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�!�����������"��#�������������������� by David Orfald Student # 100254513 Written for Professor Jeffrey M. Ayres Carleton University, Institute of Political Economy Course PECO 5501F (Selected Topics: Globalization and Resistance) December 2005

© 2005 David Orfald

Not for publication or on-line posting without prior approval by the author.

Author contact:

David Orfald (h) 613-594-4831; (w) 613-560-4386 e-mail: orfald-clarke@sympatico.ca or orfaldd@psac.com

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How can unions successfully organize workers and negotiate with employers when they

are dealing with huge transnational corporations? In the literature on globalization and

union resistance, one view is that unions must look to “global unionism” and adopt

strategies that organize across borders. A second view emphasizes the importance of

designing effective on-the-ground unionization campaigns and structures. This essay

explores this debate using the case study of a Canadian public sector union that has

organized the workers of the world’s largest mineral resource extraction company, at the

Ekati Diamond Mine in the Northwest Territories. The study suggests that union capacity

to build collective identity in a difficult work situation, and to mobilize community

support, will be the most likely determinants of success, not the ability to organize

globally. It also finds that national state policies still play a critical role in constraining

corporate power.

For if the price of diamonds should rise in Persia, it shall also rise perceptibly in England, for the great merchants all the world over do know one another, do correspond, and are partners in most of the considerable pieces, and do use great confederacy and intrigue in buying and selling them. – Sir William Petty, 1623-1687 British physician, philosopher, surveyor and economist 1 Given the globalization of firms, finance, and labor markets, the labor movement recognizes that union organizing and bargaining campaigns and strategic research must become global as well.

– Conference program for the Global Companies, Global Unions Conference, scheduled to take place February 2006 in New York City 2

(For unions) the path to change is often blocked by attitudes and practices that are deeply embedded in their organization’s culture and traditional ways of working. The majority of union members continue to look upon their unions as a service provider (some combination of lawyer, social workers and insurance agent) to which they pay dues with the expectation that the union (something they identify as separate from themselves) will take care of their problems for them.

– Paul Clark, Building More Effective Unions (Clark 2000: 164)

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It looks like a classic David vs. Goliath struggle, but with no assurance that the little guy

will win.

The big guy is the giant transnational BHP Billiton (BHPB), which proclaims

itself as the world’s largest diversified resource corporation, and owns and operates the

Ekati Diamond Mine in Canada. Located near the Arctic Circle, 300 kilometers northeast

of Yellowknife, Northwest Territories, Ekati is an extremely isolated work location,

accessible year-around only by air. Mine employees fly into the location to work two

week shifts, 12 hours a day, living on site in company-owned facilities. At the end of

their two week shift, they are flown back home to one of more than a dozen communities

scattered through northwestern Canada. Almost one-third of the workforce is aboriginal.

The little guy is Diamond Workers Local 3050, which represents about 500 Ekati

employees. They are certified by the Public Service Alliance of Canada (PSAC), a

national Canadian union comprised primarily of federal civil service employees. The

union is currently trying to achieve a first collective agreement with BHP.

Almost needless to say, the process of organizing the unit and negotiating a first

collective agreement has been challenging. Progress has been slow, and a successful

outcome for the union is still very much in play.

This kind of drama is being played out around the world, as unions try and

organize the workers of transnational corporations (TNCs) in the context of a globalized

economy. Today, transnationals operate in an era of liberalized trade and deregulated

economies, which seems to have significantly increased their power and influence. TNCs

have increased freedom to invest where they please, to move production and services to

lower wage areas, to contract out production and services to non-unionized subsidiaries,

and to more freely engage in anti-union management practices. These developments

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have, in many countries, led to significant contractions of labour movement membership

and declining levels of union density.

How unions might best respond to globalization and the growing power of TNCs

is a question that is being debated extensively by the labour movement and in the

academic literature on globalization and union renewal. One set of views suggests that

unions must look to “global unionism” and adopt strategies that allow workers to

organize across borders or use supra-national institutions to constrain corporate power. A

second focus emphasizes the importance of union capacity to design effective on-the-

ground organizing campaigns and local structures. Still others highlight the national and

local contexts, or suggest that effective strategy is contingent on a combination of factors,

arguing for more integrative approaches that draw on an understanding of political

economy, industrial relations, and geography.

The purpose of this essay is to explore this debate, using it to introduce and

discuss the case study of the Ekati diamond miners, and in particular to pose two

questions. First, what does the literature suggest in terms of strategies for union success

in a case such as this? Second, what does a case like this have to contribute to the

broader discussion about how unions can best resist globalization?

I say explore and introduce because this review is not a full-blown case study, for

two reasons. First, a full assessment of the case is premature given that the effort to reach

a first collective agreement at the mine is still ongoing, and the jury is still very much out

on how a first collective agreement will be achieved, what it will look like, and therefore

what impact the unionization effort will have on the employment practices at the mine.

Second, although the author has a basic familiarity with the case as a staff member in

collective bargaining at the PSAC, the information presented in the case study has been

drawn primarily from publicly available documentation.1 Given some of the issues raised,

a full case study in this situation should include field interviews with local and national

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union officers, and members and staff engaged in the organizing and negotiating efforts.

Perhaps this review might serve as preliminary background to such a research project.

In the meantime, the case raises a number of interesting issues quite relevant to

the debate about how unions might best respond to globalization and the power of

transnational corporations. While the conclusions to be made are tentative in nature, the

review of this case suggests that the key determinants of success are more likely to be

local and national in nature, and internal to the union’s own capacities, rather than

conditional on the ability to organize globally.

**

The plan for the essay is as follows. The first section reviews the literature, starting with a

short explanation of the links between globalization, neo-liberalism, transnational

corporations, and the impact on unionization rates and labour movements. Against this

background, the debates around union renewal are introduced, looking first at several

pieces which suggest that a “global unions” strategy is required and second at materials

which highlight union capacity and on-the-ground union building. The section ends with

a review of analyses which emphasize national factors and recommend strategies

contingent on the unique characteristics of the case.

