Bargaining Simulation Discussion

Instructions
Below you will find all the information you need to for the negotiation portion of the collective
bargaining simulation, including
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the background of the organization (CCL);
the current collective agreement;
a comparison of CCL’s employment package with those of its competitors; and
a memorandum of agreement to record your final settlement.
Before beginning the collective bargaining exercise, each team should do the following:
1. Read the case materials.
2. Develop your bargaining goals and strategies.
3. Prepare the initial set of proposals that you will share with the other team. (Remember, this
may not be your final bargaining goals – these are your opening positions.)
Remember, just as in the real world, your provincial labour relations act requires that you
bargain in good faith and make every effort to negotiate a collective agreement.
Coastal Crops Ltd. (CCL) Case2
Coastal Crops Ltd. (CCL) has been unionized since it was founded in 1968. It has always
operated out in the west end of St. John’s, Newfoundland. While the firm originally farmed the
land, in the 1980s the firm built a number of large greenhouses. The addition of greenhouses
allowed CCL to expand its product offerings and grow produce all year long. To better meet the
needs of its customers outside of Newfoundland, the firm purchased a (non-union) location in
1997, which is located in Phippsburg, Maine.
The relationship between the management group of CCL and the United Agricultural Workers of
Canada (UAW) has generally been strong. Wages, benefits, and working conditions have usually
been on par with or better than those of the competition. In particular, the firm has tried to pay
slightly above the going market rate. To date, there has been only one strike. It took place in
1997 and was largely centred on the issue of job security, given the poor economic conditions of
that period and the concern that the acquisition of the Maine location would result in job losses
in Canada. At that time, the Newfoundland economy was performing very poorly, in part due to
the collapse of the cod fishery. Given the dramatic decrease in demand for its products, and the
need for capital to purchase the new location, the company laid off about 30 percent of its staff
and froze all wages for three years.
The early 2000s gave rise to new opportunities for CCL. With the legalization of medical
cannabis, the firm built a production facility on the property in 2003. In 2017, anticipating of
legalization of recreational cannabis, the firm doubled the size of its cannabis production facility.
Currently, approximately 65 percent of CCL’s yearly revenues come from cannabis production.
The cannabis market has resulted in the firm hiring about 200 new employees over the past five
years. As the parties prepare to enter a new round of bargaining, several key events are taking
place.
For the union, the last contract (signed in 2016) was ratified by only 54 percent of the
membership. Given the 1997 job cuts and wage freezes, many members felt that the revenues
associated with the medical cannabis should have resulted in greater gains at the bargaining
table. In fact, the membership has voted in a whole new slate of union leaders to form this year’s
collective bargaining team. Rumour has it that the membership wanted a more militant
negotiations team that would take a firm stand on increased wages, improved vacations and
pensions, and job security. It is also clear the union faces a challenge meeting the needs of a
diverse membership. The average union member is 38 and has around 14 years of service.
However, given the downsizing in 1997, and the influx of cannabis work, the St. John’s location
almost has two different age groups. There are approximately 200 employees with fewer than
five years of service (most of them are in their twenties); yet there are about 300 employees with
more than 15 years of service (most of whom are over 40). The current negotiations team will
need to balance the needs of its newer members with those of the “old guard.”
Management has just received notice that it is at risk of losing its contract with Premium
Cannabis. Premium Cannabis is CCL’s largest contract and represents about 40 percent of its
annual revenue stream. There are two reasons why Premium Cannabis may not renew its
contract. First, CCL is having problems meeting the production quotas specified in the contract.
This is largely due to reliability issues related to CCL’s now aging production equipment. When
the firm expanded the cannabis production facility in 2017, it did not buy new equipment.
Rather, it repurposed existing equipment from when the cannabis facility was first built in 2003.
This equipment is older and less reliable; it is also much less energy-efficient than the equipment
currently available. Second, CCL’s labour costs are higher than those of some of its competitors,
which could well take over the contrast. Premium Cannabis’s management team is under
increased pressure to minimize expenses in all areas, including supplier contracts, to retain
profitability. There is a rumour that a new firm may get the contract (Firm 2 in the attached
comparison). This firm has the advantage of brand-new, energy-efficient equipment and lower
labour costs. It currently runs 24 hours a day, 7 days a week. Hence, it is in a better position to
meet the needs of the cannabis industry.
