• authored by Members for Democracy

History of Company Warehouses

A Study in Broken Promises and Broken Lives

For those of you that have been following the Loman story there may be some confusion about why this is happening and who stands to gain. Certainly store managers have seen the deterioration of servicing impact their ability keep customers happy. What was once a very tight organization is now fragmented and reeling from decisions made since the departure of OFG President Clarence Heppell. What followed is the legacy of an organization that "blinked", that chose to ignore its considerable investment in "human capital" in favor of an anti-union "race to the bottom" mentality. In its wake are the broken promises and lives of those who helped build the company.

Human capital is a slippery creature for one very simple reason: it is difficult to measure. There are no columns for accountants to enter the positive effects of trust, cooperation, or employee empowerment. How does one measure people skills? A smile given to a customer, an employee who remembers a customers name and what they talked about last time they met, product knowledge, going the extra step, being able to slip seamlessly into any number of jobs using a variety of equipment, being happy in your work - how do you measure these things? The OFG answer seems to be that if you cannot measure them they do not exist and are irrelevant.

Current corporate rhetoric talks a lot about the pursuit of "worker flexibility" and under this guise just about any tactic to weaken worker rights and pay is justifiable. But what is this so called "worker flexibility"?

As Roger Hayter of the Dept. of Geography, SFU, wrote in a 1997 study published in the Canadian Geographer wrote, "... there is no agreement as to what constitutes an appropriate definition of flexible production, technology, and ultimately, employment. Within the context of the unionized mass production industries in North America, for example, Marshall and Tucker (1992) distinguish between a 'neo-Taylorist model' and a 'high-performance model'. The former extends Taylorist principles of scientific management and emphasizes rationalization or cost cutting by simplifying worker tasks through automation and restricting worker control over production processes. In this model, low wages are a competitive advantage, and employment flexibility is achieved by the autonomy of managerial discretion over hiring and firing, work processes, training, and possibly by multitasking of simple tasks - but not multi-skilling. In contrast the high-performance model draws explicitly on Streecks (1989) notion of 'diversified quality production', which stresses the cause-and-effect relationships between high wages, job security, productivity, and innovation. In this model, high wages and job security stimulate, and are made possible by, a highly skilled workforce committed to high quality, as well as efficient production."

What we have seen since Mr. Heppells' departure is the movement to and adoption of the "employee as a robot under the boot heel of the manager model" and away from the high performance and innovation that made this company unique and successful. Loman Warehousing serves as an interesting example for a couple of reasons. There is ample reason to question if there ever will be any savings associated with the breakup of the warehouse and this already must be the most expensive decision in OFG history. Secondly, it speaks to a corporate culture that ignores the promises it made in a most underhanded and ethically repugnant way.

Some History

Way back in 1985, when the union was the Retail Clerks Union, there was some language introduced as Memorandum "A" and "C". A copy outlining the "terms as negotiated", dated Jan. 9, 1985, from then President Bryan Denton stated, "The Company agrees that there will be no reduction of the workforce in the warehouse due to contracting out of any of the work presently being performed by members of that bargaining unit." However, in the finalized copy signed by Jack Allard in August of 1985, the language has changed to this, "Employees hired before January 1st, 1984, will not be reduced to part-time except by mutual agreement between the company and the union." In addition there was a clause that stated, "Overwaitea will do its utmost to maintain all remaining operations, providing they are economically viable." This was the language used and it appeared as MOU "F" in the 85-87 collective agreement.

In the 87-91 collective agreement, the reduction of pre-84 employees clause is at Section 6,c. The language regarding economic viability moved to Section 12, e. It was followed by a new 12,f, which stated, "If the Employer's warehouse operation should move, all employees covered by this Agreement shall be transferred to the new warehouse without loss of seniority. No employee shall be terminated because of such a move."

The Loman Years

All of these three sections remain in the Loman Collective Agreement as 6c, 12 e & f. One begins to see the real sellout that occurred as section 6c and 12 f now refers to Loman as the Employer. Predictably, the security and intent behind these clauses was gone at that point and our present crisis reflects what should have been obvious to Brooke Sundin at the time of signing. Why did Brooke not cover this issue? Certainly at that time we had the power to vary these clauses to reflect the same security as was originally intended. The 777 agreement was a sell out of members generally. Brookes' failure to deal with this clause, something that would be obvious to any rookie negotiator, was a sell out of the Loman members specifically.

But the economic viability clause remained and one might fairly conclude that as long as we continued to demonstrate excellence some measure of security may be had there. Enter the strange world of Loman management. Suffice it to say that just about every way to get labour costs up has been applied by this management and by OFG. This has been detailed elsewhere. The union sat silently on the sidelines reveling in the "more work (dues) for our junior members" rhetoric, as if something positive had been achieved.