The second section of the essay introduces the facts of the case. First, background

related to the mine and BHPB will be presented. The approval and development of the

mine will be reviewed within the broader context of northern development, outstanding

aboriginal land claims, the expansion of Canadian diamond mining, and international

trade in diamonds. Second, background on the PSAC and the unionization effort will be

presented, looking at how and why the union came to take on this project, the interests of

the workers in unionization, and where the process of negotiations currently lies.

The final section of the essay then provides an assessment of the case, looking at

prospects for success and strategies for resolution. The particulars of the case will also be

Page 4

used to reflect on the literature and the broader discussion about union resistance to

globalization.

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Although transnational corporations (TNCs) have been around for decades, if not

centuries (Piazza 2002: 135), it has become common in recent years to link their rise in

scale and influence to globalization, and more particularly to the dominance over the last

quarter-century or so of the neo-liberal form of globalization, or what Steger (2005) calls

the ideology of “globalism.” This ideology has promoted trade and financial

liberalization, deregulation, promotion of foreign trade and investment, and significant

cuts to government programs, services and size. Sometimes referred to as “the

Washington Consensus” (see Williamson 2000), globalism is closely associated with the

dominant role played by the United States in world affairs, and the critical influence on

international and domestic policies played by multilateral institutions such as the

International Monetary Fund (IMF), World Bank and World Trade Organization (WTO).

TNCs are closely linked to this process because the conditions placed by these

multilateral institutions on financing, aid and trade have the effect of opening up national

economies to foreign investment and trade.

The Canadian government has actively supported and advanced the cause of

globalism by negotiating and signing onto the Canada-US Free Trade Agreement

(CUSFTA) in the late 1980s and the North American Free Trade Agreement (NAFTA) in

the early 1990s and removing restrictions on foreign investment. Both federal and

provincial governments have bought into the project of neo-liberalism by adopting

balanced budgets, tax cuts, and privatized public services as key features of their public

policy agendas (see for example Ayres 1998; Swimmer 2001).

Certainly, there is little doubt of the powerful role TNCs now play in the world

economy. Nissen (1999) cites data indicating that of the top 100 economies in the world,

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forty-seven are transnational corporations instead of nations. Some 300 companies own

twenty-five per cent of the world’s assets. Growth in foreign direct investment has far

outstripped the growth rate of exports and world production. Although it has been

calculated that direct employment by TNCs still only represents a small proportion – 3.4

per cent – of the world’s total labour force (Harrod and O’Brien 2002: 13), TNCs have a

much wider influence on employment through local suppliers and by influencing world

trade. By the mid-1990s, forty per cent of all international trade was comprised of trade

among the subsidiaries of TNCs (Gordon and Turner 2000: 12).

An important component of the globalist agenda has been an attack on the role

and influence of the labour movement. TNCs have played an important role in this attack

by taking advantage of trade and investment liberalization to shift production to lower-

cost countries and regions, or those with weaker labour legislation, outsourcing

production to non-unionized companies, and more vigorously resisting unionization

efforts. They have been aided in this process by national governments who have rewritten

labour legislation in favour of employers, making it more difficult for unions to organize,

negotiate and strike (Panitch and Swartz 2003; Lafer 2004).

As a result, globalization has been closely associated with significant declines in

the size and influence of the labour movement worldwide. While the phenomenon is

worldwide (Frege and Kelly 2004; Kubicek 2004; Martin and Ross 1999), it has been

most pronounced in the Anglo-American context. Union density (the proportion of

unionized workers compared to the total non-agricultural workforce) has declined

particularly sharply in the United States, from levels as high at 40 per cent to less than 14

per cent today, and in both the UK and Australia, from 55 per cent in 1980 to below 30

per cent in 1999 (Fairbrother and Griffin 2002).

The Canadian labour movement has weathered this storm better than many,

actually experiencing recent growth in absolute membership numbers, but union density

has still been on a gradual decline from highs of 37 per cent in the early 1980s to about

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32 per cent today. The decline has occurred mostly in the private sector, where union

density is now below 20 per cent. Thus the labour movement in Canada is increasingly

dominated by public sector union members, now more than 50 per cent of the total

(Murray 2002; Jackson and Schetagne 2003). Although the legislative framework

governing unionization in Canada has changed less substantially than countries like

Australia and New Zealand, governments in Canada have regularly used legislative

interference to impose contract settlements on public sector workers, and several

provinces have weakened labour legislation, for example by making it mandatory to post

information in the workplace on how workers can decertify their union (Panitch and

Swartz 2003; Reshef and Rastin 2003).

Given neo-liberal globalization, some see the prospect for international trade

unionism as bleak. For example, after investigating the prospects for international trade

union cooperation following cross-border corporate mergers in the auto industry (i.e.

DaimlerChrysler, Ford/Volvo), Piazza says that modern industrial unions had a “heyday

in terms of membership and influence over wages and social policy during a few decades

in the mid-1900s…(whereas) the multinational corporation is a four-century-old

institution that has grown steadily in power and profit accumulation” (Piazza 2002: 134).

However, others see potential for great renewal. Munck for example argues that

globalization is leading to a significant expansion of the working class, that the

international labour movement is resolving old Cold War differences and acting more and

more like a social movement, and has the potential to “play a central and increasing role

in achieving a degree of social regulation over the worldwide expansion of capitalism in

the decades to come” (Munck 2002: 194).

Most assessments argue that the union movement will have to work exceedingly

hard to resist globalization, and focus debate on the best means for doing so. Taking

place within labour movements and within the fields of international political economy

and industrial relations, this debate is generally framed as one about “union renewal” –

Page 7

i.e. how can the union movement revitalize itself and reverse its fortunes. Organizing the

unorganized is seen as one of the most essential components of union renewal, but other

common key themes and strategies include re-engaging membership involvement in the

work of the union, union mergers, social movement unionism, internal restructuring and

international labour solidarity (Frege and Kelly 2004; Fairbrother and Griffin 2002;

Fairbrother and Yates 2003; CRIMT 2004).

In the remainder of this section, I will touch on several themes in the literature of

direct relevance to the case study of Ekati.

