John Mayberry, President of Dofasco outside main office building October 3, 1989
Robert Perkins thought he had a deal.
He gave Dofasco 32 years of his life in the grit and noise of the Hamilton steel mill. In exchange he was to get a secure retirement with a good pension and health benefits.
It was all part of a contract called The Dofasco Way, the package of welfare programs leavened with a healthy dose of fear that kept the company union-free for 75 years, creating what employees always felt was a “family atmosphere” where management really cared about them.
Today, after taking early retirement because of the way his body was worn down in fulfilling his part of that contract, Perkins and several hundred other Hamilton Dofasco veterans fear the old way is dead and the deal has been summarily changed.
“They gave us a package when he retired and now they've decided across the board to take away those benefits,” said Perkins' wife, Bonnie Hamilton. “Something's just not right here. If they get away with this, what's going to be next?”
Dating back to 1937, The Dofasco Way combined welfare initiatives such as recreation programs, concerts, picnics and a massive Christmas party with one of Canada's first profit-sharing plans. Called The Fund, the plan gave industrial workers an undreamt of promise of security in their old age. That promise, however, was always coupled with a far from subtle threat — join a union and it could all be taken away.
That combination of threat and promise worked for 75 years, but today, many veteran workers fear The Dofasco Way is dying a “death of a thousand cuts,” as the steel industry concentrates into a few firms with a global reach.
The most recent evidence of that change — the action that has Hamilton and her husband so angry — is the company's decision earlier this year to impose a series of sweeping changes to its benefits program. Among the changes are an end to the program that sent ArcelorMittal Dofasco's most senior workers into retirement with an extra 15 weeks' pay, pushing all employees into a defined contribution pension plan for all future service and the requirement retirees pay more of the cost of their health and dental benefits.
The arbitrary change to the retirement vacation bonus, workers say, could cost the longest serving employees more than $30,000. They see it as a gross betrayal of The Dofasco Way's legacy — a legacy that also keeps many workers from publicly speaking bad words about the company.
“No one ever says ‘no' at Dofasco,” Hamilton said. “In most cases these workers are third generation and they've been taught to keep their mouths shut about the company. People have always been afraid to speak out.”
The Dofasco Way was rooted in the visceral hatred company founders Clifton and Frank Sherman had toward labour unions — an evil they sought to keep out of their Hamilton plants by creating a sense of mutual interest between workers and management.
“My father felt a union created unrest in a company,” Frank Sherman Jr. recalled in a 2008 Spectator interview. “He felt if people working in his company were doing as well as people in unions, why would they need one?”
McMaster University labour studies professor Robert Storey captured the dual nature of the program in his 1983 paper Unionization Versus Corporate Welfare: The Dofasco Way.
The carrot part of the program included creation of the Dofasco Illustrated News, company picnics, a massive Christmas party, a recreation program that included euchre and cribbage tournaments twice a month, monthly dances at the Royal Connaught's Crystal Ballroom, theatre outings, a band, a glee club and varsity and intramural sports leagues.
The Fund, however, was always the heart and soul. The deal required the company to match employee contributions to an amount equal to 10 per cent of net earnings, but not to exceed four times employee contributions. Employees could contribute 3 or 5 per cent of their yearly wage to a maximum of $150.
In an age when industrial pensions were rare, The Fund promised an almost undreamt of security in retirement.
In May of 1938 the Dofasco Illustrated News made that goal clear: “Security for every [Dofasco] employee is the motive for the Fund. It provides for old age, so that a man no longer holds fears about what lies in the future. It gives protection right now for wife and children, gradually replacing insurance.”
The “stick” portion of the campaign took many forms. A lodge of the Steel Workers Organizing Committee, Local 1004, was formed at Dofasco before the more famous Local 1005 formed at Stelco. Harry Hunter, a Communist Party member, was one of the first leaders, but was summarily fired by the company, along with the rest of the local's leadership, on trumped up allegations of unsafe work or “disloyalty.”
When the Second World War made it harder to simply fire workers, some union activists would find their protection from conscription into the military withdrawn while others, like Stan Ellis, found themselves working a day shift for two days, then afternoons for two days and nights for two more all in the same week.
If ever a breath of union sentiment was felt at Dofasco, “rumours” quickly spread warning The Fund would be ended if a union came into the plant.
Union meetings were frequently infiltrated by company spies who also watched workers on the street outside the plant to note who they were talking to.