CCL management is currently examining the possibility of a substantial reorganization to better
meet the needs of the cannabis industry. This could include raising production quotas and
replacing the present equipment with new, energy-efficient, labour-saving machines in the St.
John’s facility (cost == = $2 million). Assuming the current two-shift cycle remains, the new
machinery would result in layoffs of about one quarter of the staff as well as the contracting out
to cheaper labour sources in times of high product demand. Two alternative strategies have been
openly discussed. First, purchase the new equipment (cost === $2 million) and begin operating
three 8-hour shifts (i.e., 24 hours per day, 7 days per week). This option would not entail hiring
new employees or laying off any current staff; however, the firm would have to find sufficient
savings in the first year of the collective agreement to absorb the full cost of the new equipment,
and the total annual labour costs could not increase. Second, close the St. John’s facility and
move all production to the second facility (Firm 4 in the attached comparison), located in
Phippsburg, Maine, a cheaper location. This location would still permit shipping of the products
to all North American customers, including those in Newfoundland. Closing the St. John’s
operation would mean that all management and union employees would lose their jobs, for
transferring staff to the American location is not feasible given immigration requirements and so
on. The firm is also concerned about the negative community and government reaction
associated with closing the operation, as they previously secured government funding to assist
with 2017 expansion. The management negotiations team has been given a clear mandate: (1) the
collective agreement must facilitate the renewal of the Premium Cannabis contract; and (2) over
the life of the new collective agreement, the firm’s total annual labour costs cannot increase
from the current amount.
Other Information
As is shown in Table 1, CCL provides a competitive compensation and benefits package. The
average wage at CCL is $20.25 per hour. This compares to an average current wage of $19.71
for the other firms.
The benefits are co-paid (70% company, 30% employee). The benefits include dental plan,
vision plan, life insurance coverage of two times base salary, medical insurance for
hospitalization and prescription drugs, and a sick benefit plan (coverage up to 66.67% percent of
earnings for any absence due to illness, maximum 52 weeks). Current cost of the benefit plan to
the employee is $750 per year; the company share is $1,750 per employee per year.
In addition, CCL contributes an amount equivalent to 4 percent of each employee’s earnings into
a retirement fund that can be used by the employee in retirement.
Costing Information for Any Proposed Changes
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Overtime. Each employee currently works an average of 4.25 hours of overtime per
week. Overtime cost is time and a half. At present, employees must volunteer for
overtime. Currently 80 percent of overtime is worked after midnight to address
production issues.
Wages. Present average is $20.25.
Vacation. The current entitlement to vacation is as set out below. Any changes to the
vacation plan would be costed using the following formula: Average hourly wage
×times× 40 hours a week ×times× Number of employees impacted.
Shift premiums. Most employees (i.e., 60%) workday shift (8 a.m. to 4 p.m.). Forty
percent of employees are permanently assigned to evening (i.e., second) shift (4 p.m. to
midnight). The shift premium is currently $1.50 per hour. There is no night (i.e., third)
shift (midnight to 8 a.m.). If production is needed after midnight, it is voluntary, paid at
overtime rates, and no shift premium is paid.
If the company implements a three, 8-hour-shift (i.e., 24 hours per day, 7 days per week)
operation, they anticipate that 50 percent of workers will permanently work first shift, 30
percent will permanently work second shift, and 20 percent will permanently work third
shift.
Retirement fund. Currently an amount equivalent to 4 percent of regular wages is placed
by CCL into a retirement fund for the employee. Any changes should be calculated as
follows: Average hourly wage ×times× 40 hours per week ×times× 52 weeks
×times× % invested by the company.
