a briefcase overflowing with money; the headline read: “The Most Corrupt Province in Canada.”

The backlash in Quebec was fierce, prompting Rogers Publishing to issue an apology. At the same time, however, a small but vocal chorus of Quebecers, including a number of prominent journalists, came to the defence of Maclean’s journalist Martin Patriquin and his report on the state of institutionalized corruption in Canada’s second-largest province.

For the locals, the allegations were not only undeniable, but also old news that the rest of the country needed to hear.

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5/3/13 9:33:57 AM

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3/25/13 5/2/13 9:55:50 8:49:11 AM AM

e

?

ner(s). ent to nterac ‡ it box. rtified ou will pterms

The Coming Quiet Revolution The Maclean’s exposé did much to draw national attention to Quebec’s deep economic and political dysfunction. It also correctly identified the major driving forces behind the corruption: the enormous influence wielded by the province’s large construction unions and an extraordinary level of intrusion into the industry by the provincial government.

Since 1968, union membership has been mandatory for construction workers in Quebec, making it the only jurisdiction in North America with such regulations.

Coupled with legislation passed in 1976, which gave the provincial government sweeping power over labour supply at the behest of the province’s five big construction unions, this resulted in a closed and rigged system characterized by inf lated costs and a lack of transparency permitting a deep penetration of organized crime.

I n 2 011, t he e m b a t t le d Liberal government of Jean Charest finally took decisive action against this culture of corruption with the launch of the Charbonneau Commission.

Meanwhile, recent legislative moves in and out of the province give fresh hope to Quebecers who view the province’s domineering unions with the same acrimony they once reserved for the heavy-handed clergy of pre-Quiet Revolution Quebec.

The roots of this closed system are not difficult to comprehend. At the dawn of Quebec’s Quiet Revolution in the 1960s, support for organized labour was widespread in the wake of autocratic regime of Maurice Duplessis and his Union Nationale party. The period after Duplessis was characterized by the wholesale transfer of authority over education and health care from the Catholic Church to the provincial government, as well as the rapid expansion of unions. But while unionization offered workers better working conditions than before, it did nothing to ensure industrial harmony. Union factionalism lead to well-publicized spates of violence at many mega-projects and threatened to derail the province’s breakneck industrialization.

Prior events all led to the 1976 creation of the Commission de Construction du

porary blip to the sector. The Merit phenomenon did not go unnoticed in La Belle Province, leading a small, but vocal, contingent of contractors to publicly question why the “freedom of association” guarantee outlined in the Canadian Charter of Rights and Freedoms was systematically denied for Quebec workers.

Finally, the issue came to a head with the initiation in 1993 of the R. v. Advance Cutting and Coring et al. Supreme Court case. The case was led by Jocelyn Dumais, a Gatineau concrete contractor well known for his acts of civil disobedience against Quebec’s closed shop system.

Dumais also brief ly ran as a candidate for the centre-right Action Démocratique du Québec party but withdrew from the political scene in order to focus on his lobbying efforts. The plaintiffs in Advanced Cutting and Coring argued that Quebec’s policy of mandatory union membership for construction workers contravened their constitutional right to freedom of association. The court heard the legal arguments in March 2000, and decided after 18 months by a vote of five to four, that Quebec’s turbulent labour relations history made its mandatory unionization law a justifiable and permissible exception to the Charter.

For a decade after that ruling, little changed on the labour reform front, despite the many scandals besetting the province’s construction industry. In 2011, prospects of change resurfaced with the launch of a massive public inquiry into the management corruption of a public construction contract: the Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry or the Charbonneau Commission. In the midst of this highly publicized inquiry, Quebec’s then Labour Minister Lise Thériault took an uncharacteristically bold step by introducing Bill 33 in December 2011. The bill’s aim was to end the practice of union placement of employees (or placement syndicale) and force the CCQ to actually assign workers based on employers’ needs.

In the same year, B.C. Conservative MP Russ Hiebert tabled a groundbreaking

For a decade after that ruling, little changed on the labour reform front, despite the many scandals besetting the province’s construction industry.

