Sunday, June 24, 2012

Could Caterpillar's Joliet Strike Become As Ugly As American Crystal's 11 Months and Counting Work Stoppage? ... Let's Hope Not

{NOTE: Minnesota based American Crystal Sugar co-op's unionized workers rejected the company's latest contract offer for a third time yesterday. It reminds me of the almost two month long Caterpillar Joliet strike situation, although Caterpillar and its workers haven't reached the point of no return yet. For the sugar co-op, I'm not so certain about that. The strike has already lasted 11 months, and it now looks like it may last a whole lot longer. Let's look at it now and see what it has to teach us about these kinds of labor disputes. It's not a healthy situation. That's for sure.}

Sugar Beet Workers Reject Union Contract for Third Time has the details:

"A majority of union members voted down American Crystal Sugar Co.'s contract for a third time on Saturday.

According to Mark Froemke, a representative from the American Federation of Labor, 63% of the union members who voted opted to reject it.

"The workers' voice was loud and clear.…I hope it means that American Crystal Sugar and the union can sit down, negotiate and come to a reasonable conclusion to this 11-month walkout," said Mr. Froemke, 56 years old. "We as workers needed to send a message that we will not be browbeaten into a substandard contract."

American Crystal Sugar Co. Chairman Robert Green, 58, who owns a beet, wheat and navy-bean farm in North Dakota, said that the company will continue to move forward after Saturday's vote.

"We are quite happy with the new workforce, and they are learning the job. We think they'll do just fine," Mr. Green said Saturday evening."

My Take

Union official Froemke says, "We as workers needed to send a message that we will not be browbeaten into a substandard contract." Let's interpret his comments in ordinary common sense language.

What he's really saying is that the company shouldn't be allowed to manage its business in an efficient and cost competitive manner. In this strike, wages aren't the real issue; seniority rules are. And that's a very big deal with labor disputes.

Seniority related labor strikes usually indicate that the union rules are so rigid --- about such fundamental things as management's "right" to assign work, select the best person to do that work, and implement other common sense productivity enhancing actions to make the company a stronger competitor in the marketplace --- that management's efforts to run its business will be fought tooth and nail by the union leaders. It's not really about how much pay and benefits workers receive. It's all about the power of unions in the everyday work environment.

In this case, probably what has happened is that management has lost the practical ability to manage its operations over the years either through contract restrictions or more likely, work customs and practices that have crept into the work place environment. Now that the company wants to reassert its right to manage its operations, the union cries foul and a long strike is the result. Management won't cave on this one. That's my prediction. And employees are in a for a long strike just to appease union leadership and their assertion of power over company operations. It's silly but I've seen it happen many times, and it always ends the same way --- which is never a good one for the striking employees.

In my opinion, the union leaders aren't doing their members any favors in this American Crystal situation.  In that regard, for a labor dispute the latest ratification vote of 63% to continue the strike was a relatively close one. A recommendation by union leaders that the membership vote favorably would have almost certainly ended in a new contract with the employees returning to work. And they'll gain absolutely nothing by continuing to strike.

The union certainly knows the company's latest offer won't be improved by much, if at all, but they are willing to let their members suffer needlessly for another several more weeks, months, or even longer. On the other hand, the company, having taken an 11 month strike already, obviously is in no mood to bend further to placate union officials.

For the company, it appears to be a case of no turning back. I very much doubt if the employees have read this situation properly, and I'm convinced that union officials haven't told the members the cold hard facts about the company's unyielding position.

Popularity and leadership are two completely different things. The union should have demonstrated some leadership and told the pure unadulterated truth to its members prior to the latest vote. Instead it chose to maintain its "popularity" instead. Meanwhile, it's perhaps "game over" unless the union recants and gets the employees back to work.

American Crystal has made the point very clearly that it's gone about as far as it will go.  And after a strike which has already lasted 11 months, the company's reasoning is that if they give in to the union's demands this time, they never again will be able to get a competitive labor agreement. So let's quickly look at what they are seeking to do.

Well, according to news reports, not all that much. The company is apparently insisting on a change in seniority rules which will result in a more flexible and productive work force and that employees contribute more to their health care costs as well. Meanwhile, the company is offering its workers a 4% wage increase in the first year, 3% the second year and 2% the third. In my view, in today's "real" world that's a very good proposal which the employees should have accepted.

To repeat, what makes me believe the company is dead serious and in this for the long haul are two things: (1) it's already endured an 11 month strike, and (2) it has hired and trained replacement workers.

The real problem with securing contract ratification is emotional. Anytime a company insists on "take backs" and adjustments in work rules affecting seniority, simple logic and common sense go out the union window.

And if some workers eventually do leave the company and secure other employment, assuming they can find it, their new jobs most likely won't be anywhere nearly as good as the ones they're striking today. But those simple facts aren't being given proper consideration by those employees voting to continue the strike.

For those 37% (and probably many more than 37% when taking into account those employees who didn't bother to vote) that voted to go back to work, they're out of luck. And that's a shame.

Thus, union leaders have put all striking employees, and themselves as well, between a rock and a hard place. They're simply unwilling to tell their members the cold hard facts of life, while hoping that somehow the company will bail them out with some kind of face saving gesture. My guess is that the time for that has passed.

Accordingly, the problem is, as always, that the workers will wait to return to work and continue to lose even more pay during the long hiatus. And the way this one looks, many of them may lose their high paying jobs and more than competitive employee benefits, too.

In other words, it's an ugly situation which is getting uglier by the day. The strike has obviously become an emotionally charged dispute where logic and common sense are out of the picture, at least for now. That's too bad and will only end up hurting strikers and their families the most of all those affected by the dispute.

Regarding the Caterpillar Joliet facility's strike, let's hope that cooler heads prevail there real soon. They've been out for almost two months now, and the longer these labor disputes go on, the more entrenched positions become and the harder it becomes to reach a solution. And, of course, the employees will never recoup what they've lost.

When the objective facts call for one thing, and the emotions say something entirely different, it gets uglier by the day. That's a shame.

Because in a strike, nobody ever wins. Everybody loses.

Thanks. Bob.

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