One stream within this debate places much emphasis on “global unionism” as a

potential solution to dealing with globalization and the increased power of TNCs, asking

whether unions should also “go global” (Gordon and Turner 2000; Harrod and O’Brien

2002). Within this broad orientation lie a number of different strategies. Some focus on

the importance of developing transnational alliances between unions, and argue that

unions need to work at developing links with counterparts elsewhere so as to exchange

information and wage campaigns together (Nissen 1999). Others place importance on

strengthening international labour centrals, such as the various International Trade

Secretariats, so that these organizations might develop the capacity to negotiate

framework agreements with TNCs (Gallin 2002). Others still suggest that labour

movements should push for labour standards within international trade agreements

(Mazur 2000).

For other labour activists, developing global unionism means actually developing

global unions with the capacity to bargain across borders with TNCs, and wage

international strikes if needed. For example, Gordon and Turner (2000: 24) report on

unions pursuing “fully integrated collective bargaining as an appropriate structural

response” to globalization, and Herod (2001: 198) notes several instances in industries

such as steel, auto and shipping where unions have sought to move in this direction.

Page 8

While the Canadian union movement has strong international connections, it has

moved away from global unions, separating in large numbers from U.S. based

international unions by establishing independent Canadian unions, of which the 1985

creation of the Canadian Autoworkers (CAW) is the most noted example (Gindin 1995).

From highs of more than 65 per cent in the early 1960s, Canadian membership in

international unions has declined to less than 30 per cent (Akyeampong 2004). However,

more recently there are signs of some pulling back from this trend. The Industrial Wood

and Allied Workers of Canada (IWA), an independent Canadian union since the 1980s,

recently decided to merge with the United Steelworkers of America (USWA), in part a

response to the growing dominance of international companies in the forestry industry

(IWA 2004). Even the CAW has recently sought a higher level of collaboration with its

former parent, the UAW (United Autoworkers Union), as a result of conditions in the

auto industry (Keenan 2005). But a widespread return to international unions does not

appear to be on the agenda.

A very different stream within the literature focuses attention on the capacities of

unions to run organizing campaigns and build effective on-the-ground membership

involvement in newly certified locals. For example, in their study of union organizing

results in the U.S., Bronfenbrenner and Juravich (1998) conclude that “it takes more than

just house calls to win,” finding that successful organizing depends on unions’ ability to

undertake a comprehensive union-building strategy that incorporates house calls with

small-group meetings, solidarity actions, rallies, media work and community-labor

coalitions. The critical factor which explained success vs. failure in the campaigns they

studied was the active role of rank-and-file volunteers in leadership positions, i.e. when

the members “rather than organizing staff are doing the primary work of building a union

in their workplace” (1998: 34). Similarly, Sciacchitano (2000) places importance on the

role of staff as a facilitator of membership involvement, finding education and group

learning to be essential components of movement building. Organizers cannot simply

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walk in with a pre-determined plan, particularly when organizing outside their own

community or gender, she argues.

Rooks makes a similar point, saying that there is a “cowboy mentality” among

many organizers which she describes as “a set of assumptions about organizing being

more than a job, being superior to other forms of work in the labor movement, and being

best experienced with an intensity resembling a military boot camp” (Rooks 2003: 33).

Such an approach does not facilitate membership engagement, as it reinforces member’s

expectations of unions as a service organization. Rejection of “business unionism” is seen

as vital to union renewal. Fletcher and Hurd (1998) talk about the importance of building

membership capacity to organize their own affairs. They also recognize the importance of

“organizing for inclusion” when dealing with issues of race and gender in union

organizing (Fletcher and Hurd 2000). They and several other authors also argue the need

for a social movement style of unionism, one which encompasses “empowerment, social

justice and equitable distribution of wealth” in their agenda (Fletcher and Hurd 1998: 53;

see also Murray 2002; Gindin and Stanford 2003; Schenk 2003). Unions thus face the

challenge of learning how to work effectively with other social movement organizations,

which often operate in very different ways than the highly structured union movement

(see Ayres 1998, especially chapter 3, for an example of this).

While the theme of the material just discussed is that union strategies and tactics

are the key elements of union organizing success, other studies recognize the critical

importance of national policies and contexts in determining the impacts of union

strategies. A recent survey of union renewal efforts in the U.S., U.K., Germany, Spain

and Italy found that many unions were using similar strategies to revitalize, but that the

results varied considerably from country to country (Frege and Kelly 2004). Contrary to

globalization theories which posit convergence across national boundaries and a

declining role for the state, their review found significant evidence of variation in results

across these countries. While related in part to variations in the nature of capitalism

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between countries, they found that the interaction between the state, employers and

unions to be a more important factor in explaining the variations. Their analysis suggests

that unions’ strategies in relation to the state can still play an important role in

determining the success of union renewal.

Another particularly interesting perspective on these debates is provided by

Andrew Herod, a geographer who has been examining the geography of capitalism and

labour. While he says that most inquiries into this subject assume that capital is global

and labour is local, he argues that capital still does have to locate somewhere, and that

labour has the capacity to act globally:

Such a realization forces us to recognize both that union strategy may be significantly shaped by the geographical realities within which workers find themselves, and that the choices they make concerning which types of strategy to pursue can have significant implications for the ways in which the geography of global capitalism is made (Herod 2002: 83-84).

For Herod, the question of whether unions should “go global” or “stay local” are

important strategic decisions that need to be made in light of the particular situation. He

uses two cases to contrast this choice, one where a United Steelworkers local “went

global” by developing an international campaign against the financier who had forced a

local employer (Ravenswood Aluminum) to lock-out its employees, and another where

the United Autoworkers “stayed local” by waging a successful strike against a plant

which was of critical and strategic importance within Ford’s internal international supply

chain.

This review of the literature provides several lenses through which the particular

situation facing the Ekati diamond workers can be viewed. Some analyses suggest that

unions need to “go global” to respond to the power of transnationals. Others suggest the

importance of union capacity. Still others argue the importance of national factors, and

Herod argues the need to apply a geographical analysis alongside political economy and

Page 11

industrial relations analyses. Before analyzing the case against this literature, key

background information will be presented in the following section.