/2013)

8:49:11 AM

Québec (CCQ) – a special government department charged with overseeing construction industry manpower. The provincial government essentially established itself as a tributary to the Quebec’s five main construction unions, instituting wage schedules and controlling the number of union cards issued. In doing so, the provincial government allowed itself “to be taken hostage by the disreputable elements of the trade union movement,” journalist and political scientist L. Ian MacDonald wrote.

The arrangement curbed building-site violence and decreased work stoppages, yet this labour peace was a straight-jacketed industry characterized by the CCQ’s intimidation. (Between 1978 and 1996, the CCQ levied close to $25 million worth of

fines for work done without the required union card.) The resulting system also made it virtually impossible for skilled tradespeople outside of Quebec to work in the province since it barred out-of-province firms from bidding on building projects.

Alternately, many skilled tradespeople within Quebec were forced to seek opportunities outside the province while starving the province’s industry of fresh talent and competition.

Michel Kelly-Gagnon, president and CEO of the pro free market Montreal Economic Institute said in his presentation at the 2012 International Open Shop Conference in Ottawa, “Quebec’s construction industry is special, and not in a good sense.

It’s a shame because Quebec’s construction workers actually have an excellent reputation in terms of actual skills and work ethic.”

The formation of Alberta’s Merit Contractors Association in 1986 started the open shop model of construction from a small movement widely perceived as a tem-

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5/2/13 9:56:18 AM

The Coming Quiet Revolution private member’s bill that, if passed, would require unions to publicly open their books. Bill C-377 found vocal champions in Quebec, most notably the Montreal Economic Institute and the Quebec Employers Council. While Quebec’s construction unions rallied against the bill, a Quebec Employers Council survey (conducted by Léger Marketing) indicated that a staggering 97 per cent of Quebecers believed that unions should be legally required to disclose their spending.

For the time being, a wholesale repeal of Quebec’s mandatory unionization law remains unlikely. The current Parti Québécois government remains steadfast in its defence of the labour status quo: current PQ Labour Minister Agnès Maltais took a vocal stance against Bill C-377 and Minister Maltais articulated similar feelings in a December 2012 letter to federal Labour Minister Lisa Raitt.

Nevertheless, Quebec’s advocates for worker freedom in the construction industry are more optimistic now than they have been in a long time. “Public opinion is on our side,” asserts Dumais. “The unions have lost a lot of public support in Quebec

Dumais asserts that the impact of over t u r n i ng Q u eb e c ’s u n ion- on ly legislation would be felt well beyond just Quebec. “In my opinion, overturning this legislation would bring to an end attempts like the heav y-handed union tactics like we’re seeing with Manitoba Hydro at the moment,” he says. “A lot of these union leaders think that as long as they have the upper hand in this province, there’s still hope for the same kind of thing elsewhere. Breaking their lock in Quebec would send a powerful message.” As for the “labour harmony” canard forever trotted out by defenders of Quebec’s closed shop construction regime, Dumais dismisses the argument as ridiculous and insulting to Quebecers. “It ’s 2013. We’re way beyond all that. The issue of labour-related violence is in the past. It’s the future we’re concerned about.”

For the time being, a wholesale repeal of Quebec’s mandatory unionization law remains unlikely.

NAT_OPENMIND_13_p30-35.indd 34

and, as a result, you’re hearing a lot less out of them.” He contends that if the issue were brought before the Supreme Court once again, the results would be quite different.

“I think the time is right for another run at overturning the law,” he says, adding that he has spoken with experienced legal counsel who supports this view as well.

5/2/13 9:57:21 AM

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5/2/13 9:57:47 AM

The

Importance of

Productivity Canadian construction companies find their competitive edge in efficiency processes

By Elizabeth Chorney-Booth

I

t’s no secret to people in the construction industry that a company’s success depends on its productivity. After all, efficient and effective work practices directly impact a business’s bottom line, so increasing productivity standards is essentially a no-brainer. But as obvious as the need for increased productivity standards is for any company, actually achieving those standards and identifying areas that need to be tweaked can become difficult and complex.

Even if you’re busy, take time to step back and evaluate your processes.

