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RESPONDING TO CHANGE IN THE WORKPLACE:

INNOVATIONS IN LABOR-MANAGEMENT-GOVERNMENT COOPERATION

## Canadian Case Study: 

## Steel Industry Worker Adjustment Program

### 

# CANADA

June 25 -- 26, 2001 Mexico City, Mexico

## APEC Human Resources Development Working Group

## 

## Canadian Case Study:

## Steel Industry Worker Adjustment Program

This case study describes a Canadian steel industry response to
challenges faced by the industry during the 1980s and 1990s. The
Canadian Steel Trade and Employment Congress (CSTEC), working with
labour and management in the steel industry, and with support from the
Canadian federal government, was able to successfully address some of
the challenges brought about by rapid changes in the industry.

## A. Organizational Summary and Program Background

The Canadian Steel Trade and Employment Congress is a joint venture
between Canada's steel producing companies and the United Steelworkers
of America (USWA). For the past fifteen years, they have been providing
a wide range of services to steel industry employers and workers across
Canada---including worker adjustment services that assist workers
affected by layoffs and/or shutdowns of plants, and training services
that address the common training needs of the current workforce in a
wide range of areas.

CSTEC was established after trade and labour adjustment issues in the
early 1980s provided a common focus to unite labour and management in
the steel industry. CSTEC was initially formed in 1986 to promote
research, education, and lobbying on steel sector-related issues.
CSTEC's mandate was expanded in 1988 to provide adjustment services to
workers who were affected by the significant restructuring taking place
at that time in the steel industry.

Through CSTEC, union and management representatives approached the
federal government department of Human Resources Development Canada
(then called Employment and Immigration Canada) and accessed resources
from its Innovations Program, to design and implement an adjustment
initiative for laid-off workers in the steel industry.

To develop its Worker Adjustment Program, CSTEC drew on the experience
of what were considered to be best practices at the time, including
lessons learned from:

-   the Industrial Adjustment Services (IAS) model and other government
    programs such as the Job-Finding Club;

-   the Ontario Labour Adjustment (OLA) service programs;

-   the Toronto Metro Labour Education Centre (MLEC) and its programs;

-   the Centre for Advanced Workers Learning (CAWL) and its job search
    seminars;

-   the United Food and Commercial Workers International Union (UFCW)
    adjustment program.

    CSTEC supplemented these practices with its own innovative approach,
    which was derived from its well-established relationships with both
    management and unions in the steel industry.

    The CSTEC approach included:

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-   joint administration of adjustment projects, which eliminated the
    need for a neutral chairperson and related costs;

-   training of peer counsellors from the steel industry to do needs
    assessments and deliver worker adjustment services;

-   a targeted approach to the delivery of services, providing
    personalized services to each individual to address his or her
    specific needs; and

-   a results-based program that measured success by outcomes, e.g. how
    many people actually found jobs and how quickly they found them.

> The Innovations Program funding and the relationship established with
> HRDC enabled CSTEC, under Section 26 of the Unemployment Insurance Act
> and the National Training Act, to authorise training programs for its
> participants without them having to go through government vocation
> counsellors---which was the normal practice that resulted in
> lengthening the time for approval. CSTEC staff and peer counsellors
> were trained to assist laid-off workers in developing training plans.

## B. Rapid Workplace Change and Challenges

> In the late 1980s, the steel industry faced a significant
> restructuring situation with the loss of nearly one-third of its
> workforce (about 15,000 out of a workforce of 48,000). It had at least
> three options to deal with this situation:

-   to disregard the consequences

-   to deal with the situation separately as individual companies

-   to deal with the situation on an industry-wide basis.

> The industry chose an industry-wide approach. The Canadian Steel Trade
> and Employment Congress, together with Canadian steel companies and
> with the United Steelworkers of America, initiated a unique and
> innovative sector-based worker adjustment program that assisted nearly
> 13,000 steelworkers in nearly 85 basic steel, pipe and tube, and wire
> draw workplaces throughout Canada.
>
> The challenges initially faced by the industry and by CSTEC in
> devising a solution to the changes that were occurring in the industry
> involved the following:

**Getting "buy-in" from the industry stakeholders---**At the workplace
level, neither union nor management was convinced that they should be
involved in adjustment. Both parties considered it a responsibility of
government. In addition, there was no tradition of companies and unions
working together on these issues.

**Getting "buy-in" from various levels of government and
regions---**Local unemployment insurance offices, and government
initiatives such as the Ontario Labour Adjustment (OLA) program and the
Industrial Adjustment Service of HRDC, initially regarded CSTEC as "the
competition".