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Geological formations containing diamonds, known as kimberlite, were first discovered

at Lac de Gras in the Northwest Territories in the late 1980s by two Canadian geologists,

Charles Fipke and Stuart Blusson, who each now own a 10 per cent share in the Ekati

diamond mine. They partnered with the Australian mining company BHP to undertake

exploration and develop a proposal to mine the diamonds. Given the location in the

Northwest Territories, the “NWT Diamond Project” as it was then known, was subject to

the Canadian Environmental Assessment Act. In 1994, the federal Minister of Indian

Affairs and Northern Development referred the project to the most strenuous review

provided for under that Act, a “Panel Review Process,” in large part as a result of the

projects’ location within a traditional hunting area of unresolved land claims of the

Dene/Akaitcho (Treaty 8) and Dogrib (Treaty 11) peoples. The Panel was comprised of

four people with expertise in northern, aboriginal, geological and environmental issues.3

The Environmental Assessment Panel began reviewing the project in 1995, and

held public hearings in 18 communities in early 1996, receiving a total of some 75

written submissions from government departments, aboriginal communities, local

business associations, and environmental groups based in both northern and southern

Canada. Reporting in June 1996, the Panel concluded overall that the “environmental

effects of the Project are largely predictable and mitigatable” (CEARP 1996: 1), and went

on to make a total of 29 recommendations dealing with aboriginal rights, traditional

knowledge, mine site security, air and water quality, and employment and socio-

economic issues. The broad scope of the reports’ recommendations reflects the broad

definition of “environment” under the federal environmental assessment process (Yap

2003). Among the recommendations was a suggestion that the government move quickly

Page 12

to resolve land claims. Forcing a resolution to land claims was beyond the scope of the

panel, since the lands of the Project were no longer available for ‘selection’ under land

claims agreements by the bands “because the Project is at a stage of advanced

exploration” (CEARP 1996: 13).

Final approval of the project was subject to further negotiations with the territorial

government and final approval by the federal cabinet, accomplished later in 1996. The

Panel’s recommendations were followed in the approval, and thus the go-ahead on the

project was subject to certain conditions, of which two were particularly critical: (1) that

BHP would negotiate “Impact-Benefit Agreements” with each of the neighboring

aboriginal communities, and (2) that BHP fund an Independent Environmental

Monitoring Agency (IEMA) to oversee the project on an ongoing basis.

In all, BHP negotiated four Impact-Benefit Agreements with the Dene, the

Dogrib, the Métis Nation (NWT) and the Kitikmeot Inuit Association. The IBAs are

privately-negotiated contracts not subject to public review (and therefore not available to

the union), but assessments of these documents report that they provide for preferential

employment treatment for aboriginals, community-based recruitment, training and

support programs, preferential contracting treatment with aboriginal businesses, and

funding arrangements whereby the company provides the communities with money to

mitigate any negative impacts on hunting and fishing as a result of the mine operation.

(Cleghorn 1999; NTREE 2000; Keenan, de Echave and Traynor 2003). Some of these

same points were also reflected in a Socio-Economic Agreement signed with the GNWT

(NTREE 2000).

The IEMA has representatives from each of the four communities, in addition to

three other board members, a staff, and a budget of some $600,000 a year. In addition to

issuing an annual monitoring report with recommendations to improve the environmental

operation of the mine, the IEMA acts to facilitate aboriginal and public involvement in

overseeing the mine (Keenan, de Echave and Traynor 2003; IEMA 2005). New

Page 13

construction projects at the mine also still remain subject to environmental assessment,

which is now handled by the Mackenzie Valley Environmental Impact Review Board,

who in a recent report expressed concerns about “the GNWT’s ability to diversify its

economy in order to avoid a boom-bust cycle” as a result of the expansion of the diamond

mine (MVEIRB 2001: 1).

Following construction, the mine actually opened in October 1998, with some 800

people employed directly by the mining company, of which some 60 per cent are

northerners, of which half are aboriginal, just short of the target of 31 per cent. The bulk

of the operation involves open pit mining using huge machines and trucks capable of

carrying up to 240 tons of ore. The ore processing plant is capable of processing some

12,000 tons a day, from which some 15,000 carats of rough cut diamonds are produced.

Although this is just “enough to fill a small coffee can,” (MacDonald 2004), daily

production is worth upwards of $2 million. At this rate, it is expected that all the

diamonds at Ekati will be mined out within a period of 10-15 years.

With the exception of mid-winter accessibility via an ice road, all travel to the site

is by air. Employees flying in and out of the site for their two-week shifts are provided

with free air transportation between the site and more than fifteen communities across the

NWT as a condition of employment.

In addition to BHPB’s own employees, some 600 contract employees work at the

site. Underground mining is contracted out to a separate company, Pro-Con, whose

employees are covered by a ten-year labour contract negotiated by the Christian Labour

Association of Canada (CLAC). Many other services such as food and accommodation

services, equipment maintenance, and even in-site haulage are also contracted out to

separate (mostly non-unionized) employers.

Shortly after Ekati opened, the Australian BHP merged with the British based

Billiton to form BHP Billiton Ltd (BHPB), which is a now a single corporation with

36,000 employees in 25 countries, and more than 100 mining and resource production

Page 14

operations involving aluminum, coal, uranium, copper, diamonds and more than a dozen

other products. The company’s overall capitalization in 2005 was US$82 billion. On total

revenues of US$31 billion, in 2004-5 the company earned its shareholders, primarily

Australian and UK based, profits of more than US$6 billion (BHPB 2005).

The discovery of diamonds at Ekati set off a wave of exploration across Canada,

resulting in many other kimberlite finds. In 2003 a second mine entered production near

the Ekati site, the Diavik mine, owned 60 per cent by the multinational mining company

Rio Tinto and 40% by a Canadian company. Three other mines have been approved and

are under construction. Two of these are owned and operated by DeBeers: the Snap Lake

mine in the NWT (220 km northeast of Yellowknife) and the Victor Project near

Attawapiskat in northern Ontario. DeBeers is the dominant player in the international

diamond industry, having controlled between 70 and 80 per cent of the world trade in

diamonds for the last twenty years, although their share has dipped below 50 per cent as

new producers, including Ekati and Diavik, have come on line and developed

independent marketing arms. The fifth mine is a Canadian owned venture, the Jericho

project in Nunavut. At least eight other projects are in an advanced exploration stage,

from the NWT to Quebec, most of them being developed by the transnationals (Law-

West 2004).

