Employer lockout at D-J Composites Ends with

Binding Arbitration

Team 6:
March 29, 2019
BUSM-1100-017
Raymond Li 100296855
Harpreet Kaur 100316567
Kiarash Kianpoor 100251384
Kenny Min 100098263
 D-J Composite Inc. is an aerospace manufacturing plant in Ganders, Newfoundland,
based from D-J Engineering, Inc. headquartered in Augusta, Kansas State with 34 unionized
employees. The original contract between the union and the employer expired in March 31,
2015, hence, the start of a new negotiation began i. In December 2016, because the negotiations
have not reached an agreement, the employees voted to go on a strike but the company
immediately took action by initiating a lockout which froze relations for both parties for almost 2
years. During and after the 2 years tension, we will review the story and analyze the situations
with relating business concepts and finally input our opinions on the matterii.

Collective Bargaining began in 2016 where the employee union group called, Unifor,
represented the employees of D-J Composite and their hired consultant went on the tables as a
bargaining unit to negotiate with the company managements, to replace an expired labor contract
from March 31, 2015. Both parties’ several attempts at negotiations in 2016 failed to satisfy
either sides. Eventually, the company proposed a new offer to replace the expiring one that
would gradually see an increase of wages over time averaging $16.20/hour to $16.74/hour but
cut the wages of underachieving employees to accommodate operational budgets. However, the
bargaining unit wanted fair growth, equal treatment of employees and comparable worth pay
based on seniorityiii. Compensation tactics that employees have used is the Cost of Living
Adjustment, to get raises to be on par with the cost of living in Newfoundland. We analyzed
2016’s Consumer Price Index (CPI) that the cost of living increased by 2.7% in Newfoundland
and Labrador; as a result, the cost of living for employees in Newfoundland are going up.
Attempts of collective bargaining to negotiate and agree on wage contracts were rejected
unanimously by the workers in 2016. Bargaining has failed, therefore, company and its
employees decided to act in December of 2016 by unanimously voting to strike. Before the strike
even went underway, D-J Composite began a lockout of their 34 union employees ceasing all
work on handiv. This aggressive tactics from employer is used to exhaust the employees
financially and put pressure on them; “The side that imposes a greater cost of disagreement on
the other, while withstanding the costs they incur themselves, is likely to prevail. Employer is
hoping the union and its employees will surrender”. Because of the strike, employees went ahead
with pickets outside the plant, with Unifor flags, fences, and union officers and workers
protesting outside receiving $250/week from unions as their only income. Later, DJ Composite
partially continued their operations by hiring strikebreakers, known as scabs, which are
temporary replacement workersv. During all the ruckus, the Newfoundland government, who
continued to stay mutual in order not to anger any sides involved, finally sent in a mediator to
suggest a solution. The future looked grim as even that attempt ended in a failure. The unions
have been on strike for two years without pay, only getting small union pay and receiving sudden
employment insurance by the court. By the end of 2018, Unifor successfully brought in the
premier of Newfoundland, Dwight Ball, to step in the conflict putting them into a binding
arbitrationvi. An arbitrator is a neutral third-party expert that will handle both side’s disputes then
decide on a solution. The settlement ended the conflict but resulted in losses on both sides, losing
one third of the workforce in order to sustain the business in favor for D-J Composite but
eliminated merit-based pay by performance into seniority favoring to unions. Today, the
company operates with 14 employees but the laid off workers are left in the dust. The now
unemployed worker named Maureen spoke out, “No job, no income, no EI, no benefits. It's like
we were thrown to the curb," signaling the struggles that former employees are left withvii.
 As the story deals directly with unions and its surrounding negotiations many of the terms
learned in class are visibly apparent. Labor Union is a group of individuals who work together
to achieve shared job-related goals. Unifor is the largest private sector union representative in
Canada, who, represent the employees in the negotiation. The story then begins due to multiple
unsuccessful Collective Bargaining, the process through which union leaders and management
personnel negotiate common terms and conditions of employment for those workers represented
by the union. They negotiate wages, hours, compensation, benefits which were not met during
the bargaining. The employees felt they were not receiving enough Compensation which is the
pay provided by the employer to his employee in return of his work. They were severely under-
compensated down to the most basic aspect, Wages, the dollars paid based on the number of
hours worked, nor the Salary, the dollars paid at regular intervals in return for doing a job
regardless of the amount of time or output involved viii. There is no legal requirement for the
collective bargaining to be successful, but D-J Composite has to recognize the right of the