**Demographic challenge---**The average age of those laid off from the
steel industry was 47, and the average years of service was about 17.
The average years of formal education was Grade 10, and many were
semi-skilled production and clerical workers. Studies have repeatedly
indicated that age and education can be high-risk factors for those
affected by layoffs. Most unemployed steelworkers had neither the skills
nor the tools to re-enter the labour market. In addition, high-risk
participants traditionally do not use government employment centres and
tend to exhaust their benefits before finding a replacement job.

**The Peer Counsellor approach---**The use of peer counsellors in the
delivery of adjustment services ran against the tide. Tradition had it
that only "expert" consultants with the appropriate academic credentials
and job placement experience could offer such services. From the other
side of this challenge, industry people had to be convinced and trained
to provide appropriate and credible adjustment services.

**Other challenges---**The general labour market condition in the late
1980s and early 1990s was far from buoyant. Any program would face
difficulties under the same circumstances. The relatively high wage
rates that were enjoyed in the steel industry up until that time would
be difficult to match in other industry sectors. The multi-ethnic
background of the steel workforce, particularly in the "Golden
Horseshoe" area in Ontario, suggested that to make the adjustment
program work there would be a need for ESL training ("English as a
second language") and other related services.

## C. The Solution

CSTEC's Worker Adjustment Program was established to provide a wide
range of adjustment services to laid-off steelworkers. CSTEC developed
and designed this national sector-based program to deliver a full range
of adjustment services through *Local Adjustment Committees* made up of
union and management participants. These services included:

-   general workplace information sessions for workers affected by plant
    closures and downsizing in the industry;

-   training for Local Adjustment Committee participants;

-   personalized needs assessment and peer counselling for individual
    workers;

-   seminars, including:

    -   Career Goal Setting

    -   Job Search

    -   Job Finding Clubs

    -   Financial Planning

    -   Self Employment

    -   Skill Development Courses;

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-   Prior Learning Assessment and Recognition (PLAR)---a process to
    evaluate and grant credit equivalency to a worker for his or her
    prior formal education, training, work and life experience;

-   General Education Development (GED)---a high school equivalency
    training program;

-   short-term skills development;

-   assistance with training referrals;

-   job placement through local and regional Action Centres and through
    CSTEC's Labour Adjustment System (CLAS), a national computer
    database of clients and employers.

> Through this range of services, CSTEC was able to deliver effective
> worker adjustment support to laid-off steelworkers. One of the
> distinguishing features of the CSTEC approach is its emphasis on
> results, not process -- especially in terms of successful job
> placement of laid-off workers. Another important feature of the Worker
> Adjustment Program is its emphasis on working with local people to
> develop solutions tailored to individuals.

**A sector-wide approach---**At the national level, CSTEC's programs are
administered and policies developed and monitored by joint union and
management committees, ensuring that the WIIFMs (What's in it for me?)
outlined below are continuously addressed. At the local level, CSTEC's
local adjustment committees devoted considerable time to working in a
joint environment where objectives and anticipated outcomes were jointly
determined, and all parties brought their considerable skills to the
table.

The sector-wide approach ensured "buy-in" from the stakeholders and
ownership of the process by those most affected by it. This approach
also enabled each local adjustment committee to access training and
other services at a lower cost through economies of scale. For example,
at one point during the early 1990s, there were eight projects working
out of the same Action Centre in Hamilton, Ontario. Because of the
economies of scale, and sharing of facilities, the costs for all
services were reduced, allowing the adjustment committees to do more for
their people.

**Identify the WIIFMs (What's in it for me?) of each of the
stakeholders---**There are palpable benefits for each stakeholder in
participating in an adjustment program. For the sector approach to work,
each of these WIIFMs must be identified and addressed.

-   **For the company**: Studies have shown that how companies deal with
    a downsizing has significant impact on those still working -- i.e.,
    the "survivor impact". Put negatively, if management does nothing to
    assist those affected, the morale of those remaining suffers, and
    productivity suffers as well. This is particularly true in the case
    where the downsizing is part of a restructuring process that may
    include the introduction of new technologies. "Survivors" feel more
    vulnerable to further layoffs. Conversely, a positive response by
    management ensures a positive reaction at the workplace that reduces
    the negative impacts.

