Union launches boycott to save jobs

The union representing laid off workers at the Nabisco bakery in Chicago has launched a boycott campaign to protest the layoffs.

The Bakery, Confectionary, Tobacco, and Grain Millers Union (BCTGM) is urging consumers not to buy Oreos, Chips Ahoy, and Ritz Crackers made in Mexico.

The union on March 23 also announced that it would be sending teams of workers laid off at the Chicago bakery to communities all over the US to publicize the boycott.

Two days before the union made its announcement, Mondelez International, the owner of the Chicago bakery, laid off 277 workers at the bakery.

Mondelez, the world’s largest maker of snack foods, is in the process of moving much of the work done at the Chicago bakery to Mexico. When the process is complete, 600 of the 1200 jobs at the bakery will be eliminated.

In July 2015, Mondelez told its Chicago workers that instead of investing to upgrade the Chicago bakery, it would be shutting down some of its production and moving the work to Mexico.

Prior to the announcement, Mondelez had made the workers an offer that the company knew the workers couldn’t accept–agree to $46 million a year in concessions in perpetuity, and the company would invest in upgrading the plant.

David Durkee, international president of BCTGM called Mondelez’s offer a sham.

“They made an offer that was so ridiculous they knew it could never be accepted,” said Durkee.

Had workers accepted the proposed concessions, their pay and benefits would have been cut by 60 percent.

“I don’t know of anybody who could support a family if 60 percent of their pay is cut today,” said Jethro Head, vice president Midwest Region BCTGM.

According to Durkee, Mondelez’s offer was made to justify a decision that had already been made.

Mondelez was ranked 91 on the 2015 Fortune 500 list of the world’s largest corporations.

It is the product of a Byzantine restructuring of the commercial food business that involved Kraft, General Mills, Nabisco, and the RJ Reynolds Tobacco Company.

After a series of mergers, restructuring, and spinoffs, Kraft in 2010 split itself in two. One company continued to make and sell food products under the Kraft and other brands.

The other became Mondelez, a global snack food corporation, that makes Oreos, Cadbury candy, and a host of other popular snack foods.

The Wall Street Journal reports that the split was forced by Trian Fund Management, a hedge fund and activist investor with major holdings in Kraft.

Five years later, according to the Journal, William Ackman another hedge fund manager and activist investor acquired a $5.5 billion stake in Mondelez. The Journal reports at the time of the acquisition that Ackman “believes that Mondelez has to grow revenue faster and cut costs significantly or sell itself to a rival.”

At about the same time that Ackman was calling for cost cuts, Mondelez announced that it would be moving much of the work done at its Chicago bakery to Mexico.

Mondelez’s Chicago Nabisco bakery has been a fixture on Chicago’s Southwest Side since the 1950s.

Most of its workers are African American or Latino, many live in neighborhoods near the bakery, and quite a few have worked at the bakery for decades.

The Chicago Tribune reports that the Chicago bakery has been “crucial to Mondelez’s North American bakery business in part due to its location and because its skilled workers know how to make a variety of cookies and crackers.”

BCTGM says that the timing of the Chicago layoffs suggests that the company is trying to gain leverage just as Mondelez and BCTGM begin a round of negotiations on a new collective bargaining agreement that covers 2,200 BCTGM members who work for Mondelez  at six locations across the US.

The union’s boycott campaign will give workers and consumers across the country an opportunity to stand in solidarity with laid off Mondelez workers and those who remain on the job but are facing the possibility of more cuts to their wages and benefits.

“(Mondelez) wants Americans to buy Oreo, Ritz Crackers, and Chips Ahoy, but (the company) isn’t interested in investing in Americans to make them,” said Head. “(Mondelez) wants to box up our decades of experience and use it to exploit the good people of Mexico.”

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Memphis Kellogg workers return to work after nine-month lockout

Workers returned to work at Kellogg Company in Memphis after being locked out for nine months. A federal judge issued an injunction ending the lockout and requiring Kellogg to return to the bargaining table and bargain in good faith.

Judge Samuel H. Hays of the Western District of Tennessee issued the injunction after finding that “there is reasonable cause to believe that Kellogg has engaged in unfair labor practices.”

Attorneys for the National Labor Relations Board petitioned the court for the injunction after the NLRB’s General Counsel in March found that Kellogg had committed unfair labor practices.

“A federal judge agreed entirely and unequivocally with the union and the National Labor Relations Board,” said David B. Durkee, president of the Bakery, Confectionery, Tobacco Workers, and Grain Millers (BCTGM), the locked out workers’ union.

The NLRB sought the injunction against Kellogg, the cereal manufacturer, after the five-member National Labor Relations Board headquartered in Washington DC unanimously authorized its attorney to seek the injunction.

According to the BCTGM, the board’s decision to seek an injunction is highly unusual. “Out of the tens of thousands of unfair labor practice charges filed in 2013, the Board sought pre-trial injunctions in only 40 cases,” said a media release from BCTGM.

Durkee in an earlier message to members said that the board’s action would not have been possible without a 2013 mass mobilization of union workers to end a Senate filibuster by Republicans to prevent the appointment of a new National Labor Relations Board.