employees to freely negotiate and to be heard. Both parties have to negotiate in good faith,
meaning both sides have to present their demands, sessions reaching the bargaining zone. In
collective bargaining, employers have to respect the labor legislation which protects employees
rights. Privy council order 1003, protects employees right to bargain collectively, unfair
treatment by managements, have labor boards with authority to bargain for them, and prohibition
of strikes and lockout unless a failed bargain. However, violations on collective bargaining were
seen as D-J Composite disrespected the right of the employees to bargain collectively, order
1003, twice with bad faith bargaining where “no intention of fulfilling its obligations to these
workers under the province's employment laws”, low balling their settlements to not meet the
bargaining zone, as well as, unjustified delays. Due to failed bargaining in December 2016, the
last rule of order 1003, allows the employees to lawfully vote for a strike and the employers to
lawfully apply a lockout. Strike is a tactic of labor unions in which members temporarily walk
off the job and refuse to work, in order to win concessions from management which is what the
employees and Unifor were planning to do. Employer then quickly answered with a Lockout, a
tactic of management in which the firm physically denies employees access to the workplace to
pressure worker to agree on the company’s latest contract offer, causing a devastating stalemate
that would last a long period of unemployment and no pay. The employer could not simply fire
the employees as they were lawfully obligated to go on a strike after an unsuccessful collective
bargainingix. The strike quickly turned the eyes of the public and the media and gathered
sympathy from the general populous. Soon after, temporary workers known as scabs were hired
to keep the organization running. These scabs also known as strikebreakers, they crossed the
picket line and start doing the jobs of lockout employees. On the other hand, the lockout
employees were harassing and making violent death threats to the temporary workers to inhibit
all operation of the company which was also an unethical way to solve the problems. The grey
lines of the law were being crossed and unethical practices were plentiful, causing the
government to finally intervene and initiate Mediation, a method of setting a contract dispute in
which a neutral third party helps the two sides clarify the issues that are separating them.
Mediation failed and eventually led to Arbitration, a method of setting a contract dispute in
which a neutral third party imposes a binding settlement on the disputing parties. The arbitration
was successful as the arbitrator after hearing from both sides, helped decide on a three-year
contract ending the long disputex.
 Richard Alexander, executive director of the Newfoundland and Labrador Employers'
Council said "this issue is very concerning to every employer in this province, particularly
unionized employers," since if the member of the union can get their desperately sought out
contract and thus win the negotiation, other employees of other companies may all go on a strike.
We can see how this incident can serve as a threat to other businesses as an External
Environment and endanger other businesses that have unionized employers. This is also an
example of Government as Regulator as the government intervened in the middle and latter
part of the story to mediate and support the negotiation xi. They later on admitted that they
regretted their actions of intervention as it gathered unwanted attention of other companies
wanting the similar treatment. Moving further, every organization requires some levels of
Business Ethics, which is the ethical or unethical behaviors shown by a manager or employees
of a company. The employees were unethical on their own part, harassing the temporary workers
and the company broke the ethics code by their bad faith bargaining by offering a low wage with
bare minimum benefits to the employees which was clearly not enough to fulfill their daily lives.
For instance, Mike Stockley, who has worked with the company for 12 years, said his wage of
just over $13.50 per hour does not cover his cost of living and he didn’t get any raise in those 12
years, “That's all we ask for is a fair raise, to make a living to feed our families and that's it”.
There was not any Comparable Worth which depicts a legal concept that aims to pay equal
wages for work of equal value, as D-J Composites were paying less to their employees compared
to the market wage of other similar employees in the field which is $35/hour in other places as
compared to only $13.5 in that firm and the pay for performance or pay for knowledge was
totally neglected. The employees left stranded at the end of the story did not receive any
compensation nor any benefits of non-financial rewards which contains the Canada Pension
Plan or the Protection Plans (EI). However, the Court deemed this case as special and allowed
some of the employees to claim EI whereas normally employees on strike cannot claim itxii.These
basic needs of Physiological Needs (wages) and Security Needs (benefits, pension plan) from
the Maslow’s Hierarchy of Human Needs Model were not being met thus making it difficult
for the employees to satisfy the higher levels of needs and bringing down performance and
employee satisfactionxiii.

