Thursday, August 19, 2010

Leaner, Meaner Capitalism at Work

Mike Malloy was talking about this tonight.

A company gets new management, which decides to reward the 300 workers who enabled the company to go from a loss last year to a half billion dollar profit this year by docking them $1.50/hr, decimating their pension program, and generally behaving like greedy capitalist pigs. Three months later, the strike is still on, and the company is making more money than ever, thanks to strikebreaking scabs.

This is the first I've heard about it.

Here's the original story, from May of this year:

Strike!: Mott's Wage Cuts Despite Huge Profits Forces Work Stoppage (5/23/10)

Over 300 full time manufacturing workers at the Mott’s plant in Williamson, New York, went out on strike this morning at 6 AM after company executives demanded painful wage cuts while the company enjoyed a record year of $550 million in profits. The work stoppage was caused as a direct result of the Mott’s (a subsidiary of Dr. Pepper Snapple Group) executives' unfair labor practices as they tried to peel away good jobs and wages, including not bargaining in good faith. The company had publicly declared an impasse and plans to implement their last contract terms, which offered nothing but a reduction in hourly wages and drastic healthcare and pension concessions for the skilled, dedicated workforce at the Williamson manufacturing plant.

“The workers that were forced to strike today are the same workers who helped make Mott’s the highly profitable company they are today, and they should not be treated like a bunch of rotten apples by overpaid executives,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, UFCW. “We understand that no one wins when there is a strike, but is very troubling and disturbing that such a profitable company as Mott’s would carve away a core relationship with their workforce all for corporate greed. Whittling down wage and benefit standards, while exponentially increasing CEO compensation is rotten business, and frankly unAmerican!”

RWDSU Local 220, which represents the workers, has been tirelessly negotiating to secure a fair and decent contract for months with Mott’s management. Despite the company’s profitability, Mott’s/Dr. Pepper Snapple have demanded givebacks, including a $1.50 per hour wage cut for all employees, a pension elimination for future employees and a pension freeze for current employees, a 20 percent decrease in employer contributions to the 401K and increased employee contributions toward health care premiums and co-pays.

Mott’s workers overwhelmingly rejected this offer and voted in favor of authorizing their negotiating committee at RWDSU Local 220 to call an unfair labor practice strike. The union has continued to demand that the company bargain in good faith in order to quickly reach a fair contract.

By contrast, Dr. Pepper Snapple Group President & CEO Larry D. Young has enjoyed a 113 percent salary increase over the last 3 years (or 28 percent each year). In 2009, Young's total compensation was $6,519,378.

Michael Leberth, president of RWDSU Local 220 said “the company has not budged from our reasonable and dignified offer and there will be no late night negotiations. We are tired of being juiced by such a profitable company.”

May is the busiest season for Mott’s apple juice and applesauce manufacturing as the demand for these family favorites is highest during the summer season.

The Williamson plant is the only plant that produces Mott’s applesauce, including high margin single serve packs, with 70 percent of the workforce in skilled labor categories. A labor dispute could damage the value of Mott’s family-friendly brand by associating it with corporate greed and union busting. Additionally, the product may suffer quality issues, as the skilled workforce is not easily replaceable. The Mott’s brand is responsible for more than $550 million worth of Dr. Pepper Snapple’s retail sales each year.

“Why would DPS, with millions in profit, risk interrupting production at a high volume plant?” asked Ira Bristol, who has worked at the plant for almost five years. “Destroying goodwill and creating this antagonistic atmosphere will badly hurt the production system and bottom line, not to mention negatively affect employee morale and tarnish the Mott’s good brand around the country.”

Here's a thumbnail of Dr Pepper Snapple—
Since being spun out of U.K. conglomerate Cadbury Schweppes two years ago at around $25 per share, DPS shares have risen to nearly $40, and have more than doubled off of March 2009 lows. Last year, the company, which produces 50 brands, including Mott's juice, namesake brands Dr Pepper and Snapple, as well as 7-Up, Hawaiian Punch, A&W root beer and others, recorded $555 million in profits on more than $1 billion in revenues.
Here's where we're at now...

