Kind of shocking news for most, but not for the workforce. We have seen the company cut back on small items like linen service to the purchasing of essential materials such as wood chips. Evergreen seems to have a cash flow problem.
Our parent company Lee & Man Paper has went from a 52 week high of $37.00 a share to as low as $3.58 a share on the Hong Kong stock exchange. They had plant closures due to the Bejing Olympics, and now the pulp market has went soft as well.
Locally, our union workers have been asked to take a 15% reduction in wages and to be prepared for temporary closures with layoffs of production workers. Along with this, the company has announced a reduction in hourly staff from 165 to 145.
The only way for there to be a reduction of wages is for there to be an election of the bargaining unit (our union body) and a majority agreement to accept a pay cut. We are currently under a binding labor agreement (Labor contract) with Evergreen until June of 2009.
I personally have issues with this request, as Lee & Man has reported gross profits of 1.4 Billion dollars on March 2007 and 2.1 Billion dollars on March 2008. (Lee & Man Paper Manufacturing Ltd. (2314.HK): Financial Statements - BusinessWeek) No savings for a rainy day? And I have locally witnessed many dollars wastefully spent in speculative operational ventures that have produced nothing but an abundance in scrap metal. Ultimately, the workforce might be requested by Evergreen to make a sacrifice of their agreed upon wages. Hopefully we will have a quick resolution.