Resolute contract regains some of the ground lost by workers in 2010

MONTREAL -- Unionized employees at Resolute Forest Products in Ontario and Quebec have ratified a new four-year contract that recovers some of the wages and benefits they gave up during the company's restructuring.

Under the deal, workers will receive a two per cent annual wage increase for the life of the agreement and a one-time $1,000 signing bonus.

"They've recovered wages but we're just looking to moving ahead," said Mike Lambert, Unifor's forestry sector director. "It was very positively received by our membership."

Workers gave up a 20 per cent cut in wages and benefits in a 2010 deal when Montreal-based Resolute (TSX:RFP), then called AbitibiBowater, was restructuring under creditor protection.

The new deal was approved by 86 per cent of workers who cast ballots over several weeks since a tentative deal was reached May 9. Turnout was 75 per cent of about 2,000 unionized workers at 11 of Resolute's mills in the two provinces.

Unifor hopes the new contract will set a pattern for negotiations by some 8,000 employees it represents at other forestry companies in Eastern Canada.

It follows a deal reached in February with the union representing 1,500 of its workers at four U.S. sawmills.

The union said the deal reflects "a brighter future for the industry" and includes provisions designed to prevent more work from being contracted out by the company.

"We were able to secure more jobs through the process of getting the company to contract...and utilize the skills that they have," Lambert said.

He said the union recognized the company still faces a $1.3-billion pension shortfall.

"We're committed to working together to make sure that we keep the operations that are going viable and that they can afford to pay and maintain the jobs, and that's job security."

The agreement covers mills accounting for over 41 per cent of Resolute's total pulp and paper capacity including seven in Quebec and four in Ontario.

Resolute president and chief executive Richard Garneau said the agreement will help the company keep its Canadian pulp and paper mills competitive and preserve its position.

"We are pleased to see that our employees and their union leaders appreciate the nature of the issues and challenges facing our company, such as accessing forest resources, controlling costs and challenging market dynamics for some of our end-use paper products," Garneau said in a statement.

As part of the agreement, Resolute agreed to work with the union to call on Ottawa to establish a national forestry sector council.

Canada's largest private sector union said the agreement was the first with a major sector since Unifor was created following the merger of the Communications, Energy and Paper Workers Union and the Canadian Auto Workers Union.