President’s Report
December 21, 2011
Pension Solvency Test
The ONTC Commission put out a letter to all pension plan members last week in an attempt to update everyone about the status of the ONTC pension plan. As reported the actuarial value of the pension plan is still down considerable on the solvency test. The solvency test gives the total amount of money needed to ensure that all current pensioners and all those contributing to the plan receive the pension they are entitled to in the event of a pension wind up.
The plan is deficient on the Solvency test in the neighbourhood of $100 Million. The pension regulations state that amount of money must be replenished over a 5 year period. The ONTC took a 1 year exemption in 2010 but had to front $20 Million this year. That still leaves in the neighbourhood of $80 Million still owing.
Numerous plans across the country find themselves in the same or worse situations than the ONR. Such as CP Rail which has put $1.6 Billion into their pension plan since 2009.
A large part of the problem as we already reported is that the ONTC Commission with Government approval decided to take a contributory holiday when the pension fund was in an excess surplus state. All unions at the ONR were opposed to this plan but the government allowed the contributory holiday to happen. If the Commission and Government had heeded the unions advice the solvency shortfall would be far less than it is now.
The Ontario Government has a solvency relief program for those government plans that meet a certain criteria. The ONTC is in the process of applying for solvency relief if accepted into solvency relief it must then devise a plan to deal with solvency shortfall over the next 2 years. After that plan has been submitted to the Government and accepted, the plan must be fully implemented over the following 5 years. This means that the ONTC has up to 7 years to fully implement whatever changes to the plan necessary to get it back to solvency.
This amount can be reached in a number of ways first by increasing contributions, reducing benefits, changing the pension calculations, changing the overall structure of the Pension Plan among other things.
This aforementioned time period also allows for the markets to rebound and interest rates to track upwards which could eliminate the solvency shortfall without the need of any additional money being put into the pension plan. We are told that a 1 per cent hike in interest rates above the current levels would mean a difference of over $70 Million on the solvency test.
As previously reported we have asked the national union assistance to ensure all our members rights are protected, National Director of Pensions and Benefits Joanne Hannah will be providing assistance to the Local
As more information becomes available we will keep the membership apprised.
The Economy
Most of you are aware of the unsettling news from around the world buffeting the Canadian economy. From a still stagnant American economy which has over 14 million workers unemployed and with 1 in every 4 American children living in poverty. To the Eurozone Debt Crisis which saw the Governments of Greece, Ireland, Portugal, Italy and Spain all possibly defaulting on their sovereign debt at the same time having to introduce severe austerity budgets that curtailed workers’ pensions, and wages. At the same time laying off 10,000 of thousands government workers and upping the cost of a post-secondary education for their citizens. To the booming economies of China and India both showing signs of slowing down.
All of this has a huge impact on Canada, Ontario and most importantly Ontario Northland. The Government of Ontario in its November economic statement tabled by Finance Minister Duncan stated that the Provinces deficit for this fiscal year will be $16 Billion due to the significant downturn in the economy. Moody’s Investment Services has warned that Ontario’s Credit rating could be downgraded because of the Province deficit and accumulated debt; this would make it more expensive for the Province to borrow money. The current deficit impacts the ONTC and all Government Ministries and Agencies as the government has less money to meet requests for additional funding.
To deal with its deficit situation the Ontario Government appointed economist Don Drummond to chair the Commission on the Reform of Ontario’s Public Services to look at ways of reforming the way public services are delivered in the province. The details of this report have still not been released.
At the same time the Northern economy has been sideswiped by these economic storm clouds around the world reducing freight revenues by 21% since 2008. In that year freight revenue was almost $45 Million it has slipped to just under $36 Million this year. Train starts are down as is tonnage and the long term projections are not good.
The silver lining in all of this is that we have been able to avoid layoffs and we have a Division at the ONTC, Refurbishment which has an opportunity to tap into a new market that can provide significant income and employment opportunities. This is the reason we having been trying to grow this Division. It can be the part of the Company which helps to stabilize the long term future for the ONTC.