-   **For the workers and unions**: The same may be said for the workers
    and the unions in an adjustment program. As representative of the
    workers impacted by layoffs, a union is expected to act as an
    advocate on their behalf. Failure to do so increases the cynicism of
    "surviving" members towards the union, and leaves laid-off workers
    to fend for themselves in a labour market that has totally changed
    since they first entered it.

-   **For the government**: The benefits to government include:

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-   Employment Insurance (EI) savings through improved re-employment
    rates and quicker placements, especially for high-risk participants
    who usually exhaust their benefits because they do not use
    adjustment services;

-   training savings through better negotiated rates; and,

-   lower adjustment costs as a result of leveraged industry
    contributions, which have been estimated by CSTEC to be around 35
    percent of total costs in CSTEC projects.

    **Promote and pilot test the initiative---**CSTEC used union
    conferences, area council meetings, and joint union and management
    regional meetings to promote its adjustment program. They also
    piloted a number of projects, namely at Algoma, Sydney Steel, IPSCO
    (Port Moody), and Sherman and Adams Mines in Northern Ontario, to
    test their peer counsellor approach and the various services listed
    above. Best practices were thereafter expanded throughout Canada in
    all their projects.

    **Develop an adjustment program that is results-based, not process
    driven---**The key to CSTEC's success was their drive to get
    results. They have always been judged on what happens to their
    participants, not on what services they deliver. The steel industry
    demanded this type of approach. Those laid-off participants who were
    "job ready" were fast-tracked to get jobs. Those who were not job
    ready were provided the services they needed to become "job ready",
    whether it be job search tools or skills upgrading, or training.

    **Create partnerships between the steel industry and
    education/training providers and government---**CSTEC has also been
    able to create partnerships between the industry and education and
    training institutions, particularly the colleges and the cégeps,
    which have been primary providers of training for laid-off workers.

    **Ensure that programs and services are tailored to individual
    needs---**One size does not fit all. Every individual affected by a
    layoff has his or her own set of circumstances, skills, education
    and objectives. The best outcomes are derived from providing the
    right services for each individual.

    **Ensure that local adjustment committees take ownership of the
    process---**No one knows the availability of local resources, and
    the needs of the people affected by a workplace layoff, better than
    the workplace members of a local adjustment committee. With proper
    training, the local committee is in the best position to ensure that
    affected workers receive the services they need. CSTEC provides
    ongoing support to local committees to help them administer their
    projects.

    **Ensure that peer counsellors are properly trained to deliver the
    services---**CSTEC peer counsellors come from the steel industry, so
    it is steelworkers helping steelworkers. This means that there is
    instant credibility when peer counsellors deliver adjustment
    services. The key to the success of this approach has been ensuring
    that peer counsellors be properly trained by professionals.

## D. Outcomes and Impacts on Workers

The services of the Worker Adjustment Program included needs assessment
of workers affected by permanent downsizing and plant closures,
personalized peer counselling, job search and placement, and a series of
seminars to help workers adjust to new realities of the job market. The
Local Adjustment Committees administered the adjustment program and
coordinated participation in related activities.

As a result of CSTEC's targeted approach, using peer counsellors from
the steel industry (both union and management), several successful
outcomes can be cited, from a very large participation rate by laid-off
workers to cost-efficiencies in administering the adjustment process.

-   In the steel and mining industries, CSTEC had set up 85 local
    adjustment committees by August 2000. Out of 15,017 people who had
    been laid-off up to that time, 12,718 had participated in CSTEC's
    programs and services (i.e., representing an 85 percent
    participation rate by laid-off workers). About 90 percent of
    laid-off workers that had returned to the labour market found new
    jobs within the first six months.

-   Costs of the program are competitive and run at about \$500 per
    person due to an emphasis on results through counselling, needs
    assessment and job placement. Lower worker adjustment program
    administration costs were estimated by CSTEC to be about five
    percent of total adjustment costs. Savings in costs are also
    realized due primarily to CSTEC working in partnership with colleges
    to deliver training courses.

-   Savings to the Employment Insurance account ensue because of CSTEC's
    high placement rate, quick adjustment results, and its ability to
    reach difficult, high-risk participants.[^1] Program administration
    costs have accounted for roughly 5 percent of total adjustment
    costs, which is significantly lower than other similar programs. An
    example of savings to the Employment Insurance account is in the
    Algoma project where adjustment services were provided for 200
    people, representing savings of approximately \$385,000 between July
    1, 1999 and March 31, 2000.

