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.1 The original contract between the union and the employer expired in March 31,

2015, hence, the start of a new negotiation began. 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 matter.

Collective Bargaining began in 2016 where the employee union group called, Unifor,

represented the employees of D-J Composite and along with their hired consultant went on the

tables as a bargaining unit to negotiate with the company managements, to replace an expired

labour contract from March 31, 2015. Both parties’ several attempts at negotiations in 2016

failed to satisfy either sides.2 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/hr to

$16.74/hr but cut the wages of underachieving employees to accommodate operational budgets.3

However, the bargaining unit wanted fair growth, equal treatment of employees and comparable

worth pay based on seniority. 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

1
2 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.
3 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.
going up.4 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 take action 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 hand. 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”. As a result 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 on, DJ Composite partially continued their operations by hiring strikebreakers, known as

scabs, which are temporary replacement workers. 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 arbitration. The settlement decided by the arbitrator 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

4 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]
favoring to unions.5 Nonetheless, employees felt the arbitrator took the companies side as 30% of

the employees were laid off and they did not receive much of what they demanded for. Today,

the company operates with only 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 with.6

As the story deals directly with unions and its surrounding negotiations many of the terms

learned in class are visibly apparent. Labour 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. 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,

5 Stephanie Kinsella, “Lockout over for D-J Composites workers, but not everyone gets to return
to work,” CBC News, December 3, 2018, https://www.cbc.ca/news/canada/newfoundland-
labrador/dj-composites-lockout-over-1.4929837.
6 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-1.5008225.
meaning both sides have to present their demands, sessions reaching the bargaining zone. In

collective bargaining, employers have to respect the labour legislation which protects employees

rights. Privy council order 1003, protects employees right to bargain collectively, unfair

treatment by managements, have labour 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 labour 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 bargaining. 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 a 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 aftering hearing from both sides, helped

decide on a three year contract ending the long dispute.

Richard Alexander, the executive director of the Newfoundland and Labrador Employers'

Council said "this issue is very concerning to every employer in this province, particularly

unionized employers,"7 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. 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 behaviours 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.

7 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
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”.8

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/hr in other places as

compared to only $13.5 in that firm and the pay for performance or pay for knowledge was

totally neglected. These type of unethical behaviours only lead to low Job Satisfaction and low

Organizational Commitment. Predictability, 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 it. 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 satisfaction.

In conclusion, we have witnessed 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

8 Stephanie Kinsella, “D-J Composites in Gander picket after 'shocking and disrespectful'
lockout,” CBC News, Dec 20, 2016.
https://www.cbc.ca/news/canada/newfoundland-labrador/employees-locked-out-dj-composites-
gander-1.3904705.
the unionized employers9, 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 for them. Also to show employees that

they are important to us by including them in financial talks.

9 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.
 References

1. “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/.

2. 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.

3. Chris Ensing, “Labour 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.

4. Ronald J. Ebert et al., Business Essentials, 8th Canadian ed. (Toronto: Pearson, 2017).

5. Stephanie Kinsella, “Lockout over for D-J Composites workers, but not everyone gets to
return to work,” CBC News, December 3, 2018,
https://www.cbc.ca/news/canada/newfoundland-labrador/dj-composites-lockout-over-
1.4929837.

6. 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.

7. 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-1.5008225.

8. 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.
9. 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.
10. 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].
11. Stephanie Kinsella, “D-J Composites in Gander picket after 'shocking and disrespectful'
lockout,” CBC News, Dec 20, 2016.
12. https://www.cbc.ca/news/canada/newfoundland-labrador/employees-locked-out-dj-
composites-gander-1.3904705.
13. Plant Staff, "NL labour board rules D-J Composites engaged in bad-faith bargaining,"
Plant News, May 4, 2017.https://www.plant.ca/general/167648-167648/.