This past summer we organized a fight back campaign on the decision to award the 127 GO Transit refurbishment contract to CAD in Montreal. Besides not making sense it could have long term affect’s on the future sustainability of the ONTC. To address that instability it has been part of our strategy to help grow this division through discussions with the Government to finalize a Strategic Alliance between Metrolinx and the ONTC that will bring GO Transit Coach and Locomotive work to our North Bay facilities. The McGuinty Government made a number of commitments this past July at the height of our fight back campaign to have the Chairs of Metrolinx and Ontario Northland meet to begin discussions on an alliance between the two Crown Agencies.
As part of our continuing campaign both the National and the Local Union have requested meetings with both the Ministers of Northern Development and Transportation to discuss moving work into the North Bay facilities through such an alliance. There has been a significant turn over in both Minister’s and Deputy Minister’s in both Ministries impacting a meeting with both Ministers. We believe we will be able to meet the Government early in the New Year to continue those discussions.
As part of our campaign the Government agreed to award the refurbishing of 10 Metrolinx coaches to Ontario Northland. As well the Company has secured a contract to refurbish 24 Coach AMT work should begin in earnest as 22 coaches arrived at the North Bay Shops last Friday. As well a contract with the Rocky Mountaineer Railway was won by the ONTC to paint and decal 7 coaches with a possibility of receiving additional work. The first two coaches have left the paint shop and the workers in this facility have done a wonderful job on these coaches. They look amazing.
Provincial Election
The Provincial Election of October 6th returned the McGuinty Liberals back to power but one seat short of a majority government. This will no doubt complicate the way forward as they try to deal with a still fragile economy and a large deficit which will take longer to balance than originally expected.
In Nipissing Conservative Vic Fedelli won the seat by a large margin. How not having the sitting MPP being a part of the government impacts the riding and more specifically the ONTC will be seen.
Recently Mr. Fedelli delivered the over 5000 signed petitions we were able to secure during our fight back campaign this past summer to the legislature.
This helps continue both the municipal and regionally pressure on the government to make good on their commitments to this organization.
Local 991 Merger
The CAW National Executive Board approved the merger of Local 991 representing Dyno Nobel workers with our Local. We wish to welcome those members to our Local.
The Dyno Nobel Unit recently ratified a three year agreement with their employer. The Bargaining Committee of Mike Martin, Steve Byers and Tom Datillo are to be commended on all their work on behalf of their membership.
CAW Bursaries
The CAW National is once again offering all CAW members and their families the opportunity of being awarded a bursary to help fund their post-secondary education. Information is available at www.caw.ca/education. We encourage all members with school age children to apply for any of these bursaries.
At this time I would like to take the opportunity to wish everyone a merry Christmas and safe and Happy New Year.
Retirements
As most are aware there has been and will be a large number of our members retiring over the next year or so. We wish all those who have retired and who are going to retire all the best in whatever they pursue after their career at Ontario Northland.
Of particular interest is the upcoming retirement of former Agreement #4 Chair and current Vice-President Scott Caverly. We wish to thank Scott for all his hard work and dedication in the service of the membership. His experience intelligence, strategic thinking and humour will be greatly missed by all of us who have had the privilege of working with him. Good Luck Scooter we’ll miss you.
Executive Recommendations
- To send Josh Grosz, Bill Fetterly, Andre Boileau, Lindsay McIvor, Mike Boissinault and Blair Behe to PEL.
- Send the 2 Skilled Trades Delegate to the Skilled Trades Collective Bargaining Conference and New Technology Conference in Toronto on February 22 – 24, 2012.
- Donate $1000 to the Daily Bread Food Bank in North Bay in the New Year.
- Donate $500 to the Food Forever Fund based in New Liskeard
Past Reports:
Mar 30/11 | Jan 26/11 | Oct 6/10 | Apr 14/10 | Jan 27/10 | Sep 16/09
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