-   Longitudinal surveys have indicated a very high satisfaction rate
    from both local adjustment committee members, who have administered
    adjustment projects, and from program participants. These surveys
    have shown a significant increase in the confidence level of
    participants, in their skill acquisition and in their ability to
    deal with job change.[^2] In addition, participants have attributed
    to the program a reduction in stress-related social costs normally
    associated with job loss.

-   The Worker Adjustment Program has become a model for those offered
    by other sectors and industries (such as the aerospace and auto
    industries). Outside of the steel industry, CSTEC has assisted 45
    local adjustment committees comprising more than 2,200 workers.

-   CSTEC has provided consultations on worker adjustment issues to
    other countries, including Brazil, Chile, Cuba, Japan, and Egypt.
    For example, CSTEC helped Brazilian officials in Sao Paolo in their
    initiative to re-organize into a decentralized system for worker
    adjustment services.

## E. The Lessons Learned

The experience of the CSTEC Worker Adjustment Program has demonstrated
that an industry-wide approach ensures "buy-in" of stakeholders and
ownership of the process by those most affected by it. The program has
enabled Local Adjustment Committees to access targeted training and
other quality services at a lower cost through economies of scale. The
key lessons learned from this experience are as follows:

**Peer counselling and targeting services---**Over the years CSTEC has
learned that most of the benefits gained from the Worker Adjustment
Program resulted from an approach that emphasized the importance of peer
counselling and targeting of services. The focus on peer counselling
also resulted in "instant credibility" with affected laid-off workers,
which, in turn, produced high participation rates and an ability to
reach high-risk individuals.

**Focus on results and job placement---**After initial experiences,
CSTEC made a concerted effort to supplement training activities with job
placement initiatives, with the addition of the Job-Finding Club and the
National Job Bank and database of clients and employers. Both have
produced improved re-employment rates, quicker placements, and reduced
adjustment costs, and savings to the Employment Insurance federal
program.

**Local adjustment committees---**The formation and training of local
adjustment committees has its distinct advantages, as mentioned above.
However, to ensure best results, CSTEC established criteria for the
selection of committee members. Accounting mechanisms were put in place
and training referrals had to be closely monitored by CSTEC, to ensure
that all training did not only go to a few individuals.

**The role of government---**CSTEC recognised the importance of the
government's role in cost-sharing adjustment projects. Despite the
success of the industry-based approach of CSTEC, the steel sector still
sees adjustment as a government responsibility, and is only likely to
contribute resources if they are on the basis of cost-shared agreements.
Equally important, the industry is more likely to act as an industry if
such shared agreements are in place.