Collective Bargaining Agreement Between Coastal Crops Ltd. (Hereinafter Referred to as
the Company) and the United Agricultural Workers of Canada, Local 101 (Hereinafter
Referred to as the Union)
Article I. Recognition
Section 1.1 The Company recognizes the Union as the sole and exclusive bargaining agent for
all employees of Coastal Corps Ltd. employed at, and in connection with, its operations on 1968
West Avenue, St. John’s, save and except office employees, human resources management staff,
security guards, supervisors and managers.
Section 1.2 The Company agrees to deduct union dues from each pay cheque for all employees
covered by this agreement and remit them to the union on the last day of each month.
Article II. Management Rights
Section 2.1 The Union recognizes that the Company has the exclusive right to manage the
business and to exercise such right without restriction, save and except such prerogatives of
management as may be specifically modified by the terms and conditions of this Agreement.
Section 2.2 The Union recognizes that the Company has the right to discipline and discharge
employees for just cause.
Article III. Hours of Work
Section 3.1 The normal work hours for all employees shall be eight (8) hours per day and forty
(40) hours per week, Monday to Friday.
Section 3.2 All time worked by an employee in excess of eight (8) hours per day or forty (40)
hours per week, and all time worked on weekends, shall be paid for at an overtime rate of one
and one-half times the normal hourly rate. All overtime is voluntary.
Section 3.3 Employees who work the second shift will receive a shift premium of $1.50 per hour
worked.
Article IV. Seniority, Layoffs, Etc.
Section 4.1 An employee’s seniority rights shall be measured on a location-wide basis, starting
from the first day or hour worked.
Section 4.2 In the event of a layoff, employees with the least seniority will be laid off first, and
employees with the most seniority will be retained, subject to their ability to perform the
available work without being trained.
Section 4.3 In the event of layoff, the Company will provide a severance payment equal to three
(3) weeks’ base pay plus an additional one (1) week’s pay per year of service.
Article V. Vacancies, New Jobs, Promotions, Etc.
Section 5.1 The Company shall post vacancies or new job openings on designated bulletin
boards. Such postings shall include a statement of the required job qualifications, wage rate, and
any other pertinent information. Interested applicants shall submit written bids to the Company’s
Human Resources Department. The job shall be awarded to the most senior applicant provided
that he or she meets the qualifications on the job posting.
Article VI. Committees
Section 6.1 The parties agree to the establishment of a Joint Labour/Management Committee
composed of an equal number of representatives of the Company and the Union. The purpose of
this Committee will be to provide a means of communication over any matter affecting the
interests of either party to this Agreement. The Company may follow the recommendations of
the Joint Committee. However, the final decision rests with management.
Section 6.2 The parties agree to the establishment of an Occupational Health and Safety
Committee consistent with the requirements of provincial legislation.
Article VII. Wages
Section 7.1 The following rates of pay will be operative for the duration of this agreement:
Section 7.2 All employees shall receive pay increases of $0.25 per hour six months after
employment in their job grade, and every six months thereafter, until they reach the maximum
rate of pay for their job grade.
Article VIII. Health Plan
Section 8.1 The parties agree to the creation of a Health Plan covering absence due to illness,
dental care, eye care, life insurance, and supplementary healthcare needs (i.e., hospitalization and
prescription drugs).
Section 8.2 The Company agrees to reimburse employees seventy percent (70%) of all costs
incurred in respect of Section 8.1 above.
Article IX. Retirement Fund
Section 9.1 The Company agrees to place 4 percent of each employee’s base annual salary,
excluding any overtime or shift premiums, into a retirement fund for that employee. This cost is
incurred solely by the Company. Employees can opt to match this contribution by investing up to
4 percent of base annual salary in their fund.
Section 9.2 When the employees retire, they will receive the entire amount invested per Section
9.1 on their behalf.
Article X. Vacation
Section 10.1 Each employee who has been with the Company for a full year will receive paid
vacation as follows:
Section 10.2 Employees with less than one (1) year of service will receive one (1) day of
vacation per month of service, to a maximum of ten (10) days.
Article XI. Grievance
Section 11.1 It is understood that employees (with or without the assistance of the shop steward)
may bring a complaint to their immediate supervisor in an attempt to settle the issue at any time
without filing a formal grievance.