In other words, diamond mining is becoming big business across the north. Ekati

is now the largest private sector employer in the territories, and the growth in

employment in the diamond mines knocked the NWT’s unemployment rate down by 3

per cent. Aboriginal employment in the mines has expanded so much that it is predicted

that by the time DeBeers’ Snap Lake comes on stream they won’t be able to meet their

aboriginal hiring goals due to shortages of trained workers.

With just two mines in full production, Canada has already become the world’s

third largest producer of rough-cut diamonds, second only to Botswana and Russia.

Canadian production is nearing 10 million carats per year, and in 2003 exports totaled

Page 15

nearly $1.4 billion. But mining represents one of the smallest portions of the total value

in the diamond industry. Worldwide production of rough-cut diamonds of around US$9

billion a year becomes worth US$60 billion by the time the stones hit retail stores as

diamond jewellery. Nearly half the world’s retail sales are in the USA (GNWT 2004). So

who does the cutting and polishing work? Mostly not the producers of rough-cut

diamonds. More than half the work (measured in dollars) goes to India, where some

700,000 diamond cutters and polishers are employed, primarily to work on the smaller

and less lucrative stones. Larger carat diamonds go to more specialized polishers in

places like Belgium, Israel and New York, though Russia and Armenia also have

significant cutting and polishing industries. Just 4 per cent of the work in cutting and

polishing is done in South Africa, which is an interesting commentary on world trade

patterns given that Botswana, Angola, South Africa, the Congo and Namibia, plus a

handful of other African countries, account for 68 per cent of rough-cut diamond

production.

Recognizing that mining alone would also leave Canada out of the more

significant value-added parts of the industry, in 1998 the federal and territorial

governments set up a task force to look into developing a cutting and polishing industry

here. While recognizing the huge potential, the committee’s report was blunt about the

scope for government action: “The GATT and the NAFTA prohibit restrictions on the

export of unprocessed materials for the purpose of promoting further processing of

natural resources” (Federal-Territorial Committee 1998: xviii). This means that the

government role in encouraging the creation of a value-added industry is primarily

restricted to promotional activities, something the GNWT has taken on with zeal. The

government has started to certify 100% Canadian diamonds under their trademarked

name, “Canadian Arctic Diamonds” and markets them as ‘clean’ diamonds, telling

customers that “you can be certain that (your diamond) was mined responsibly…the

companies that mine diamonds in the Northwest Territories must observe strong

Page 16

Canadian laws that protect the Arctic environment and the mine workers.” (GNWT

2005). With support of BHPB, the community college is now training cutters and

polishers, and four small companies now employ some 100 workers. Nevertheless,

Canada’s share of the cutting and polishing work remains miniscule in comparison to the

total value of its exported diamonds.

**

Initially, BHP employees at Ekati formed an independent employee association which

achieved certification under the Canada Labour Code, the legislation which governs

industrial relations under federal jurisdiction, including territorial employment. But after

a tentative settlement was rejected by the members, leaders of the Employees Association

(BHPEA) decided to seek affiliation with a larger union. How they came to choose the

PSAC as their union of choice, and why the PSAC agreed to take on the unit, is the

subject of the remaining parts of this background section.

The Public Service Alliance of Canada (PSAC) was created in 1967 when the

federal government passed the Public Service Staff Relations Act (PSSRA), which

extended collective bargaining rights to the federal public service for the first time.

Almost overnight the PSAC became one of Canada’s larger unions, formed by an alliance

of civil service associations that had advocated for departmental employees prior to

passage of the Act. For many years, the PSAC remained rooted in its civil service

association traditions, and more often than not selected the path of binding arbitration

provided in the PSSRA as the means for resolving disputes in collective bargaining.

However, with expansion of the public service, feminization of the workforce, growing

frustration with the bargaining process, and a new generation of leaders, the PSAC

transformed itself into a more activist union, began to select the strike/conciliation route

in the PSSRA to resolve disputes, and by 1991 was able to wage its first general national

strike of its federal government members (Warskett 1998).

Page 17

The 1991 strike was ended quickly by Brian Mulroney’s conservative

government, with a legislatively-imposed settlement that froze wages in the first year of a

contract, and limited increases in a second year to 3 per cent, then well below the rate of

inflation. In 1993, Jean Chrétien’s Liberals were elected, but their promise to forge a

better relationship with angry civil service workers was soon forgotten. With Paul Martin

as finance minister, the Liberals imposed a further four years of wage freezes on the

federal unions and undertook a massive restructuring of the federal public service to cut

costs, balance the budget and increase efficiencies (Swimmer 2001). In the process, the

PSAC’s membership dropped from 180,000 in the early 1990s to less than 140,000 by the

time collective bargaining recommenced in 1997, forcing the union to cut its own staff.

At the same time, thousands of employees were carved out of the core public service and

made employees of special operating agencies, such as museums, airport and port

authorities, or separate government employers for food inspection, tax collection,

statistics, and national parks. The PSAC ‘followed’ most these members using successor

rights provisions in legislation, so that even as the membership and union staff was

shrinking, the number of bargaining units was expanding significantly, from a few dozen

in the 1980s to almost 200 by the end of the 1990s.

Beyond following its members, the union began to make a number of adjustments

to respond to the new reality of federal government policy. First, it began a process of

regionalizing political decision making and services so as to better serve its membership.

Second, it developed its mobilization structures and increased membership participation

in the bargaining process. Third, it began to make a major investment in organizing,

hiring full-time staff dedicated to organizing new bargaining units in each of its seven

regions. Finally, it began to regularly challenge privatization efforts, play a larger role in

Public Services International (the International Trade Secretariat for public service

unions), and in 2003 initiated creation of a Social Justice Fund to support international

solidarity work.

Page 18

In Canada’s northern territories, the federal government has always been a big

employer, and still remains so today. But just as the federal government was restructuring

in the south, it was also doing so up north, devolving services and employees to the

territorial governments, who in turn were devolving services to local hamlet governments

and housing associations in dozens of communities. Thus in addition to federal

employees, the PSAC now represents workers in the three territorial governments, the

three northern energy corporations, and more than 80 other separate bargaining units, of

which most are quite small in size (less than 25 employees each). In all, the PSAC

represents approximately 1 out of every 4 employed workers across the three territories.