In conclusion, we have seen an inevitable sad ending for the D-J Composite’s employees.
Witnessing how Richard Alexander, the executive director of the Newfoundland and Labrador
Employers' Council, is worried about other employers of the province and especially the
unionized employers, we can conclude that the government was quite afraid of ending the
argument in favour of employees. If the employees were victorious, they could set an example
for other employees creating a chain of similar uproar that is not wanted by the companies and
the government. Thus, it was only expected for the arbitrator to take the employer’s side to
inhibit future strikes. It almost seems like the employees were used as a scapegoat to set an
example. There is no denying in the fact that the employees and their families had to go through
two years of harsh difficulty. No pay or compensation during the two years left some employees
with nothing to feed their families and they are truly left to survive on their own. However, even
though it seems like the company did not lose much, they did lose two years of productive work
and a relationship with their employees that can never be amended again. We learned that for
every party involved in the collective bargaining, we cannot forget that lives of many families
can be decided on these negotiations and should never be taken lightly. That is why we thought
we would become the company and handle this issue differently from the first place by being
more transparent about our financial situation and providing enough evidence to the
representatives of the union and employees to help them understand that the company cares
about its employees but financially cannot afford to give them any high raises. That way, we
could offer the employees what was reasonable for us and to show employees that they are
important to us by including them in financial talks.
i
Consumer Price Index (2002=100) by Component Canada and Newfoundland and Labrador January-December
2016. (2016). https://www.stats.gov.nl.ca/statistics/Prices/PDF/CPI_Components_2016.pdf [Accessed 29 Mar.
2019]

ii
Meghan McCabe, “Workload decline in Gander 'transparent to everyone': D-J Composites,” CBC News,
December 22, 2016. https://www.cbc.ca/news/canada/newfoundland-labrador/dj-composites-responds-labour-
dispute-gander-1.3908732.

iii
“Unifor files second ‘bad faith bargaining’ complaint against D-J Composites,” Telegram, December 21, 2017.
https://www.thetelegram.com/business/unifor-files-second-bad-faith-bargaining-complaint-against-d-j-
composites-172131/
iv
Garrett Barry, “Disbelief' for D-J Composites worker who was laid off after contract fight,” CBC News,
February 07, 2019, https://www.cbc.ca/news/canada/newfoundland-labrador/dj-composites-back-to- work-
15008225.
v
Chris Ensing, “Labor unions rally in Gander to support locked out aerospace workers,” CBC News, January 12,
2017. https://www.cbc.ca/news/canada/newfoundland-labrador/union-rally-dj-composites-gander-lockout-
1.3932598
vi
Stephanie Kinsella, “Unifor says D-J Composites has agreed to binding arbitration,” CBC News, October 3,
2018, https://www.cbc.ca/news/canada/newfoundland-labrador/nl-employers-council-premier-dj-composites-
1.4849096
vii
Garrett Barry, “Unifor expands pickets from D-J Composites to government offices in lockout,” CBC News,
September 27, 2018, https://www.cbc.ca/news/canada/newfoundland-labrador/unifor-dj-composites-shutdown-
day-2-1.4840822
viii
Ronald J. Ebert et al., Business Essentials, 8th Canadian ed. (Toronto: Pearson, 2017),189.
ix
Stephanie Kinsella, “D-J Composites in Gander Picket after ‘Shocking and Disrespectful’ Lockout.” CBC
News, 2016. https://www.cbc.ca/news/canada/newfoundland-labrador/employees-locked-out-dj-composites-
gander-1.3904705
x
Ronald J. Ebert et al., Business Essentials, 8th Canadian ed. (Toronto: Pearson, 2017),191.
xi
Ronald J. Ebert et al., Business Essentials, 8th Canadian ed. (Toronto: Pearson, 2017),25.
xii
Ronald J. Ebert et al., Business Essentials, 8th Canadian ed. (Toronto: Pearson, 2017), (181-182).
xiii
Ronald J. Ebert et al., Business Essentials, 8th Canadian ed. (Toronto: Pearson, 2017),206.