Section 11.2 The formal grievance process will be as follows:
Step 1: The employee will (with a shop steward) present a written grievance to
his/her supervisor. The supervisor will have ten (10) workdays to investigate the situation and
respond. If the grievance is not satisfactorily resolved, it moves to Step 2.
Step 2: The grievance is presented to the department manager by the chief shop steward.
The department manager will have ten (10) workdays to respond to the grievance. If the
grievance is not satisfactorily resolved, it moves to Step 3.
Step 3: The grievance is presented to the General Manager and Union Local President. The
General Manager will have ten (10) workdays to respond to the grievance. If the grievance is not
satisfactorily resolved, it moves to Step 4.
Step 4: The grievance is presented to the Vice-President of Employment Relations by the
President of the National Union (or delegate). The Vice-President will have ten (10) workdays to
respond to the grievance. If the grievance is not satisfactorily resolved, it moves to arbitration
and follows the current process outlined by the provincial labour relations act.
Article XII. Progressive Discipline
Section 12.1 The Company and the Union believe in the practice of progressive discipline. Prior
to formal progressive disciplinary action taking place, the employee may receive a verbal
counselling from his/her supervisor. The employee has the right to union representation during
this counselling. The only documentation of this meeting will be the time, date, and nature of the
discussion. This will be placed in the supervisor’s file and will be moved to the employee’s
human resources file only if progressive discipline steps are taken within twenty-four (24)
months of this counselling.
Section 12.2 The normal progression of progressive discipline shall be as follows:
Step 1: Written Warning
Step 2: Suspension
Step 3: Discharge
Section 12.3 It is understood that certain offences will result in a faster progression through the
progressive discipline process outlined in Section 12.2.
Section 12.4 Copies of all written warnings, suspensions, and discharges must be given to the
employee (in the presence of a union representative). Copies will also be placed in the
employee’s human resources file. All documentation concerning progressive discipline must be
removed from the employee’s file after a period of twenty-four (24) months if no other
disciplinary action occurs.
Article XIII. Duration
Section 13.1 This agreement shall be effective May 31, 2016, and will remain in force until May
31, 2019; thereafter, it shall be automatically renewed from time to time for further periods of
one year unless either party, at least sixty (60) days prior to May 31, 2019, or any subsequent
expiration date, serves on the other party written notice of its desire to terminate or amend the
Agreement.
IN WITNESS THEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives on this 31 day of May 2016.
For the Company
Ryan Byrne_____________________________________________
Samantha Kumar ________________________________________
Paul O’Kane _____________________________________________
Alexandra Scott __________________________________________
For the Union
Megan Collis ___________________________________________
Nina Gonzalez __________________________________________
Mark McCracken ________________________________________
Adam Smith ____________________________________________
Memorandum of Settlement
Between Coastal Crops Ltd. & United Agricultural Workers of Canada (Local 101)
The parties agree as follows (use additional pages if necessary):
ARTICLE I. Recognition
ARTICLE II. Management Rights
ARTICLE III. Hours of Work
ARTICLE IV. Seniority, Layoffs, Etc.
ARTICLE V. Vacancies, New Jobs, Promotions, Etc.
ARTICLE VI. Committees
ARTICLE VII. Wages
ARTICLE VIII. Health Plan
ARTICLE IX. Retirement
ARTICLE X. Vacation
ARTICLE XI. Grievance
ARTICLE XII. Progressive Discipline
ARTICLE XIII. Duration
Signatures:
COMPANY
UNION
__________________________
_______________________
__________________________
_______________________
__________________________
_______________________
__________________________
_______________________
Bargaining simulation: Position Paper
A. Ranking of your top 5 issues (with a brief explanation):
B. Target positions and firm resistance points (bottom line) on each issue (and a brief
explanation for each issue):
C. Strategy and tactics:
What tactics are you going to use, distributive, integrative or mixed. Do your strategy and tactics
depend on the issue? Provide a brief explanation of your choice of strategy and tactics. What do
you expect the approach from the other side to be? In what order to you plan/prefer to negotiate
the issues (and why)?
D. Roles
Have you assigned specific roles to members? Briefly state why or why not?

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