Business briefs – July 2

In a move that puts the brakes on Air Canada’s recovery plans, the cash-strapped airline’s biggest bargaining unit has narrowly rejected a management proposal for a pension-funding moratorium.

Union rejects Air Canada deal

TORONTO — In a move that puts the brakes on Air Canada’s recovery plans, the cash-strapped airline’s biggest bargaining unit has narrowly rejected a management proposal for a pension-funding moratorium.

By a margin of 50.8 per cent, the International Association of Machinists and Aerospace Workers rejected a tentative pact that would have frozen their wages until March 31, 2011.

Union spokesman Bill Trbovich says after absorbing a series of pay cuts over the past six years, the workers are upset at the prospect of making more sacrifices.

Trbovich admits the vote threatens to delay Air Canada’s effort to gain federal approval to defer most of its pension payments for 21 months.

The IAMAW represents about 10,000 mechanics, electricians, baggage handlers and cargo agents.

Air Canada says it needs immediate pension relief, and is seeking $600 million in loans to survive the recession.

One possible option would be to bring back James Farley, a former Ontario judge, to mediate a solution.

In early June, the federal government appointed Farley as the mediator to persuade the airline’s five unions to support plans for pension relief.

That plan includes a proposal to skip a $100 million pension payment due on July 30th, another $60 million due Aug. 14, and suspend further contributions until the spring of 2011.

Dow Chemical shutters three plants

MIDLAND, Mich. — Dow Chemical will close three Louisiana plants as the company shifts away from basic chemicals and more toward the lucrative business of specialty chemicals, the company said.

Dow has said it will cut about 2,500 jobs as part of a restructuring that came with the acquisition of rival Rohm&Haas. About 100 jobs, part of that restructuring, will be cut with the closure of the plants, but most employees will be offered jobs elsewhere.

The plants that will be closed make ethylene, used in everything from packaging to plastic bags.

The company bought rival Rohm&Haas in April for more than $16 billion, a deal that added massive amounts of debt, but gave the company a strong position in the specialty chemicals market.

Dow says closing the plants will lead to savings of more than $100 million a year, part of a multibillion-dollar restructuring.

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