March 10, 2010 / 2:03 AM / in 8 years

UPDATE 1-Union ratifies labor deal with Canfor, company says

(Updates with ratification of the deal, company comment)

* Deal offers no pay rise for two years

* Canfor says deal offers relief from economic problems

* Union says deal could be pattern for other firms

VANCOUVER, March 9 (Reuters) - Unions have ratified a contract at Canada’s No. 2 lumber producer Canfor Corp CFP.TO, that the company said offered relief from pressing economic problems.

“This agreement sets a new positive tone for our industry,” Canfor Chief Executive Officer Jim Shepard said. “It provides some relief from the economic issues we are facing and a profit based performance bonus that will reward our hourly workers”

Canfor said a majority of union workers had ratified the deal, which applies to some 2,300 workers.

Bob Matters, chairman of the United Steelworkers’ Wood Council, said earlier that the four-year deal has no wage hike in the first two years, and 2 percent in the third and fourth years. It is structured to help restart idled sawmills as the lumber market recovers.

“We do expect it to be the pattern agreement for talks with the other employers,” he said.

The union agreed to defer some holiday and vacation pay as an incentive for Canfor to invest in equipment to upgrade its sawmills, while workers laid off in partial mill shutdowns will get more severance protection.

The union said in a note to its members that it agreed to concessions such as deferred benefit payments as an alternative to wage rollbacks, and there was the possibility of profit-sharing in the future.

British Columbia produces about half of Canada’s softwood lumber exports to the United States. Workers remained on the job after labor deals expired last year, although many mills were idled because of the recession.

Companies with mills needing labor deals in British Columbia include West Fraser Timber Co. Ltd. WFT.TO, Tolko, Tembec TMB.TO and AbitibiBowater ABWTQ.PK.

$1=$1.03 Canadian Reporting by Allan Dowd, editing by Peter Galloway and Carol Bishopric

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