Ontario’s $225-million beer deal disrupts LCBO contract talks

Ontario’s deal to allow beer, wine, cider and premixed drinks to be sold in convenience stores, big-box outlets and additional supermarkets has thrown a wrench into contract talks with workers at the Liquor Control Board of Ontario, raising the prospect of a strike at the provincially owned booze retailer.

Ontario Premier Doug Ford announced a deal last month to hand the Beer Store, which is controlled by multinational brewers, more than $225-million in order to liberalize alcohol sales this year. The changes could see 8,500 new places to buy booze pop up across the province.

This is expected to affect the LCBO, which is among the largest purchasers of alcohol in the world. Its 660 stores across the province, which currently sell wine, cider, beer and premixed drinks, are to retain their monopoly on hard liquor under the new system.

The sudden spectre of liquor store closings and job losses has complicated contract talks under way with the union representing the LCBO’s approximately 9,000 front line employees.

Starting on Wednesday, the LCBO’s unionized workers will vote online and by phone on whether to give their leaders a mandate to call a strike if talks break down in the coming weeks or months. The union has never walked off the job before.

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A round of negotiations held last week resulted in “zero progress,” according to Colleen MacLeod, chair of the OPSEU bargaining committee for LCBO workers and a 26-year veteran at the retailer.

Ms. MacLeod warns the government’s alcohol liberalization plan has put good union jobs at the LCBO at risk. She also said that the changes will reduce the $2.5-billion in profits that the retailer hands the Ontario government to help pay for health care, education and other services each year.

“You add 8,500 locations, there’s going to be a drop in sales at the LCBO. That’s clear,” she said in an interview. “Then those profits will then go into the hands of large grocery. Because this isn’t about mom-and-pop stores. They’re not going to be able to compete with the likes of Walmart, Costco, Loblaws.”

Ms. MacLeod said LCBO management has already said it does not want to renew existing protections in the current contract for workers against layoffs and store closings.

Her union has also just issued a lengthy list of its own demands in the wake of the Beer Store deal. The proposal calls for the LCBO to guarantee that “wholesale, storage, and distribution” and any work related to the expansion linked to the beer deal be done only by OPSEU members, not private-sector contractors. OPSEU is also calling for guarantees that no stores will close and that no employees will be laid off or see their hours reduced.

The government has acknowledged the Beer Store deal will have an effect on the LCBO’s retail numbers, but it has not released any estimates, nor spelled out how many stores will need to close.

The LCBO will be the wholesaler for all the alcohol sold in new outlets, and Mr. Ford has touted internal estimates suggesting LCBO revenues could rise by as much as $1-billion thanks to this new role.

However, the new warehousing work associated with being the wholesaler for the new outlets has already been contracted out to a private-sector company, Trillium Supply Chain Services Inc., which is owned by Germany-based global logistics giant DHL Group.

The LCBO said in a statement it would retain its four LCBO-run warehouses to service its existing customers but that it needed additional warehouse capacity to meet the new demand.

Wage increases are also on the table. An arbitrator recently awarded the union back pay after a court struck down the Ontario government’s public-sector wage-suppression legislation, which had limited wage hikes to 1 per cent over the past three years. For 2021 to 2024, the union’s workers are to retroactively receive increases of 3 per cent in each of the first two years and 3.5 per cent last year.

Under the existing contract, Ms. MacLeod said employees who make it to full-time status, usually after years as casual employees, make $16.75 an hour to start, with the top-paid hitting $30.57 after nine years.

Colin Blachar, a spokesman for Finance Minister Peter Bethlenfalvy, who is responsible for the LCBO, said in an e-mail on Tuesday that the ministry has asked the LCBO to provide updated projections of the impact of the changes as the new regime comes into effect and that the government would “work closely with them to manage the transition carefully and minimize any disruptions.”