## F. A Company Perspective -- Dofasco Inc.

> Employees of Dofasco Inc. represent one of the examples in which the
> Worker Adjustment Program had a significant impact. Dofasco is
> currently one of Canada's largest steel producers with about 7,200
> employees in Hamilton, Canada, representing some twenty percent of
> total Canadian steelworkers. Serving customers throughout North
> America with flat rolled and tubular steels and laser-welded blanks,
> Dofasco has recently had the distinction of being the most profitable
> North American steelmaker in earnings on a per-ton basis with a net
> income of \$261 million (Canadian) on sales of \$3.2 billion
> (Canadian) in the year 2000. According to the Dow Jones Sustainability
> Group Index, Dofasco was recently deemed the most sustainably managed
> company in the basic materials sector, globally. Dow Jones evaluates
> companies based on innovative technology, corporate governance,
> shareholder relations, and social well-being. Dofasco has operations
> in Canada and the United States. Its wide range of steel products is
> sold to customers in the automotive, construction, energy,
> manufacturing, pipe and tube, appliance, packaging and steel
> distribution industries.
>
> Dofasco prides itself in the "triple bottom line" of sustainability:
> financial performance, environmental responsibility, and social
> well-being. The company's slogan is "Our product is steel. Our
> strength is people."---and so, as such, it was a willing and active
> participant in the Worker Adjustment Program of CSTEC.
>
> During the late 1980s and the first part of the 1990s, Dofasco
> experienced a significant downsizing in its operations as a result of
> a stiff competitive situation in the industry and general economic
> downturns within North America and worldwide. By the mid-1990s the
> company had seen its ranks fall from some 12,800 employees down to
> 7,000, all through attrition and voluntary programs.
>
> In April 1994, approximately 650 employees received notices of lay off
> from the company. This event initiated collaboration between Dofasco
> and CSTEC, leading to the development of a strategy based on the
> Worker Adjustment Program to help the laid-off employees adjust to the
> new realities of their situation.
>
> Dofasco established an action committee including representatives from
> all the stakeholders involved, including management, employees,
> trainers, counsellors, and CSTEC officials. Fourteen people were
> assigned to a Dofasco initiative called DTAP (Dofasco Transition
> Assistance Program) to "help employees adjust together". The DTAP team
> benefited from a knowledge transfer from CSTEC counsellors, to help
> laid-off employees adjust. The type of adjustment services that were
> needed by these employees included training for new skills, career
> counselling and job placement activities. The general perception of
> those who stayed and those who left Dofasco was that "those who left
> were treated with excellence."[^3]
>
> The DTAP program lasted three-and-a-half years at Dofasco, with a
> success rate of benefiting 98 percent of the participants in the
> program. New skills training and job placements of Dofasco employees
> included opportunities in other manufacturing and service industry
> sectors, where prospects were greater at the time compared to the
> opportunities offered by the steel industry. Since the mid-1990s the
> company has been transformed from what was then seen as an
> "entitlement culture"---where employees believed that they would
> always be looked after regardless of the company's performance during
> an economic downturn---to an earnings and performance culture that
> recognizes and encourages career development and individual needs of
> employees. A testimonial of one of Dofasco's current employees:
> "Dofasco has given me many opportunities to make meaningful
> contributions using my existing skills, but perhaps more importantly,
> they have given me many opportunities to learn new skills." Another
> testimonial: "I look at it \[Dofasco\] as a door for great
> opportunities."
>
> DTAP provided counselling for training programs, for making decisions
> on career opportunities, and for job placement. The legacy of the DTAP
> program is that now Dofasco has good experience in helping its
> employees with their career development goals. A constructive and
> useful working relationship has also been developed between Dofasco
> and the CSTEC organization, for example for ongoing skills training
> initiatives. The company recognizes that a skilled workforce is a
> strong competitive advantage, and from their perspective the CSTEC
> programs and services provide a cost efficient way of delivering
> skills training to company employees. CSTEC, for example, was able to
> work out a partnership arrangement with the Mohawk College, a local
> education institution, to use their instructors and facilities to
> deliver relevant courses for the steel industry and for Dofasco.
>
> Today the workplace has changed considerably in the steel industry,
> not only because the pace of technological change has increased, but
> also because employee expectations and demographics have changed too.
> For example, an aging workforce suggests new challenges are present
> due to retirements and attrition, and because of the need to attract
> and train young qualified employees to the industry. It is estimated
> that about 1,300 of Dofasco's manufacturing employees will leave
> (retire) by 2010. New programs involving computer-based training and
> co-op courses (where students rotate between classes and on-the-job
> work experience) are helping to address this issue.
>
> Dofasco has used the fundamental principles of CSTEC to be
> results-oriented (not just concerned about process) and to ensure that
> both the common and individual interests of the steel industry
> participants are addressed. As such, Dofasco's current programs help
> ensure that their employees are being appropriately trained and able
> to meet their career goals, for the mutual benefit of the company and
> the employees.

## G. Conclusion and Replicability 

> The CSTEC Worker Adjustment Program has proven that the sector-wide
> approach can provide quality services at reduced costs, with positive
> labour market results for all parties involved. The principle on which
> it was built, addressing the common needs as well as the individual
> needs of participants and stakeholders, and the collaboration it
> fostered between management, workers, educational institutions and
> government, provide a guiding example for others to emulate. The
> process evolved out of non-political circumstances binding the
> affected parties through a common interest (i.e., a common workplace
> situation brought about by economic challenges).
>
> The fact that the Worker Adjustment Program was used as a basis for
> developing programs in other industry sectors, such as the aerospace
> and auto industries, suggests that it is replicable across industries.
> Furthermore, considering that CSTEC, based on its experience, has
> provided consultations on worker adjustment issues to other countries,
> including Brazil, Argentina, Egypt, Chile, Cuba, and Japan suggests
> that the program provides opportunities for emulation in other
> countries.

## 

[^1]: According to an evaluation study of CSTEC \[*Program Evaluation
    Study of the Canadian Steel Trade and Employment Congress*, by EKOS
    Research Associates Inc., 1991\], CSTEC's high participation rate is
    considerably higher than that of other similar programs.

[^2]: See *Program Evaluation Study* of CSTEC, ibid.

[^3]: One of the additional initiatives introduced by Dofasco at the
    time, to reduce the negative impacts of actual and impending
    layoffs, was to introduce a program for all employees called
    "Play-to-Win". This was a three-day experiential learning program
    provided at a resort in Northern Ontario that focused on coping with
    change, rebuilding trust, and working together in a team
    environment.