TRANSFORMING LABOUR RELATIONS AT ALGOMA STEEL

In 1991, employees at Algoma Steel, Canadas third-largest steel producer, concluded the largest worker buyout in the history of North American business. As majority shareholders, Algoma employees elected four new members to the thirteen-member board of directors, and had a strong influence on the election of another seven members. The buyout ushered in a new era of managementunion cooperation. Before 1991, labour relations at Algoma had been bitterly adversarial. The unions viewed management as uncaring autocrats, while management viewed the unions as rigid and bullying. In the early stages of the union management relationship, success was defined as parties from each side being able to sit in the same room without resorting to physical violence. The turnaround in labour relations at Algoma began only when both sides recognized the damage that the hostile climate was inflicting on the bottom line. Todays labourmanagement partnership is driven by mutual respect and a spirit of cooperation that extends from the joint steering committee (on which representatives of both management and labour serve as cochairs) to the shop floor, where workers are grouped into employee participation units (EPUs). Worker empowerment is based on the idea that employees know best how to run the workplace. Workers are encouraged to submit their ideas to the EPUs. Over one four-month period, employee suggestions saved the company $1.2 million. In addition, employees share in the profits (in 1994, they pocketed an extra $400 each), and are involved in decision making in areas that were once the exclusive domain of management, such as flexibility, hiring, and training. As Denis Desjardins, coordinator of Algomas employee participation program, says, Its a fabulous opportunity. Every worker thinks, If only I could change things around here. Now they have the chance. The sea change in labour relations at Algoma is reaping substantial benefits for the company. Profits and productivity are up, grievances are down, and all those workers who were laid off after Algomas nearbankruptcy in 1991 have been recalled.
Sources: K. Mark, Buyout and the Bottom Line, Human Resources Professional, April 1995: 1719; M. Lowe, Steel Resolve, Financial Post Magazine, April 1995: 204; and V. Galt, Algoma Reinvents Labour Relations, The Globe and Mail, April 21, 1995: B1.

Questions
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Which aspects of Algomas labourmanagement partnership do you think contributed the most to the companys turnaround? What kinds of training would both management and labour need to assist them in developing and maintaining a cooperative relationship? Assume that Algomas profitability suffers as a result of a major decline in steel prices. How might each side in the labourmanagement partnership respond to the crisis?