When Brazil's Vale SA snapped up Inco for a record $19-billion in 2006, there was plenty of hand-wringing over what the foreign mining giant might do with the storied Canadian nickel miner and its flagship operations in Sudbury.
Fears of a traumatic restructuring were quickly put to rest, however, when Murilo Ferreira, the Brazilian in charge of the nickel division, gave a speech to the Greater Sudbury Chamber of Commerce in February, 2007.
"What can Sudbury expect from the new owners? In reality, I expect you to see very little change. We are well aware and very proud of Inco's place of prominence in the Sudbury community and we are not looking to make major changes in how things are done. This is a very successful company," Mr. Ferreira said.
Little more than two years later, however, dramatic alterations to the 107-year-old company are in full swing.
Vale Inco Ltd.'s executive management team has endured a broad restructuring, including dozens of layoffs, amid a precipitous downturn in nickel demand and plunging prices. Meanwhile, about 3,300 Inco workers went on strike on Monday after rejecting Vale's demands for major concessions on pay.
More than 85 per cent of the unionized employees voted to rebuff Vale's attempt to exclude new workers from the company's defined-benefit pension plan and reduce a so-called nickel bonus that rewards miners with extra pay when the metal's price is high.
Wayne Fraser, United Steelworkers director for Ontario and a member of the union's bargaining committee, has said Vale wants a "war" in Sudbury.
"Hopefully the company recognizes the significant votes as a signal that they ought to get back to the bargaining table and put a Canadian solution to this … rather than trying to impose a Brazilian solution on it," Mr. Fraser said Monday.
The price of nickel has skidded to less than $7 (U.S.) a pound from more than $20 a pound in 2007, and Vale's chief executive officer, Roger Agnelli, recently claimed that Sudbury is his company's highest-cost operation and is "not sustainable" at current operating levels.
However, former Inco executives said the company was consistently profitable at similar nickel prices just a few years ago.
"They just want to break the union. They want to completely hit the reset button on the entire labour situation and the agreements that have been put in place in the past," said a former Inco executive who spoke on the condition of anonymity.
The strike will have little immediate impact on Vale's production because the Sudbury operations were already halted as part of a two-month shutdown in reaction to low prices. The mines and smelter were scheduled to start up again later this month, but could now remain shuttered indefinitely, as neither side appears willing to give in.
"We're always willing to negotiate but we can't negotiate by ourselves, so, from our perspective, until the union accepts the fact that change is required for our business to be competitive in all price cycles, there's little for us to talk about," Vale Inco spokesman Cory McPhee said.
Inco's senior management has also been dramatically restructured and reduced. A string of prominent executives, including Fred Stanford, the former president of Vale Inco's Ontario operations, recently left the company.
Just last week, the company cut 54 executive jobs. The layoffs were in addition to 423 Canadian cuts, including 261 in Sudbury, announced in March.
Federal Industry Minister Tony Clement initially demanded answers from Vale for violating commitments it made under the Investment Canada Act to not cut jobs for at least three years, but later said he was satisfied that Brazilian miner was not targeting Sudbury with its job cuts and mine shutdowns.
Less than a year after placating the Sudbury business-lunch crowd, Mr. Ferreira stepped down as Vale Inco's president and CEO. He was replaced by Tito Martins, a former Vale communications executive.
With files from CP