Wabush Mines behind own woes: former union leader

Layoffs and financial troubles facing a western Labrador iron ore mine are not due entirely to the global financial crisis, a retired union leader claims.

Wabush Mines advised employees this week that it will need to lay off staff and slash production levels to cope with what general manager Gino Levesque termed "the most difficult time in the [company's] history."

In a memo to employees on Monday, Levesque said the company is eliminating overtime and contractual work, and reviewing its "whole cost structure" — including rentals, purchasing, energy use and fixed costs — to find savings.

But Jim Skinner, who retired earlier this year as the head of the United Steelworkers local in Wabush, said any layoffs and production cuts cannot be blamed on the changing world economy, including a sudden slump in demand for steel.

"The economy has absolutely very little to do with this," said Skinner, who added that the Iron Ore Company of Canada, in neighbouring Labrador City, has ruled out production cuts while producing the same product.

"IOC is doing the right thing. They're investing in their operations, and their equipment is getting replaced and upgraded, and why isn't it happening in Wabush?"

In his memo, Levesque, who joined the company last year, indicated to staff he is concerned about operating issues.

He wrote that his primary goal now "is to better understand why we are trapped in this type of working environment which is not effective for our daily routines."

The Steelworkers local claims that production targets for the coming year will be 40 per cent less than this year, making layoffs and spending cuts inevitable.

Town is worried: mayor

Wabush Mayor Jim Farrell said the town council is obviously worried about a downturn at its largest employer.

"There's ups and downs all the time, and I guess we're in a down now, but hopefully this global economic crisis will cease soon and things will get back to normal again," Farrell said.

Any cuts will be felt across Labrador West, where there had been a boom in housing prices in recent months, following a surge in demand for iron ore.

"It's going to affect a lot of people right from real estate right on down to us," said resident Bill Elton.

"We're a minor contractor in Wabush Mines but still we have work. And with the reduction of work, reduction of work force, it's going to trickle down. It's going to hurt everybody.

Labrador City resident Kim Pike said the news comes at a difficult time.

I think it's devastating to the town of Wabush, and the people, especially just before Christmas," she told CBC News. "People are feeling pretty upset about it and worried."

Labrador City resident Gary Travers pointed to younger families that have moved to the area for jobs they thought were assured, even though the cost of living in the region has soared.

"All these, especially these younger people just getting hired on, going out and buying homes, expensive homes — what's going to happen to them now?" Travers said.

Farrell said the Wabush town council may need to trim its own spending if it receives less from Wabush Mines.