The dominant role of PSAC in the North helps explain the choice made by the

BHPEA and its members, who in 2004 agreed to become the PSAC Diamond Workers

Local 3050. In making this choice, the Ekati workers selected local presence and

northern experience over other options they might have chosen, such as a union with

mining experience and an international presence. By joining the PSAC, the Ekati workers

got access to the education and mobilization services of PSAC North and its NWT

component, the Union of Northern Workers. It also got access to legal, negotiation and

research services based in Ottawa. As the Local president explained to the members in an

open letter: Our decision to choose the PSAC as our Bargaining Agent is based on our desire for a fair, healthy and democratic workplace that values workers’ rights and improves the quality of life for everyone. This workplace will put the interest of workers first and foremost with “good jobs” that have security, decent pay, good benefits, training, advancement and bargaining power. Only by unionizing can employees ensure that Multi National Corporations are accountable for their actions. 4

For PSAC, organizing the mine can be seen as part of a strategy to diversify the

union and rebuild the labour movement by organizing the unorganized. Compared to

many organizing efforts, Ekati was also a chance to recruit a large group of members in a

single bargaining unit, and an opportunity to get in on the ground floor in an expanding

industry. Indeed, the union has also sought to establish connections at the Diavik mine,

Page 19

and has plans to extend the diamond mine organizing effort as new mines come on

stream. Also, diamond miners are relatively highly paid union members compared to say

airport scanners, building security guards, military base cleaners, and parking-lot

attendants (other recent organizing targets).

That being said, the going has been tough. The PSAC’s lawyers had to use the

provisions of the Canada Labour Code to force the employer to allow the union access to

the work site – which remains accessible to union representatives only via charter flights.

The union also sought to intervene around a long-standing dispute about a “site

allowance” which employees thought represented a premium for working in an isolated

location, but which the employer was using in its calculations as compensation for

regularly scheduled overtime worked as a result of the two-week in, 12-hours per day

shift schedule.5 After representations to the labour board and review by the PSAC’s

lawyers, the employer’s calculations prevailed, a blow to local organizers who had hoped

the issue might generate substantial back pay for the Ekati miners.

The PSAC collective bargaining process began in February of 2005 with the

tabling of union proposals for a first collective agreement (PSAC 2005). Key issues

include health and safety, contracting out, severance pay upon closure of the mine, and

pay inequalities between workers doing the same job, particularly between white and

aboriginal employees. Bargaining continued intermittently during the year, and with a

lack of satisfactory employer response to the union’s proposals, the PSAC filed for

conciliation in October 2005. The next steps involve further bargaining with the help of a

federally-appointed conciliation officer, who has up to 60 days to try and bring about a

negotiated settlement. If that cannot be accomplished, then shortly thereafter the union

will be in a strike position (provided the employees vote in favour of a strike under the

provisions of the Canada Labour Code), or the employer will be in a position to lock-out

its employees. The future remains very much in play.

Page 20

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At one level, the case of BHP Billiton’s Ekati Diamond Mine is an unlikely case study

for a discussion of globalization. The company cannot move production to the

maquiladora region of Mexico. Ekati is not located in a special trade zone immune from

Canadian labour, trade and safety laws. The mine is located where the kimberlite deposits

exist, and when all of the (economically-viable) diamonds are gone, the mine will close

and the miners will leave the area, just as fur-traders left the region when most of the

beavers were taken out nearly 200 years ago. In other words, there are arguments that the

case might be better viewed through a lens of union organizing and community

development in resource-dependent industries.

And yet at another level, the mine has been developed at a time when the neo-

liberal form of globalization is the dominant development model, and this is evident in

several aspects of the project, and with the way in which the entire diamond mine

industry in Canada has expanded. Although both BHP and Billiton had long histories as

resource development companies going back to the late 1800s, their merger into a huge

transnational corporation with investments in more than 25 countries took place in an

environment of freer trade, freer capital movements and a freer climate for investment. In

Canada, the Foreign Investment Review Agency was long gone by the time BHP joined

in on the project. Most of the diamond mine developments and explorations are

dominated by large transnationals such as BHPB, Rio Tinto and DeBeers.

The expansion of Canadian mining of diamonds is also taking place within a clear

international division of labour, where the dominant pattern is that mining takes place

primarily in Africa (with Russia and Canada coming in way behind), cutting and

polishing takes place in India, and setting of diamonds into jewellery and retailing take

place primarily in the USA and Europe. As much as they would like to see cutting and

polishing take place in Canada, the federal government constrained its ability to develop

Page 21

a value-added industry in Canada when it signed the GATT and NAFTA. Thus the role of

the state in developing these aspects of the industry is limited to a role of cheerleader and

promoter of “100% Canadian” diamonds.

Furthermore, Ekati and the other Canadian diamond mines are being developed in

economically depressed and dependent regions of the country, for the most part in areas

with unresolved aboriginal land claims, and therefore in areas with vulnerable

populations. This fact conditions the response of the governments and communities, and

shifts considerable power to the transnationals. Despite the fact the diamonds remain

rooted in the Canadian Shield, the TNCs still negotiate from a position of significant

strength, not fundamentally unlike the dynamic which exists when they seek to enter the

maquiladoras and free trade zones of the world.

In this context, “resistance” to globalization has not taken the form of a broad

public debate about what the aboriginal communities, and Canadians, might want to do

with this newly discovered resource, or about fundamentally different models for

development, or about rejecting development of the mine altogether. It’s more a matter of

negotiating over the dividing up the benefits between (1) the international investors who

are shareholders of BHP Billiton, (2) Canadians generally (via royalties for the mineral

rights on crown land and corporate taxes on BHPB), (3) the local communities, and (4)

the employees of the mine. This is not simply a question of division of revenues and

profits, but extends to other issues that factor into the cost of operating the mine, such as

what provisions are made to ensure the health and safety of the miners, what conditions

are placed on the reclamation and restoration of the land once the pits are mined out, and

what investments are made to aid long-term development in the region, and reduce the

inevitable boom-bust dynamic inherent in a mining operation that will only last about

half a generation.

