American Crystal Sugar seeks a larger slice at workers’ expense

Locked out workers at American Crystal Sugar earlier this month rejected the company’s offer to end the lockout. The company’s offer, which hasn’t changed since American Crystal made its original final offer in August 2011, would increase worker health care premiums thus reducing take home pay, increase out of pocket health care expenses, and reduce job security by making outsourcing easier and more common. It also takes steps toward eliminating seniority rights.

The workers’ most recent vote was the fourth time in 16 months that members of the Bakery, Confectionary, Tobacco, and Grain Millers Union have rejected the company’s offer.

In a recent New York Times column, Paul Krugman observes that

The American economy is still, by most measures, deeply depressed. But corporate profits are at a record high. How is that possible? It’s simple: profits have surged as a share of national income, while wages and other labor compensation are down. The pie isn’t growing the way it should — but capital is doing fine by grabbing an ever-larger slice, at labor’s expense.

American Crystal joins a growing list of highly profitable firms including Caterpillar, GE, IBM, Lockheed Martin, and Verizon seeking a larger slice at their workers expense.

In fiscal year 2011, which ended on August 31, 2011, American Crystal reported net revenue of $811 million, but when it came time to negotiate a new contract with its 1,300 unionized workers, the company demanded that they accept benefit cuts and more job insecurity.

Reasoning that their labor had helped create the company’s wealth and that they deserved at least a portion of it to help maintain their benefits and job security, BCTGM members found the company’s final offer to be unreasonable. When a vote was taken in August 2011, 90 percent rejected the final offer, but agreed to keep negotiating.

The company chose to lock them out.

Three other times during the 16-month lockout, American Crystal has made the same offer, and every time a majority of workers has rejected it.

In addition to hurting the workers, the lockout has hurt local communities in Minnesota, North Dakota, and Iowa where American Crystal has processing facilities and packaging and transportation sites.

Last December a report by the Minnesota AFL-CIO found that the lockout was doing serious damage to local communities where American Crystal workers live. According the report published in December 2011, the loss of income resulting from the lockout cost local economies more than $18 million. Those losses have likely grown since the report was published.

American Crystal is a cooperative of sugar beet growers, and the growers have been hurt as well. Growers belonging to American Crystal will receive $58.67 per ton, $14 less than they received last year. Growers at thee other co-ops in the region are projected this year to receive $74.05 per ton, $74.05 per ton, and $87.74 per ton.

Even American Crystal’s bottom line has been hurt by the lockout. Net proceeds, which fell to $555 million in 2011, are 30 percent lower than 2011’s. Since the company began operating its processing facilities with replacement workers, tons of poor quality, unsalable product have filled the company’s warehouses.

But the company appears to believe that its long-term interest lies in paying less for the labor that makes its sugar. American Crystal CEO Dave Berg likened workers who demand their fair share of the company’s wealth as a “cancerous tumor” and told co-op members that, “We can’t let a labor contract make us sick forever and ever and ever. We have to treat the disease and that’s what (the lockout is about).”

Berg’s attitude and the company’s intransigence has led the AFL-CIO to call for a boycott of American Crystal products. It has also caused BCTGM and the AFL-CIO to suspend lobbying efforts in support of the federal sugar support program, which restricts foreign sugar imports and is vital to the profitability of the sugar industry. The sugar support program is part of a larger Farm Bill being negotiated by Congress.

So far 100,000 people across the US have signed a petition pledging support of the American Crystal boycott, but when a delegation of workers and community supporters tried to present the petition to a recent company board meeting, they were turned away.

American Crystal seems determined to continue demanding sacrifices from its workers no matter what the consequences.