Bargaining Report

Firstly, we defined our negotiation strategy as distributive bargaining. This

consensus was reached through intra-organizational bargaining as some of our views and

ideas differed slightly on how to approach negotiations.

As we are still feeling the aftershock of the deep recession that erupted a year

ago, our company’s resources are scarce. Hence Management has decided that any

improvement in work terms that will increase the company’s total cost significantly

(more than 2%) was not allowable. An important factor that contributed to our bargaining

power was the timing of negotiations. Canada's economy shed more than 43,000 jobs

last month and since October 2008, employment has fallen in most industries, with the

steepest declines in manufacturing (-11%). On the other hand, the Union was trying to

focus on possible future growth for Bigsit as a result of the upcoming Olympics and

the change in tax systems (HST) that may reduce variable costs. Both sides used these

factors to establish bargaining power throughout the negotiations and to justify offers

and opinions on different issues. Our strategy began with an attempt to improve our cost

structure through contracting out and in order to make this a possibility, Management

attempted to put differences aside and attitudinally structure our relationship with the

Union by attempting to create a conducive environment for negotiations through humour

conversation.

Based on our research, we found that Bigsit could significantly lower variable

costs by contracting out 15% of labourers to Mexico where the average wage is

approximately 4 times cheaper for manufacturing industry workers. This would have

saved the company about 10% of annual total cost and allow management to increase

wages significantly and better compensate all remaining 108 employees in terms of

holidays and benefits. However, since the Union defined job security as their top priority...