In that regard, there is little doubt that some important gains have been made

during the negotiations for the establishment of the Ekati mine. As noted above, the

Page 22

Impact-Benefit Agreements and the Socio-Economic Agreement with the GNWT have

resulted in high levels of aboriginal (30 percent) hiring, as well as northern hiring in

general, programs of community based recruitment, free transportation to and from

several aboriginal and northern communities, staff training, and business opportunities

for northerners and aboriginals. Although the IBAs have been criticized for being

privately negotiated, confidential documents, with weak systems for monitoring

(Cleghorn 1999), they have at the same time received positive attention from around the

world as a means for leveraging aboriginal participation in resource development projects

(NTREE 2000, Kwiatkowski and Ooi 2003, Keenan, de Echave and Traynor 2003). The

Independent Environmental Monitoring Agency has also received praise as an ongoing

forum for public scrutiny into the environmental aspects of the mine’s operations and

impacts. In fact, the IEMA’s staff manager (Kevin O’Reilley) is the former research

director of the Canadian Arctic Resources Committee (CARC), one of the environmental

groups that participated in the Environmental Assessment Review process. CARC is also

a member organization of the Canadian group MiningWatch Canada, a coalition of

environmental, aboriginal, church, international development and labour organizations

that keeps a watch on mining activities in Canada (IEMA 2005; MiningWatch Canada

2005).

BHPB likes to promote itself as a good corporate citizen, and their Canadian web

site (ekati.bhpbilliton.com) certainly promotes their role in negotiating the IBAs and

funding the IEMA. The site also contains references to dozens of awards won by the

company, including several health and safety awards, a Canadian government award for

job creation awarded by the federal Department of Foreign Affairs and International

Trade (DFAIT), and being named five years in a row as one of “Canada’s Top 100

Employers” (Yerema 2005). BHPB has actively participated in the branding of Canadian

processed diamonds and promotes the fact they “divert” 10 per cent of their production to

Canadian cutters and polishers. The GNWT’s promotional materials celebrate the

Page 23

contribution of the company to economic development in the territory (GNWT 2004;

GNWT 2005).

Attributing this to good corporate citizenship would be a mistake, however.

Internationally, BHPB operations have attracted lots of negative attention from

environmental and development groups. The British-based group Mines and

Communities, working in collaboration with social movement groups around the world,

maintains an internet-database on articles on mining companies. Their web site includes a

large file of more than 120 references to BHP Billiton, drawing attention to cases such as

the Ok Tedi mine in Papua New Guinea, where indigenous communities have been

engaged in a fifteen year battle to win compensation for environmental damage from a

mine operated by BHPB (Mines and Communities 2005, Kirsch 2002). In Australia, BHP

has bypassed collective bargaining by forcing new hires onto individual employment

contracts known as “Australian Work Arrangements” (AWAs), a system introduced by

the Australian government to allow for greater workplace flexibility (Maher 2003). In

Peru, local groups concerned about the environmental and development impacts of a

BHPB copper mine weren’t able to engage the company in discussions about standards

and commitments for improved operation until attention was drawn to the situation by an

international network of organizations including the Canadian Environmental Law

Association (CELA), the Peruvian non-governmental group CooperAcción and the US

and Australian arms of Oxfam (Keenan, de Echave and Traynor 2003). The Canadian

group MiningWatch Canada, also maintains an internet file on BHP Billiton, citing their

2003 award as a “Dirty Digger” and exposing their participation in environmentally

destructive forestry practices in Indonesia (MiningWatch 2005).

If Canada in general, and the aboriginal communities of the NWT in particular,

have achieved a somewhat bigger share of the benefits from the Ekati project, and are

bearing a lower share of the costs than is the case in other situations where BHPB

operates, credit for this must go to the way to processes set in motion by the Canadian

Page 24

Environmental Assessment Act and the requirements for government approval of the

project. Aboriginal groups were able to use outstanding land claims to raise the stakes

around project approval, and led to the project’s referral to a full Panel Review under the

CEAA, as opposed to the less onerous and public options (“screening” and

“comprehensive study”) provided for under the Act. The aboriginal communities and

environmental groups then used the Panel Review process to place key demands about

northern development, aboriginal cultural concerns and environmental protection on the

agenda. The conditions placed on the project by the Environmental Assessment Review

Panel, notably the requirement that the company negotiate Impact-Benefit Agreements

and fund an Independent Environmental Monitoring Agency, were key conditions that

led to a better balancing of interests than might have otherwise been the case. To be fair,

this was not a matter of conditions being forced upon the company: early on they seemed

to have ‘got with the program’ and actively put forward solutions. In fact, the creation of

the IEMA was sought by both the company and the aboriginal communities (CEARP

1996). The conditions placed upon the project thus emerged from the interactions

between the company, the state, aboriginal communities, and environmental

organizations, in the context of the existence of the CEAA and the fact the project was

subject to federal and territorial government approval.

What then of the effort of Local 3050 and the PSAC to achieve a collective

agreement with BHPB?

As with the mine approval and monitoring process, the importance of the state to

managing relations is an important factor. The applicable legislation, the Canada Labour

Code (Part I), gives unions rights to organize, prohibits the employer from interfering in

the formation of a union, was used by the union to gain access the site and meet with

employees, and imposes on the company a duty to bargain with the union in good faith.

These rights exist to a greater extent than in many other countries, including BHPB’s

“home” countries of Australia and the UK. The Code also provides the union the

Page 25

opportunity to apply for conciliation and move the process forward if they feel the

company is not making sufficient effort to achieve a collective agreement, a step that the

union has taken and one which will undoubtedly put pressure on the company. The

existence of the Canada Labour Code (Part II) is also germane to the situation, as it

governs health and safety issues, mandating the establishment of joint committees, and

providing workers with important rights to address health and safety concerns outside the

processes of collective bargaining and grievances.

That being said, the Code also reflects a view of labour-management relations

which legalizes the strike or lock-out of employees, under certain prescribed conditions,

as the ultimate tool for resolving disputes. And by no means is the Code is tipped towards

worker’s rights; for example, there are no prohibitions on the use of replacement workers.

