Lockout Costs

With our labor dispute stretching into it’s third month, it is becoming abundantly clear that Scott Banda has given the Co-op Refinery a blank cheque to push his own personal vendetta against unionized workers. How much profit and patronage is Banda willing to throw away to try and exert his control over yet another union? Just how much of the Co-op Retails and their member-owners money has Banda spent on the lockout and when will the FCL Board of Directors reign in the excessive funding?

The Union filed Freedom of Information Requests with the City of Regina on November 13, 2019 & December 23, 2019, for all correspondence between the City of Regina and the Co-op Refinery in regards to the temporary development permit and the housing/building permit that was obtained or in the process of being obtained for the Co-op Refinery site in Regina. In response to our requests, the Union received a total of 21 documents with over 1379 pages of information. These documents, along with other publicly available documents, shine a light on some of the costs associated with the lockout.

land lease costs

For the Co-op Refinery to initially rent the land from the City of Regina is quite a cost in and of itself. Keep in mind, the land in question contains no production units or equipment, produces no money for the Co-op, and in essence is simply a barren field that’s only purpose is to house a scab camp and facilities to prolong a lockout.

The Co-op Refinery is spending $743,832 every single year, to rent roughly 290 acres of land from the City of Regina. This land has no special features or amenities that make it overly appealing except it’s close proximity to the refinery. Paying over $2,500 dollars an acre for an empty field, just to house trailers to facilitate the lock out of its own workers, seems like a exorbitant price with little potential for return on investment.

Administration costs

To build a camp of this magnitude is not without the usual costs of administration. This does not take into consideration additional costs of changing bylaw and zoning to allow the camp to be constructed in the first place.

For people keeping track, this brings the total to $832,072 without a single shovel hitting dirt or any economic benefit to the Co-op system. This won’t include any additional extra costs associated with increased insurance premiums incurred with the massive liabilities associated with attempting to house people inside an operating oil refinery.

Scamp camp costs

Building a scab camp is a massive expense with significant risk just for a contingency plan. If negotiations go well and a fair deal is reached, like every previous contract for the last 77 years, it would be a colossal waste of time, money, and resources. With the Co-op Refinery erecting a camp in 2017, and holding on to the same trailers off-site for the last 2.5 years, it’s not hard to fathom that Banda had no intentions of bargaining in good faith and signing a new collective agreement with Unifor 594 workers.

The next two documents show the Co-op Refinery spent $14,450,000 on a tinder box camp with numerous safety issues to house managers and replacement workers work. At this point the Co-op Refinery has spent $15,282,072 total – JUST ON THE SCAB CAMP- while still trying to maintain the facade of bargaining in “good faith”.

hidden costs

Next, we look at some of the unknown costs – the cost of operating an oil refinery with its 730 highly-trained and competent unionized workers locked outside the facility. The cost to safety, and the extra risks that come with running a fatigued crew, are immeasurable and potentially will never be known until it is far too late.

Just because 730 workers are locked out, doesn’t mean that the Co-op’s manpower costs have decreased. The Refinery is still a 24/7 operation and it takes a significant compliment of employees working every day to keep the Refinery safe and profitable. With less staff inside the plant than normal, that means each employee is working more hours than normal just to keep up. Under the Saskatchewan Employment Act, all hours worked over 44 hours are considered overtime and to be paid at a higher rate. The Co-op’s advertising only mentions unionized worker’s wages, so until the Co-op commits to complete transparency we will never know their true staffing costs during the lockout.

The Co-op Refinery have contracted out at least four private security firms, including hundreds of AFIMAC security guards, intelligence operatives, and media teams solely to prolong the lockout, as well as spy on Unifor 594 members. This cost will likely never be released, but much smaller incidents have ran close to a million dollars a month.

One of the biggest auxiliary expenses for the Co-op Refinery will be the lawyer bills paid to MLT Atkins. Their legal machine is tasked with protecting the Co-op’s legal interests and finding loopholes within the law to prevent legal, peaceful picketing. With hourly rates ranging anywhere from $300-800 per hour, and the myriad of legal issues surrounding the lockout, the soaring costs will undoubtedly be mounting.

Cost of lost production

We’ve heard Scott Banda personally attest that the refinery is running at 90% capacity and that it’s “normal” for this time of year. What he fails to mention is this is not logically possible when there are entire processing units shutdown since the lockout began. Why has he not be held personally accountable for misrepresenting the truth to the public and the Co-op retailer?

When units are not running, it’s a daily monetary loss to the bottom line. Regardless of how much they spend, that roughly 20-30% of lost production will quickly cut into their annual net revenue and the patronage they pay out to member-owners. The units in question were running and operational before the lockout, but with them now shutdown it shows the Co-op admitting they don’t have the people or skills required to operate some of the older units and equipment.

The consequences of lost production won’t be publicly disclosed, but even with a conservative estimate of a 20-30% loss means close to a million per day hit to Co-op’s profits. Over the course of this 80+ day lockout that means in excess of $80,000,000 has been lost already. This doesn’t take into account the fact they are running expensive sweet synthetic crude blends instead of cheaper heavier oils which will further cut into the bottom line.

That brings our total to $95,282,072 of what should be Co-op owners money wasted on one mans personal mission.

helicopter costs

With hundreds of citizens signing a petition to stop the helicopters incessantly flying over Regina it’s obvious that the only concern Scott Banda has is to continue waging his personal war, immune to the concerns of everyone around him. Helicopter rentals from Provincial Helicopters out of Manitoba and Transwest out of Prince Albert vary depending on the size and model used as well as the payload. Generally, they seem to be hauling passengers as well as heavier cargo and freight into the refinery so let’s just use a simplistic, and probably low, rate of $1,000 an hour. Being extremely conservative they could potentially make a round trip in an hour (generally much longer) and do ten in a day (also they tend to do many more). That still means $10,000 dollars a day as a low-ball estimate as to how much they are willing to spend to bypass picket lines. Over the 80+ days, this lockout has gone on this cost is easily approaching or well past the million-dollar mark.

$95,362,072 in damage to the Co-op retailing system so far. Money that should be going back into patronage that Co-op members expect.

What this means for local co-ops

So what does that mean for local Co-ops throughout the FCL retail distributing system? With the energy sector providing 67.7% of total sales and 78.6% of total income since 2012 it becomes abundantly clear how patronage payments are being re-allocated. Why would Scott Banda want to put this arrangement into jeopardy?

Data from publicly disclosed FCL financial statements

Amid the latest closure of the Wolesely Co-op and a smattering of other small town Co-ops being in jeopardy, one must wonder if Scott Bandas’ personal vendetta is worth destroying the legacy the Co-op was initially founded upon? Ongoing legal disputes between FCL for attempting to punish Calgary Co-op for acting in its own best interest or attempting to monopolize a market show just how badly the co-operative spirit has been stripped from FCL. Who will be the next Co-op in the crosshairs that will be deemed not profitable enough? If they are willing to risk millions and the chance to gas an entire city to lockout 730 people that make a fair sum of their profits; what will they do to every small town on their path to “sustainability”.