The mobilization known as “Give Me Five” generated grassroots pressure on the Senate to change the rules that allowed a small minority of Senators to prevent the President from appointing new members to the NLRB.

The filibuster paralyzed the NLRB and prevented it from ruling on matters similar to the Kellogg lockout.

“What the labor movement accomplished in the spring of 2013 with our highly successful “Give Me Five” campaign and what that effort is yielding today for our members will stand as a lasting testament to the power of grassroots labor mobilization,” said Durkee.

The ordeal of the locked out workers began last year when Kellogg at its Memphis plant informed BCTGM Local 252G that the company wanted to open negotiations on a local Supplemental Agreement that was set to expire in October 2013.

The Memphis plant is one of four Kellogg plants whose workers belong to BCTGM. A Master Agreement covers wages, benefits, and other matters for all four plants. But each plant has a Supplemental Agreement that covers local issues.

When Kellogg came to the bargaining table, its proposals shocked BCTGM negotiators.

The company proposed that all new hires be classified as casual workers, who would be paid $6 an hour less than regular employees and have no health care or pension benefits. Subsequently, the company clarified its position to the union and said that if a regular employee was laid off and then rehired, the employee would be classified as a casual worker.

The company also wanted to eliminate a cap on the number of casual workers that could be employed at one time. The current agreement limits the number of casuals to 30 percent of the workforce.

The company wanted eventually to end regular employment and make all work at its Memphis plant casual work.

The union’s position was that redefining casual work was a matter to be negotiated when bargaining over the Master Agreement began.

The company responded that the union could either accept the company’s proposal or union members would be locked out.

When the union refused, the company locked out 225 workers on October 22, 2013.

As a result, Kellogg workers in Memphis went nine months without a paycheck or health insurance.

“Memphis families have endured foreclosure notices on their homes, repossession of vehicles, delayed medical procedures, depleted savings, children taken out of schools, children with disabilities whose parents are desperately trying to cobble together ongoing care by whatever means possible, the hounding of bill collectors, and the toll on family relationships that surpasses any monetary worth,” said Kevin Bradshaw, Local 252G president during the lockout.

Kellogg argued that its concession demands were necessary because the company needed to lower labor costs to stay competitive.

But while Kellogg was telling workers that it was facing hard times, it gave the company’s CEO John Bryant a 21 percent raise, boosting his yearly salary to $8 million.

Kellogg has reluctantly agreed to return the laid off workers to their jobs and to resume bargaining with the union.

However, the company could be facing more problems. One hundred twenty of the locked out workers have filed complaints with the US Equal Employment Opportunity Commission. The complaints say that Kellogg’s lockout of its mostly African-American workforce at the Memphis plant was racially motivated.

Bradshaw said that the union and the workers would pursue their claims against the company.

“Locked out, but not beaten, mistreated but unbending, disillusioned by this company’s disgusting reward for faithful service, but not disheartened,” said Bradshaw at a July 31 media conference announcing the EEOC complaints.

As Hostess prepares to sell brands, workers set the record straight on company’s demise

Hostess, which filed for bankruptcy last year and began liquidating its assets in November, announced that it has accepted the latest stalking-horse bid worth $410 million for the purchase of its snack cake brands, bringing the total amount of stalking-horse bids for its bakery brands up to $858 million. The bids establish a floor where bidding will begin at a February 28 auction when the bankrupt company’s brands and assets will be put up for sale.

C. Dean Metropoulos & Co. and Apollo Global Management joined together to submit the snack cake bid. The bid is a proposed price for brands such as Twinkies and Dolly Madison and five bakeries where the products were made.

C. Dean Metropoulos & Co. has bought other famous but troubled brands including Pabst Brewing Co. and successfully turned them around.

“We share these bidders’ goal of quickly restoring Twinkies®, CupCakes®, Ding Dongs® and Ho Hos®, among others, to shelves across America, and view new, serious ownership as a necessity for building a sustainable model for these brands moving forward,” said David Durkee, president of BCTGM, a union representing 5,000 Hostess bakery workers. “The BCTGM looks forward to the opportunity to work together productively and is now engaging with bidders who recognize the value that we can bring to an ongoing business.”

Previously, Hostess had accepted a $360 million bid from Flowers Food, Inc. for Wonder Bread, Butternut, and other bread brands and 20 bakeries where they were made. Two other companies made successful stalking-horse bids on other lesser known Hostess brands.

The $858 million stalking-horse bids are almost twice as high as a 2011 estimate of the company’s worth.

Hostess went out of business in November after BCTGM members went on strike.

Before the strike, members overwhelmingly rejected the company’s take-or-leave-it final contract offer that cut wages by 27 percent over five years, increased worker health care expenses, reduced health care benefits, and did not restore pension contributions.

The media has dutifully reported that the strike caused Hostess to go out of business and lay off 18,000 workers, but Mike Hummel, a member of BCTGM Local 218 and a 14-year Hostess employee, tells a different story in a video entitled, “Inside the Hostess Bankery: Who Keeps the Dough.”