The management had continued to document the efficiencies they created and it began to read like a rap sheet for a troublesome and lazy workforce. Finally I could take the union's silence no longer and in September of 2000, wrote a letter to the man in charge, Peter Schmitz, a former Axis Logistics manager. I met with Peter, and our Chief Shop Steward Gord Carter to discuss this letter. Peter said he "... disagreed with a number of statements in the letter." When I asked what they were exactly, he refused to comment further. I began to gather signatures in support of this letter but the union advised that the "timing was not right." I had worked with these guys for a long time and I trusted in them. Nothing changed and I grew impatient with the union's continued failure to address in any way the issues I brought forward. I then wrote a letter to the membership in June of 2001 and began soliciting signatures regardless of the unions' position on that. They actively campaigned against signing but I was able to gather a good number of signatures anyway. The members recognized the truth of it and they also began harboring suspicions about a union that seemed bent on keeping the issues silent.

If you have been following the UFCW "Econo-Fight" (AKA Two Shirts and a Hat Campaign) you will know that this has not changed.

If we leave aside for a moment the sell out of the Loman members by the UFCW, the questions remain. Was abandoning the investment in human capital given the success and uniqueness it brought to the business necessary or wise? Just because RCS, a no service model, had some wage concessions should OFG also go this route? In a business as lucrative as this, appealing to a more up-scale demographic with a full-service model, should this change everything? If you know anything about the corporate culture at Head Office you know the answer. The sell out by the UFCW was more than just a moment for OFG to consider the effects. It was for the corporate culture an opportunity to rise up the corporate ladder, to exorcise the business from the greedy overly powerful union members. That they were largely responsible for getting the company this far is neither here nor there to these people.

But I was still confused as to why Pattison would allow the logistics stream to bleed cash like there was no tomorrow for so many years. Trucking costs alone were said to have increased by several million dollars per year. Of course, when you take distribution from under one roof, spread it all over the valley and as far away as Calgary, put it in the hands of inexperienced low-wage employees, you don't have to be a rocket scientist to know costs are going to skyrocket. He could have bought us out a hundred times by now. This was a smart businessman?

The OFG Version of Worker Flexibility

My conclusions were featured on the MFD site under the title Their Crisis, Not Ours. At the time I thought (naively as it turns out) that when push came to shove, the union would be there for us. In that article I wrote;

"It seemed logical to search for a central principle in play. The abandonment of the merits of consolidation seemed to be it. But what explained the hostility towards us from OFG since the departure of Clarence Heppell? That was not a nice thing to come to realize. And what explains the near total failure of our "new employer" to realize improvements with what was so recently considered one of the most efficient distribution labour forces in the business? I had to look for a new central principle at work.

The best common thread I can come up with is this: The name on the paycheque as employer. OFG's strategy has consistently resulted in a name change on the paycheque. Efficiency does not seem to be a factor."

Certainly Brent Louth's "will say statement" seems to back up that conclusion. From that statement comes the long list of name changes on the cheque as follows:

  • 1984 - contracted out the frozen food to BC Ice and Cold Storage.
  • 1989 - BC Ice and Cold Storage becomes Versacold
  • 1990 - contracted out to Versacold for "refrigerated food products".
  • 1990 - contracted out bulk foods to Turner Distribution Systems.
  • 1990 - contracted out to Associated Grocers in Calgary all products destined for southeastern BC.
  • 1991 - contracted out produce to Tom Yee Produce Inc.
  • 1992 - Overwaitea warehouse now called Loman Warehousing Ltd.
  • 1993 - Overwaitea sells Associated Grocers in Calgary to Linkfast.
  • 1993 - contracts out to Turner Distribution Systems the HABA, GM, and tobacco.
  • 1995 - contracts with Axis Logistics for produce, formerly done by Tom Yee Ltd.
  • 1999 - contracts with EV for all perishable products formerly done by Versacold and Axis.
  • 2000 - contracts with EV for non-perishable products formerly done by Turner Distribution
  • 2001 - contracts with EV for goods destined for southeast BC formerly done by Linkfast.
  • 2002 - all work done by Loman to be done by EV?

Yes, there have been more than a few name changes on the paycheque. Here we see the OFG version of the pursuit of worker flexibility - the ability to sell them off or blow them off like changing underwear. Unanswered is how many lives have been turned upside down by this company's willingness to play spin the company. How many workers and their family's thought they had some stable employment only to be tossed aside? For the guys at the warehouse who have been with Jimmy since the 60's and 70's this is a bitter pill to swallow. Having a shell company brought in to send economic viability down the crapper and his treatment of the Loman employees, says more about Jimmy's religious and philanthropic claims than any other story I have ever heard. Some of his longest serving employees help bring the business up from nothing to a dominant market player, create the most efficient distribution center in North America, and all OFG can say is "thanks for getting us this far, now get lost." B.C.'s Very Own Food People? And Proud Of It? Give me a break.

In the wake of this agenda lies a distribution system literally riddled with inefficiencies and hemorrhaging cash. How anyone at OFG could be proud of this accomplishment let alone retain their employment is a mystery to me. If I were Jimmy I think I would have a forensic accountant come in and assess just how much this has cost and what it will continue to cost before I issue the next round of bonus checks and promotions. If you don't like unions Jimmy, why do you continue to be the best example for the need for them?

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