“In reality,” Storey wrote in a 1996 Spectator analysis piece, “loyalty underpinned with a healthy dose of fear were the twin operating principles of the ‘Dofasco Way.'”
The anti-union side of the program was a sweeping success. Where neighbouring Stelco was organized by the Steel Workers Organizing Committee, forerunner of the United Steel Workers union, Dofasco workers have consistently defeated efforts to organize them, including a 2008 drive in which ArcelorMittal invited union reps into the plant to talk to workers.
Storey argues the Shermans struck the right combination of paternalism and fear to achieve their goal.
“Employee welfare programs provided employees with concrete proof that profit-sharing plans were not merely … employer mechanisms to increase profits and productivity while stabilizing wages,” he wrote. “The company could, and did, provide all the benefits available in the ‘union shops.' But Dofasco workers believed they had something more: they believed they had an employer who cared and who saw to it that interests and needs of his employees were met.”
Over the 75 years since its creation The Dofasco Way forged a solid bond with workers.
In an essay entitled Growing Up The Dofasco Way, one worker recalled how close that relationship was when cancer struck a family.
“Dofasco visiting representatives came to the hospital to see my dad, and to help fill out the necessary paperwork. They ensured that his sick pay was started and offered what advice they could to my mother,” the worker wrote. “They left us their direct contact information and the day that my dad died we called them from the hospital as they had asked. They arrived at my parents' home almost the same time that we did.”
The company reps helped the family pick out clothes their husband and father would need, accompanied his wife to the funeral home and turned out on the day of the funeral to pay respects. They also spoke for the family in making a compensation claim because his cancer was directly attributed to foundry work.
Even for this worker, fear of speaking against the company remains a very real concern. At the bottom of the essay the writer adds “Note* the writer of this piece has asked not to be named to avoid any conflicts or repercussion that may occur as a result of the honest opinion given here. In the old “Dofasco,” we never would have had to worry about that. Honesty was part of our policy and ‘Our Strength was our People.'”
That care for workers was cemented by some impressive payouts from The Fund: an average of $6,528 per worker in 1996, $5,611 in 1999, $7,900 in 2000 and $9,000 in 2006.
While many point to the 2006 takeover of Dofasco by Arcelor, followed by Arcelor's merger with Mittal, as the time when The Dofasco Way began its slow decline, there were signs a decade before that the old way was in trouble.
Frank Sherman Jr., of the company's founding family, commented on those changes in 1992 when he retired after 20 years with the company. He told The Spectator he felt the company was veering from the strong family environment of his father's years. “The legacy was being let go as the new guard came in,” he said. “There was a sense of the culture slipping away.”
Lloyd Urquhart, who retired after 33 years as a crane operator, felt it too. He said in 1997: “I'm sad to see that dollars are ruling at Dofasco now. It almost looks like Stelco.”
Storey identified that trend in a 1996 piece for the Spectator.
Former Dofasco CEO John Mayberry also captured the trend in a 2002 speech to a meeting of the Automotive Parts Manufacturers Association in which he said Dofasco had fallen into an “entitlement culture” in which “people felt that if they gave a good day's work, they were entitled to wages and, one day, to retirement benefits. There was no connection to the company's performance. In fact, this culture was an impediment to performance.
“Outside our gates, the world was changing. Globalization had increased competition and impacted pricing. Our competitors started looking around for opportunities to consolidate, in the hope that bigger would be better in a globalized marketplace.
“There is no Dofasco Way any more,” Hamilton said. “Today that's just something management hides behind.”
For its part, ArcelorMittal Dofasco management says the essential elements of The Dofasco Way remain unchanged.
In an email in response to specific questions, AMD vice president for communications and public affairs Tony Valeri said The Fund “has been and remains an integral component of compensation at Dofasco,” and will continue to be supported by the company; the recreation park, Christmas Party, Canada Day celebrations, employee wellness programs, sports leagues and company magazine (now called 1 Magazine) remain vibrant elements that “contribute to our Total Value Proposition for employees and to our strategic objective to be a top Employer of Choice.”
That said, he added, the company has been forced to change some of its ways to deal with increased competition and continuing demands for new products.
“The steps we are taking will ensure the sustainability of the organization which supports more than 5,000 jobs, as well as our ongoing commitment to community,” he wrote. “We're meeting this challenge by continuing to focus on improvement and efficiency, so that we remain a strong Ontario manufacturing company, unlike what we have seen from other multinationals in recent months. We are on plan to hit our target at the end of 2013 and we continue to keep employees engaged and informed as we move through the program.”
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