Foreign workers assigned unsafe housing during contracts at Ontario baby formula plant: documents

Workers brought to Canada by a B.C. contractor to work at the Canada Royal Milk plant in Kingston, Ont. lived in overcrowded conditions that violated local fire and building codes until the city's fire inspectors intervened.

But now, some of their former co-workers at the plant say work they were doing there was also unsafe, even though CBC News has learned the contractor was issued work permits reserved for those offering expertise "of significant economic benefit to Canada."

Current and former employees of the baby formula manufacturer told CBC News that the company was very hierarchical in its early months of operations and that these contracted workers from China were treated like "second-class citizens" at the bottom of its organizational structure. CBC is protecting their identities because they fear a backlash for speaking out.

CBC has not been able to speak to any of these foreign workers, but details of the foreign workers' experiences during their contracts in Canada were included in documents obtained by CBC under municipal freedom of information law. 

Kingston's fire department investigated five single-family homes owned by Canada Royal Milk's contractor, Realgoal Technology Inc., after a neighbour complained of seeing unsafe propane storage at one of the residences.

In one email released to CBC, Realgoal — a Canadian company based in B.C. — confirms it provided accommodation and food for employees of its Chinese parent company, Heilongjian Realgoal Technology Co. Ltd., while they were in Canada for the "installation and [commissioning of] equipment for Canada Royal Milk in Kingston."

In June and July of 2019, fire inspectors found a total of 88 workers living at the five addresses.

Handwritten notes from one visit say the inspector was told by someone at the property there were more people staying at these residences, but the first wave of workers had already left. 

Inspectors determined the homes should be classified as rooming houses under the fire code and documented a range of fire and building code violations, including unsafe cooking facilities and partitioned sleeping quarters constructed without proper permits.

Realgoal appealed to Ontario's Fire Safety Commission. An agreed statement of facts in this case described the violations at each address in detail, including how one two-bedroom home provided accommodations for 26 workers, with 18 people sleeping on bunk beds in its basement.

"Each occupant is an offshore employee of Realgoal or its sister corporation, U-Pack. In other words, each employee has been brought to Canada by Realgoal for the purpose of completing an employment contract in Canada," the statement of facts said.

The statement of facts also outlined the terms of their employment and the lack of control they had over their living conditions.

Workers made no 'significant household decisions'

"If an employee is unable to work or has completed his assigned work, his accommodation is terminated and he is returned to his home country," the statement of facts said. While some employees might have known each other or shared cultural ties, others were strangers, it said.

"Realgoal or U-Pack determines who is brought to Canada, for what purpose and what duration," the statement of facts said. "The employees/occupants do not make any significant household decisions."

Accommodations and meals were provided as part of their compensation — but one locally-hired Canada Royal Milk employee told CBC News the Realgoal contract workers sometimes lacked money for food and asked other workers for their receipts from local retailers so they could submit them as expense claims.

The statement of facts said Realgoal would retain ownership of the houses only while it needed the accommodations, and then sell the houses once the work was complete.

In March 2020, inspectors followed up with Realgoal and discovered the case could be closed because one property had been sold and the others were no longer housing excessive numbers of people.

By this time, construction of the Canada Royal Milk plant in Kingston had ended and workers were beginning to test equipment and ramp up for production.

A press release was issued and Kingston media reported in late March 2020 that the local residential properties owned by Realgoal had been brought into compliance. 

CBC News asked Canada Royal Milk whether it was aware of the kind of accommodations provided for these workers.

"Canada Royal Milk is not able to provide statements on the questions pertaining to the business affairs of Realgoal Technology or their subcontractors," said Carey Bidtnes, the human resources manager who also acts as the company's spokesperson. 

Up to 500 workers were on the site during the plant's construction, she said, and the majority of them were Canadian residents. The commissioning and calibration of some equipment has been "delayed due to COVID," she said, and to complete the required work, seven employees of Realgoal and their subcontractors remain on site.

Co-workers concerned about dangerous work

CBC News contacted Xinmiao Li — who identified herself as the human resources manager for Realgoal — and asked her about the workers her company provides for the milk plant.

"Sorry, I don't have anything to say about that," she said. "I'm going to hang up. I'm not taking any interviews. I'm not answering any questions. I don't want to talk about that, OK?"

She did not respond to a series of additional questions sent by email.

Trade law professor Henry Gao from Singapore Management University advised the Chinese government during negotiations for its trade agreement with Australia, which expanded trade in services and allowed more access for Chinese workers. He said Chinese firms bidding for contracts abroad use China's relatively inexpensive labour to compete globally in sectors like construction.

"[Workers] typically live in dormitories — they live there, they eat there, they all work on the construction site, for example, and outsiders would typically have no idea what the living and the working conditions are," he said.

"So unless you have some government inspector who will show up ... to inspect all this, you cannot guarantee that they will follow the rules ...

"You want something to be done well at a cheap price, then where do they cut corners? Part of that is by not following strictly the rules [for things like housing] ... You find six, eight or even 12 people in a little tiny room.

"And the Chinese workers, typically they do not complain. Their goal is very clear. They go to a foreign country, they work hard, they get the money and they go back and pay their family."

Current and former employees of Canada Royal Milk who spoke to CBC News confirm these Realgoal employees were expected to work hard: they were observed working very long shifts and performing dangerous work, sometimes after other employees had left at the end of the working day.