These assumptions about how labour-management disputes are resolved poses unique

challenges in the situation at Ekati. Herod’s discussion of the importance of

understanding the geography of capitalism is very useful here. In the event a satisfactory

agreement is not reached through negotiation and conciliation, the union’s next step is a

strike. Yet how does one wage a strike when the work site is located out in the tundra 300

km from the nearest road, accessible only by company chartered air service? Where do

the picket lines go? What happens to the workers on-site who are 100 per cent dependent

on company-supplied services? This is not just a matter of the geography of the

employer’s work site, but the geographical distribution of the members. If a strike is

waged by picketing the employer’s offices in Yellowknife and Vancouver, how does the

union bring all these employees together and house and feed them, given that they live

scattered across more than 15 northern communities, and probably an equal number of

southern ones?

A case such as this clearly reinforces the importance of on-the-ground union

building of the type discussed in section one and in the literature of Bronfenbrenner et. al.

(1998), Fletcher and Hurd (1998; 2000), Sciachittano (2000) and Rooks (2003). Clearly,

Page 26

it will take “more than just house calls” to forge a strong union local. The capacity of the

union to identify and nurture leaders from within the membership, to maintain

communication with the members, to mobilize the workers around bargaining objectives

which are both realistic and reasonable, but worth fighting for, are obviously key factors

in a case such as this. As Clark (2000) said in one of the quotes used to open this essay, if

the local membership sees the union as a service akin to a legal firm or insurance

company, then it will be hard to build an effective union. If membership support is weak,

the logistical difficulties of waging a strike in a situation such as this are likely to be

overshadowed by the internal political challenges facing the union in maintaining

solidarity.

The challenge of maintaining solidarity in the event of a strike is heightened by

the short-term nature of the project, the geographical dispersion of the workforce, and the

potential for splits in collective identity between southern and northern workers, and

between aboriginal and other employees. This is perhaps exacerbated by the existence of

the close working relationships between the company, the government, and community

leaders as a result of the negotiation of the IBAs and the ongoing consultation processes

through the IEMA. In the event of a strike or lockout, the employer would have very

strong communication channels through which its position and interests could be

articulated. This would strengthen their ability to forge a commonality of interests

between the company’s position, the needs of the communities, and those employees who

are both workers and members of these communities.

Thus beyond the challenge of building collective identity in the local, the union

faces the task of developing a bargaining agenda (and if needed a strike strategy) which

situates the worker’s interests within the broader interests of the community and supports

the Local in developing those community ties to achieve this. The Local is in the best

position to determine these demands, but those focusing on wage equality, education and

training, severance pay, and employee voice in decision-making might be most likely to

Page 27

achieve both worker and community support. If BHP Billiton is not all that vulnerable to

the physical effects of a picket line, given the geography of the mine and the lack of

interdependence with other parts of its operations overseas, it is vulnerable to a public

campaign that would challenge its image as a flagship diamond miner, a “Top 100

Employer,” a good corporate citizen, and a producer of ‘clean’ diamonds. The unions’

ability to work with the aboriginal communities, community groups and environmental

organizations, in forging a united front behind its bargaining demands could therefore

become the critical factor in determining success in the negotiations process. Such a

campaign would need to be primarily regional (NWT) and national (Canada) in nature.

In such a context, it is difficult to see how the strategy of developing “global

unions” has much to offer workers in this particular case. The ability to build on-the-

ground structures and to work within regional and national networks of other social

movement and community groups, and government officials, has been shown to be the

likely indicators of success in the negotiation process. From that point of view, the PSAC

as a union that has invested significantly in mobilization and membership education and

has a very strong regional and national presence, is much more ideally placed to achieve

success than a union which also happened to include BHPB employees elsewhere in the

world. Certainly it will be important in the negotiations and mobilization process to have

an international overview of BHPB’s performance and record. From that point of view

cross-border networking for the purposes of research and information sharing has been

and is likely to continue to be an important component of the union’s strategy. This

requires a union with global awareness, but not necessarily a global union.

One case cannot prove a theory, but there is much about this story that reinforces

the analysis put forward by Frege and Kelly (2004) discussed in the first section. In

respect of aboriginal rights, environmental accords, and basic labour rights, the Ekati

Diamond Mine case certainly illustrates the importance of national government policies

in determining the outcomes for communities and workers, and suggests that interactions

Page 28

between the state and employers and unions should remain as a key loci of struggle and

contestation for unions and social movements seeking to maintain these rights. The case

also reinforces Herod’s views on understanding both the geography of capital and the

geography of labour as a critical element of analysis and strategy-building, alongside the

more traditional tools of political economy and industrial relations analyses.

Page 29

���������

1 Quote from the web site Brainy Quotes <www.brainyquote.com/quotes/quotes/w/ williampet200160.html>. Background on Petty from the Thoemmes Continuum Dictionary of Seventeenth-Century British Philosophers at <www.thoemmes.com/dictionaries/petty.htm>. (Both sites accessed 11 October 2005).

2 Cornell University School of Industrial Relations, Conference Program for the Global Companies, Global Unions Conference, 9-11 February 2006, New York City, available at: <www.ilr.cornell.edu/globalunionsconference> (accessed 5 October 2005).� 1 I work as the Senior Research Officer in the Negotiations section of the PSAC, but from January 2004-April 2005 (during which this unit was organized and negotiations began) I was Acting Coordinator of Negotiations. Nevertheless, the views and analysis in this essay do not necessarily represent those of the PSAC; they remain those of the author. 2 Quote from Anton Chekhov found at <www.dailycelebrations.com/012905.htm> (accessed 26 November 2005). 3 Unless more precisely specified, the sources for this section include CEARP 1996, NTREE 2000, Kwiatkowski and Ooi 2003, Keenan, de Echave and Traynor 2003, Law-West 2004, MacDonald 2004, NWT 2004 and BHP 2005. 4 Open letter from Robert Beaulieu, President of Local 3050, 2004, published on-line at <www.diamondworkers.com/profiles.html> (accessed 26 November 2005). 5 Federal labour standards legislation obliges employers to pay premium pay rates for work in excess of 40 hours per week, or in the case of employers who have received a permit to implement averaging systems, for work in excess of an average of 40 hours per week.

Page 30

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