New York Times:
Published: August 17, 2010

WILLIAMSON, N.Y. — After nearly 90 days of picketing in the broiling sun outside the sprawling Mott’s apple juice plant here in upstate New York, Michelle Muoio recognizes that the lengthy strike is about far more than whether the 305 hourly workers at the plant get a fatter or slimmer paycheck.

The union movement and many outsiders view the strike as a high-stakes confrontation between a company that wants to cut its labor costs, even as it is earning record profits, and workers who are determined to resist demands for wage and benefit givebacks.

“It’s disgusting, honestly, that they want to take things away from the people who made them profitable,” said Ms. Muoio (pronounced MOY-oh), a $19-an-hour machine operator who has worked at the plant 15 years.

The company that owns Mott’s, the beverage conglomerate Dr Pepper Snapple Group, counters that the Mott’s workers are overpaid compared with other production workers in the Rochester area, where blue-collar unemployment is high after years of layoffs at employers like Xerox and Kodak.

Chris Barnes, a company spokesman, said Dr Pepper Snapple was seeking a $1.50-an-hour wage cut, a pension freeze and other concessions to bring the plant’s costs in line with “local and industry standards.”

The company, which has 50 brands including 7Up and Hawaiian Punch, reported net income of $555 million in 2009, compared with a loss of $312 million the previous year. Its 2009 sales were $5.5 billion, down 3 percent.

With each passing week, the two sides have dug in deeper, doing their utmost to outmaneuver and undercut each other. Rain or shine, dozens of workers picket outside the plant each day, standing alongside a 15-foot-tall inflatable rat and a mock coffin emblazoned with “R.I.P. Corporate Greed.”

Rebecca Givan, a professor of industrial relations at Cornell, said the strike has taken on broader symbolism. “The union wants to tap into the public backlash against perceived corporate greed,” she said. “The company wants to emphasize the depressed local labor market.”

The strike has become so important because of the prominence of the brands and because of its unusual nature: a highly profitable company is taking the rare and bold step of demanding large-scale concessions.

Unlike previous battles, where American manufacturers have often sought to cut labor costs by threatening to close plants or move operations to the South or overseas, Dr Pepper Snapple is not making such threats.

For unions across the country, the stakes are high because if the Mott’s workers lose this showdown, it could prompt other profitable companies to push for major labor concessions. Such a lengthy strike is unusual at a time when work stoppages have become much less common than they once were.

Strikes and other work stoppages nationwide have plunged in recent decades, to 126 last year from 831 in 1990, according to the Bureau of National Affairs, as unions represent fewer workplaces and workers increasingly recognize the considerable pain and risk involved in walkouts.

“Companies have asked for concessions throughout the history of the labor movement because they’ve faced hard times and needed help to survive,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, which represents the Mott’s workers. “Dr Pepper Snapple is different. They don’t even show the respect to lie to us. They just came in and said, ‘We have no financial need for this, but we just want it anyway because we figure we can get away with it.’ ”

Negotiations have not been held since May, and Dr Pepper Snapple says it has no intention of resuming them. The company has continued to operate the plant using replacement workers and says that production of apple juice and apple sauce is growing each day. Union officials say production is one-third of what it was before the walkout.

The Mott’s workers voted 250 to 5 to strike, walking out on May 23. They were furious about the company’s demands to cut their wages by about $3,000 a year, freeze pensions, end pensions for new hires, reduce the company’s 401(k) retirement contributions and increase employees’ costs for health care benefits. Dr Pepper Snapple said it was merely seeking to bring its benefits more in line with those of its other plants.

Even before the strike vote, workers were stewing, saying that management had begun treating them far worse after Cadbury Schweppes, the former owner, spun off its American beverages division in 2007, creating Dr Pepper Snapple.

The new management eliminated their bonuses, the summer picnic and the year-end holiday party for employees’ children, several workers complained.

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