While locally-hired staff recognized unsafe working conditions and tried to take steps to protect themselves, different expectations and standards were set for these contractors, CBC News was told. Language barriers made it difficult for locally-hired workers to talk to these contract employees about the dangers and their rights in an Ontario workplace.

As CBC News reported last week, unqualified millwrights were seen installing equipment around live electricity. A complaint filed with Ontario's labour ministry described the same danger.

The ministry was also asked to investigate another case where foreign workers were sent into the confined space of the plant's four-story milk dryer without adequate safety equipment. A witness told CBC that managers became frustrated with how long it was taking a qualified environmental cleanup firm to clear a clog of dried, burned milk product during the day, so they sent in the foreign workers overnight with makeshift ladders and tools to try to chip it out.

More than just managers

When all three levels of government backed a $332 million foreign investment by China's Feihe International to build the baby formula factory, public announcements said it would employ 200 to 300 people in manufacturing and research positions while adding a thousand more spinoff jobs in construction, services and local supply chains.

The Ontario government's $24 million contribution to the project came from its "jobs and prosperity fund," which is earmarked for projects that create and retain jobs in the province.

The company said six managers would move to Kingston from China to oversee the project. But little else had been reported publicly about Chinese citizens working at the plant until the fire department's investigation made the news.

Bidtnes said the plant currently employs 132 full-time and 3 part-time employees, and continues to recruit more. "Other than three management team members with work visas, all the employees hired are Canadian residents," she said. "During the construction and commissioning phases of the project, Canada Royal Milk employed nine persons with a work permit specific to the plant."

In response to a request from CBC News, Immigration, Refugees and Citizenship Canada revealed that 112 work permits have been issued or extended for employees of Canada Royal Milk, Realgoal Technology Inc. and UPACK Machinery Technology Limited — Realgoal's sister company — between January 1, 2018 and January 31, 2021. 

The department lists 14 permits approved or extended for Canada Royal Milk employees: one person was given a work permit based on being of "significant benefit to Canada," six permits were listed as "intra-company transfers" from its parent company, Feihe International, and the others came in as temporary foreign workers.

The application process for temporary foreign workers can require a labour market impact assessment from Employment and Social Development Canada. Canada Royal Milk has requested assessments for managerial and office positions, such as:

• Web designer and developer.
• Senior manager - construction, transportation, production and utilities.
• Manufacturing manager.
• Accounting technician and bookkeeper.

ESDC told CBC News that there is no record of Realgoal Technology Inc. requesting a labour market assessment. IRCC shows only one work permit issued to a Realgoal employee who required one.

While 13 work permits for "intra-company transfers" were approved for Realgoal, most (85) of the permits issued to the two contractor firms operating at the Kingston plant were C-10 permits, for workers of "significant economic benefit to Canada."  

Immigration lawyer Rafeena Rashid said the bar is usually set very high for C-10 permits, and the proposed benefit from allowing the worker entry must be "important or notable." In her experience, she said, the company would need to provide evidence and expert testimony that these workers offered something special, like specific proprietary knowledge or trade secrets — not just the skills of a general tradesperson or labourer.

Kim Ly of Borders Immigration Consultancy in London, Ont., expressed surprise at how many C-10 permits were issued for work at this plant because they are usually very hard to get. On top of that, a lot of evidence is usually required to obtain work permits for Chinese citizens, she said.

She also found the number of permits approved to be high, relative to the size of Canada Royal Milk's operations. 

"For me, it doesn't make sense," she said, wondering aloud if these applications were helped by all three levels of government backing this baby formula project.

By bringing in labour under C-10 permits, she said, these contractors do not have to pay the median wage for that classification of worker — while an average Ontario millwright may receive $35 per hour, these workers don't have to be paid that. A C-10 permit is also desirable because the workers are eligible for Ontario health insurance coverage, she said.

Fear of being 'unwelcoming'

Guy Saint-Jacques was Canada's ambassador to China when the Canadian Dairy Commission began talks with Feihe to bring the powdered milk plant to Kingston.

When Chinese companies invest overseas, he said, "they are very eager to bring as many Chinese workers as they can."

He cited the case of a coal mine in northern B.C., where the foreign investor wanted to employ 200 Chinese citizens and said the Canadian miners who applied were not qualified.

The former ambassador said that when he'd meet with investors, he'd tell them "they have to be a good Canadian corporate citizen. And that means that once you invest in Canada, you will have to abide by our rules with regard to employment."

Liberal MP Mark Gerretsen, who represents Kingston, told CBC News that he understood the foreign workers were brought in because "they specialized in certain areas of the construction process of the plant." 

The region's long-term economic benefits would come from employment after the plant was built, he said.

Kingston city councillor Simon Chapelle's district includes both the plant and the improvised lodging houses for the workers.

He said he thinks the jury's still out on whether this plant is delivering on the economic benefits it promised for the community, although the company's investment does help keep residential property taxes low.

He worries city officials weren't holding this company to a high enough standard. Loud, startling noises and foul smells at the site were only addressed "reluctantly" after residents spoke out, he said.

People hesitate to criticize Canada Royal Milk's business practices, the councillor said. "I think there [are] sensitivities of being labelled as non-supportive or unwelcoming."

After CBC News reported on workplace safety and harassment issues at the plant, Kingston Mayor Bryan Paterson said he spoke to city staff "to ensure every city regulation is being followed.

"We will continue to monitor this situation and work with the necessary regulatory agencies and other levels of government as needed," he said on social media, while thanking those who came forward to share their insights.