Ron Magnus, managing director of FMI’s Center for Strategic Leadership in Denver, Colorado, says that with our stalled economy pushing companies to compete for the same jobs, increased productivity is more than just a way to manage costs – it’s a way for companies to set themselves apart from the compe36

If the owners/managers feel too close to the processes to see the problems, then connect with a consultant – they’re out there. tition. Many firms even build productivity measures into their contracts as a way to assure clients that they will do whatever it takes to complete jobs efficiently and cost-effectively. To even be considered a contender for the best jobs available, it is essential for all organizations to raise the bar for productivity standards, or at least keep up with rival companies that do.

“Say you’re up in the oilsands in Alberta, the market has been somewhat soft [because] the margins are being squeezed,” Magnus says. “For an organization to make as much money as they have in the past, they’ve got to figure out productivity issues. It’s the only place to go to figure out how to do a job faster and more efficiently.”

When Magnus consults with clients, he encourages them to look at the big picture of productivity before getting mired in the details. Once that overview is

in place, he helps organizations to model a productivity plan and set tangible behaviours that will result in increased efficiency. Those behaviours can include strategies to enhance planning and scheduling, and tactics to rectify something as simple as unnecessary trips back to the shop to pick up equipment that hasn’t been brought to the work site.

Magnus says that the road to improved productivity starts with an attitude shift at Know that each company has its own needs and solutions. A plan of action for one company may not work for yours, and that’s OK. the top level of an organization, whether it’s a large firm or a small contractor with only a few employees. If management takes a big-picture approach and encourages a culture of productivity throughout the company, employees will more likely adapt to tangible changes that affect the way they work.

Janaka Ruwanpura, vice-provost (international), former Canada research chair

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5/2/13 9:59:02 AM

and professor in project management systems, Schulich School of Engineering at the University of Calgary, studies 10 specific targets that he says construction company leaders should examine because they can affect company output.

Some of those targets include employee motivation/satisfaction, the relationship between subcontractors and main contractors, material management to reduce wasted trips, “tool time” (actual hands-on, working time) optimization, office to on-site communication and weather-related issues.

Another problem, Ruwanpura says, is that most companies focus so much

Improved productivity comes from all staff levels being on board with change. on working quickly and taking on as many jobs as possible that they don’t see the obvious internal productivity problems they would if they took a step back for self-examination. “Productivity is not about working hard and fast. It’s about how you really analyze where the problems lie,” he says. “When you’re in a chaotic environment, you don’t pay attention. You just run projects.

You don’t have time to make changes; you’re just running.”

For some companies, Ruwanpura suggests they place a dedicated person on the ground to communicate productivity needs – called a construction productivity improvement officer.

“They use this person as a facilitator for the entire team so they can identify the problems and mitigate the solutions, and then measure the output,” he says, adding that, at the end of the day, companies need to measure two things: how much they produce and how much tool time is being netted.

Ruwanpura suggests company leaders question how communication occurs within their organization; how they determine employment skill sets for future staff; and how they deal

with existing employee motivation and morale. It also helps if the harder aspects are examined, like the management of material resources and the accuracy of estimates. If any of the findings aren’t satisfactory, adjustments and changes must be made.

Each company has different specific needs, and Ruwanpura agrees with Magnus that productivity is not about the small details, but rather the bigger picture improvements involving communication and organization. Since the solutions vary from company to company, improvements come from a series of changes and tweaks rather than a single magic bullet.

Ethan Cowles, senior consultant at FMI, works directly with contractors looking to make productivity improvements. He says that it can be tricky to implement productivity measures because construction professionals are notoriously reluctant to change. “Construction is one of those industries where, for whatever reason, people are wired to think that planning is a waste of time,” Cowles says. “Many people think that if they’re not actively installing work, then they must be goofing off.” Activity then gets confused with productivity.

Cowles says that raising productivity standards in the field includes the impor-

Change requires bigger-picture thinking and changing the company culture. tant step of management empowering its foremen. Managers accomplish this through effective communication in which they state job expectations clearly.

It also means proactive measures are required to ensure required materials and resources will be on site, and on time. When the project begins, responsibility and accountability must be shared so everyone on the site feels a part of the process to complete their jobs as efficiently and budget-friendly as possible.

Productivity can and should be used to give companies a competitive edge in the construction industry.

Companies should develop a clear plan of what needs to be accomplished weeks before a job even starts, says Cowles, so crews can hit the site with a sense of momentum. Aiding that momentum, employees also need proper training, appropriate work materials, and hard copies of the overall plan and checklists.

