TORONTO - Royal Plastics Group Ltd. plans to relocate one of its two vinyl siding plants from Canada to Tennessee. The move sparked a determined protest from union leaders because the factory's workers recently had won a protracted battle to organize the plant. Royalguard Vinyl Co., a unit of Toronto-based Royal, will move equipment from its plant in Vaughan, a suburb of Toronto, to a vacant plant in Newbern, Tenn., over the next several months and close the Vaughan facility by late October, said Royal spokesman Mark Badger.
Royal Plastics President Vic DeZen said the move is not related to recent union certification of the plant by the United Steel-
workers of America. USWA officials charged the relocation was announced to intimidate Royal employees and prevent further unionization at North America's fourth-largest profile, pipe and tubing company.
``If we're losing money, why do we keep the plant here?'' DeZen said in a July 20 telephone interview from Toronto. He said the company will share data with the Ontario Labour Relations Board showing that the plant is not cost-competitive.
DeZen said Royal decided to open a plant in Tennessee after being rebuffed recently in an effort to buy a U.S.-based competitor that he declined to identify.
Newbern is in the middle of one of Royal's major, rapidly growing siding markets and an operation there would save transportation costs, Badger said. DeZen said the Vaughan plant ships 94 percent of its output to the United States.
Royal officials publicly confirmed plans to close the plant July 14, the same day that the USWA held a rally to protest the decision. However, according to union leaders, Royal officials announced the shutdown to employees May 16, one day after the Ontario Labour Relations Board imposed a collective agreement arbitration award in favor of the USWA.
Royal initially told workers it would close the operation Aug. 4 but it since deferred the shutdown, Badger said.
At the July 14 rally, USWA spokesman Brad James said the union will try to prevent the plant closure, which he said violates Ontario's provincial Labour Act.
About 40 demonstrators, including Royalguard workers and USWA and Ontario Federation of Labour officials, attended the midday rally held in hot, humid weather in front of Royal's headquarters.
Royalguard employees and USWA officials tried to organize the plant for two years while Royal resisted the unionization drive, James said in an interview at the rally.
USWA filed a complaint June 23 with the Ontario Labour Relations Board to try to keep the plant open. USWA Ontario director Harry Hynd said if the union is successful, it could be the first time in Canada a union prevented a company from relocating a plant to avoid a new union agreement.
``It's not often that a company is as blatant as Royalguard'' to prevent unionization, Hynd said.
He admitted the Royalguard move probably will hamper USWA efforts to unionize other Royal operations.
Badger said the 160,000-square-foot Newbern facility is larger than Royalguard's existing plant. The Tennessee plant formerly made gasoline station pumps, but has been vacant for several years, according to an official at the Newbern Chamber of Commerce.
Badger did not provide other details of the siding operation. He said Royal will try to find other employment for Royalguard's 140 employees.
Royal's only other vinyl siding production plant is also near Toronto.
Royal's siding sales for the year ended Sept. 30 were about C$93 million (US$67.5 million) out of a total of C$453.1 million (US$329.1 million). For the six months ended March 31 it had sales of C$227 million (US$168 million) and profit of C$15.2 million (US$11.2 million).
Brad Smith, an analyst with Midland Walwyn Capital Inc. of Toronto, said Royalguard's move ``is probably good because the southeast United States is a large market and [Royalguard] will be close to it.''
Interest in Royal's plastic modular house has helped push its stock price up to a recent high of C$19.75 (US$14.62), Smith said.
The company went public in November at a share price of C$11.25 (US$8.33). It closed unchanged at C$18.13 (US$13.42) July 17.
Royalguard's first USWA contract includes wage increases of about 10 percent over 21/2 years to C$11.25-C$11.95 (US$8.33-US$8.84) an hour, plus changes in working conditions, according to USWA literature. Badger would not confirm wage figures or comment on how Royalguard's wages compare with other Royal operations.
