The future is looking decidedly unfriendly for telecom giant Telus Corp. as it ticks towards a potential two-province strike in Alberta and British Columbia early next year.

Talks between the company and the Telecommunications Workers Union (TWU) are now in conciliation in an effort to defuse the dispute, sparked in part by deep cost-cutting measures and company efforts to redraft four collective agreements into a single contract.

Telus has chopped more than 6,500 jobs from its ranks of 28,000 through early retirement and voluntary departures, and is consolidating operations from 66 call centres in 20 communities to 19 call centres in six areas.

“It seems counter-intuitive to think that fewer people could deliver better service, but that is exactly what we intend to do,” Entwistle told a Calgary business luncheon last week.

He later told reporters that the company is looking to replace an additional 10 per cent of its “non-core” positions through outsourcing.

Workers would be retrained and redeployed in higher-growth areas such as wireless and Internet divisions.

File photo by Shannon Oatway, Business Edge
Telus president and CEO Darren Entwistle says several departments could be run more efficiently if contracted out.

Lawrence Surtees, a senior telecom analyst at IDC Canada, said the looming labour dispute is coming at a bad time.

“The Street actually rewarded Telus with share price gains because it liked their (third- quarter) results,” said Surtees.

“Clearly, if there were to be an ugly and protracted strike, that could jeopardize some of the financial progress that’s been seen over the past quarter or so.”

While the latest revelation from Telus underscores the continuing need for big telcos to lower costs, says Surtees, the company must also contend with growth from its expansion into Eastern Canada and its $6.6-billion acquisition of Clearnet Communications Inc. two years ago.

The Burnaby-based telecom is also tackling employment costs and restructuring issues that arose out of the 1999 merger of B.C. Telecom and Telus, he added.

“They’re having to confront this at the same time they have to take costs out of the organization because of the current climate for telecom, which is seeing spending fall off,” said Surtees.

In the first three quarters of this year, the projected growth rate for spending on data communications in Canada is about half what everybody thought it was going to be in January, he added.

“Big telecom providers are being squeezed two ways – tight money and tight capital, which sets them down the path of having to really examine costs.”

Telus employs more than 13,100 unionized workers in Alberta and B.C. who are now represented by four collective agreements. About 40 per cent of the unionized employees are based in Alberta.

TWU workers voted 84.5 per cent last month to give their union a strike mandate in an effort to reach a new contract. The previous contract expired almost two years ago. Calgary-based Telus Mobility, which has 1,300 bargaining unit workers, falls under a separate agreement and is not included in the current negotiations with the TWU.

TWU president Rod Hiebert said Entwistle’s statement in Calgary has aggravated the situation and turned up the heat on already-frustrated workers.

“I don’t think Darren Entwistle and his executive want to reach an agreement – it appears from what we’re reading in the press that he just wants to fight,” Hiebert said.

“The numbers of people that he’s downsized already have created horrendous problems. Some offices in Alberta tell me they don’t want to leave by the front door anymore, because there are so many customer complaints that they’re worried the customers will be waiting for them. It’s really a war zone out there.”

Telus says it wants to draft a single collective agreement which “considers the current economic climate and competitive marketplace.”

“Our approach to customer service should be dictated by the current and future requirements of our customers . . . not antiquated notions of how the work should be conducted,” Entwistle said in Calgary.

Some areas, such as the company’s in-house autobody divisions, janitorial services, metal shops and coin-rolling departments, would be more efficiently run by outside parties, said Entwistle. “The ability to outsource these functions would generate significant cost savings that could be reinvested back into our core business to develop better solutions for our customers and make us more competitive.”

The company also wants to introduce variable pay by linking a portion of salaries to performance targets, and redesign work shifts without incurring excessive overtime costs.

Entwistle told reporters that Telus has spent more than a year developing contingency plans in case of a strike, but stressed it’s his “strongest desire” to avoid work action.

The TWU’s Hiebert said a strike has the potential of “getting very nasty, very quick, because the company doesn’t seem to have any respect for those workers who have worked just about their whole lives for Telus.”

He hopes that there will be a substantial number of managers who will opt to stick to their own jobs during the dispute. Under federal labour legislation, he added, managers don’t have to cross the picket line or do the work of any employee who is legally out on the street.

Surtees said he thinks Entwistle may be putting on a brave face in saying the firm’s financial performance and customer service levels can be sustained during a strike.

“He can maintain operations – management will be working 24/7, and non-union people will be burning the candle, so to some extent he’s right,” he said.

“But can it truly maintain its customer service and response time to a trouble call? It’s debatable, and it depends who strikes and where.”

The government-appointed conciliators are expected to forward their report to the federal labour minister by Jan. 13, and if an agreement has not been reached, a 21-day cooling-off period follows. The TWU must issue a 72-hour strike notice before it can legally strike.

Telus plans to release its 2003 targets during a conference call Monday (Dec. 16).