It’s imperative, once the job is in progress, that foremen and crews track relevant progress (such as completion dates, material use/waste, unforeseen/unbudgeted challenges) for productivity measurements to be recorded and adjustments to be made to the plan, if needed.

Modifying long-standing company procedures requires managerial forethought as well as a buy-in from field employees. Both Cowles and Ruwanpura say it is possible to get all the players on the same page and significantly increase productivity by setting clear expectations, defining processes and developing effective channels of communication. “Internally, a company needs to know that productivity is valuable and it’s got to be somebody’s responsibility,” Cowles says.

“Sometimes it’s a combination of people, but somebody needs to feel the weight and the responsibility to know that they’re following their own best practices.” If nobody has the responsibility to create a successful culture, the importance of the idea falls by the wayside.

Productivity is obviously a gamechanger in construction and is not something to be swept aside. For companies who are struggling with profits and just don’t know why, there are consultants out there who can point out issues that company leaders are just too far into the processes to see. Taking a step back every now and then may be all an organization needs to do in order to move forward.

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5/2/13 9:59:41 AM

2

NUMBERS

BY THE

Total man-hours worked under the Merit Hour

Bank Benefit Plan:

Wholesale merchants’ sales by industry unadjusted ($ millions) across Canada

2007

69,743,223

2008

77,595,931

Building Supplies

2008 2009 2010 2011 2012 77,235.9 66,932.4 73,935.3 78,723.3 81,522.1

2009

74,140,547

Metal Products

18,972.7 13,163.1 15,022.7 17,750.4 18,827.8

2010

79,583,013

Lumber and Millwork

34,099.6 31,986.1 35,666.7 35,811.8 37,033.4

2011

87,908,004

115,358.6 103,460.8 110,411.2 123,189.8 128,177.2

2012

96,729,350

Machinery and equipment

(Source: Statistics Canada)

Construction price index for

apartment buildings in:

Average number of employees covered under the Merit Hour Bank

6

2008 2009 2010 2011 2012

Halifax

128.9 130.4 131.8 135.7 138.8

Toronto

139.9 136.8 136.7 141.7

144.4

Calgary

174.4 160.7 156.6 160.1

166.4

Vancouver

159.9

144.0

136.0

134.1

138.9

Yearly value of all building permits by province ($ million): Newfoundland Nova Scotia & Labrador

(Source: Merit Contractors Association)

Benefit Plan:

2007 2008 2009 2010 2011 2012 33,875 38,314 38,187 39,371 43,089 48,015

Capital expenditures for construction in Canada (in $ millions):

2009

2010

2011

2012P

2013 (est.)

205,373.9

243,866.6

260,919.4

280,887.9

283,618.0

New Brunswick

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

2008

802.5

1,326.7

1,113.8

25,414.6

1,636.7

2,185.8

13,141.2

10,577.2

2009

1,148.2

21,880.5

1,560.7

1,890.3

11,276.9

7,629.9

2,077.0

11,425.4

9,723.8

766.4

1,368.7

2010

1,205.2

1,633.8

1,133.3

28,138.6

1,757.4

2011

1,057.3

1,464.6

965.9

28,024.4

1,842.1

2,613.9

12,768.1

9,249.8

2012

1,184.6

1,551.1

968.5

29,547.5

2,485.7

3,114.1

14,662.9

10,759.6

New housing price index ($ thousands) St. John’s

Saint John, Moncton, Fredericton

Halifax

Toronto

Winnipeg

Saskatoon

Calgary

Vancouver

2008

119.6

102.5

107.9

103.6

110.2

120.6

100.6

102.3

2009

133.3

105.8

109.1

103.4

113.0

111.4

93.9

95.8

2010

141.2

107.5

110.1

106.1

118.4

114.6

95.6

99.0

2011

146.9

108.1

112.0

111.0

124.1

116.2

95.5

98.7

2012

147.2

108.0

114.4

116.7

129.3

118.8

97.1

90.7

38

OPENMIND 2013

NAT_OPENMIND_13_p38-39.indd 38

(Source: Statistics Canada)

2013-05-02 10:13 AM

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