According to Hummel, the three private equity firms that own Hostess purposely provoked the strike by making a lowball final last best offer, which they knew BCTGM members could not accept. They then used the strike as an excuse to liquidate the company and sell off its assets.

The sale, says Hummel, will turn a nice profit for the private equity firms.

Ripplewood Holdings, Silver Point Capital, and Monarch Alternative Capital bought Hostess in 2009 after the company filed for bankruptcy for the first time. As part of the deal, the new owners asked Hostess union workers to make contract concessions estimated to be worth $110 million.

The new owners said that they would use money saved by the concessions to modernize the bakeries and make Hostess products competitive.

Among other concessions, workers agreed to allow the owners to deduct $10 a week per worker from worker paychecks. The deductions would be used to fund infrastructure improvements at the bakeries.

But according to the workers interviewed by Hummel, those investments never took place.

The CEO gave himself and other executive raises and bonuses, then blamed the workers for the bankruptcy, said Kenneth, a Local 218 member. “I feel if they were going to do something like that, they should put it on the fact that they didn’t spend money on equipment that we were working with because a lot of equipment was breaking down and needing repairs,” he said. “The money they stuck in their pockets should have been money that they should have invested in the company.”

Other workers interviewed by Hummel tell a similar story. Workers constantly had to make do with broken and antiquated equipment and few if any of the promised modernizations ever got off the ground.

In addition to not keeping their promise to invest in the company, the new owners decided to keep workers’ money that was supposed to be used to fund pensions.

Under terms of the old contract, BCTGM members’ compensation package includes $4.25 per hour per worker that went to the workers’ pension fund, which pays for a pension, retiree insurance, and a death benefit. But in August 2011, Hostess stopped sending that $4.25 an hour to the pension plan and instead kept it. Some of that money was used to pay executive bonuses and raises.

“They stole $50 million from our pension,” Hummel said.

The company owners have never returned this money, and the bankruptcy court has ruled that they don’t have to.

According to Hummel, the theft of their pension and the new owners’ broken promise to invest in the company made BCTGM members wary of making more sacrifices, and that’s what led to the company’s demise.

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.

Hostess, bakery workers head to mediation; liquidation on hold–for now

Federal bankruptcy judge Robert Drain on Monday urged Hostess Brands to seek the help of a mediator to resolve a strike by members of its bakery union, BCTGM. Hostess agreed, temporarily putting its planned liquidation on hold.

Negotiators from Hostess and BCTGM will meet with a mediator on Tuesday morning.

The Teamsters, Hostess largest union, which primarily represents delivery drivers and those who support the drivers, said that it would “closely monitor the mediation . . . and assist in any way we can to help the two sides reach an agreement that keeps the company’s doors open.”

BCTGM did not issue a statement about the mediation.

BCTGM did, however, submit a motion Monday in bankruptcy court that joined other unions affected by the possible liquidation in objecting to the company’s request to be allowed to begin winding down operations.

In its pleadings, BCTGM carefully laid out reasons why its members went on strike even though they knew that there was a good chance that Hostess would react to the strike by going out of business.

Foremost among their reasons was the belief that the company’s owners were not interested in meaningful restructuring that could make the company viable again.

Members of the union suspected, instead, that the private equity companies that now own Hostess–Ripplewood Holdings, Monarch Alternative Investments, and Silver Point Capital–were more interested in diverting company assets to their own pockets

The pleadings point to past experience to justify their concerns. In 2009 as part of a deal to help Hostess exit from its first bankruptcy, BCTGM members agreed to reductions in their health and welfare plans and work rule changes that achieved “significant labor cost savings.”

In return, according to BCTGM, the company agreed to invest these savings in new equipment, new technology, rebranding its products, such as Twinkies and Wonder Bread, and plant modernization–investments that could help Hostess regain its lost market share that led to its first bankruptcy.

But this reinvestment never took place. Hostess used savings generated by the workers’ concessions instead to pay private equity fees to its new owners and executive pay increases and bonuses.

The company also took on more debt. To buy the company in 2009, Hostess’ new private equity owners borrowed $713 million. Since then the company’s debt has increased to $860 million.

When the first bankruptcy ended, BCTGM warned that unless the company got serious about reinvesting in its operations, the company’s heavy debt load would soon lead to another bankruptcy. The warning proved prescient.

Instead of working with its unions to avoid a second bankruptcy, the company again blamed workers for its troubles.

After the company declared its second bankruptcy, it began bargaining with the bakery workers on a new contract. During the negotiations, Hostess demanded that the bakery workers agree to an 8 percent wage cut, 20 percent higher worker health care costs, allowing the company to freeze pension contributions until 2015, and the elimination of eight-hour work shifts.

Having been burnt once, BCTGM members were skeptical about accepting more concessions. In September when Hostess stopped negotiating and made its final offer, 92 percent of the BCTGM membership voted to reject it.

When the company decided to unilaterally implement its final offer, the union felt that it had no choice but to strike. Savings from any concessions that workers made would once again be diverted to the private equity firms instead of into meaningful investment in operations. Without new investments in operations, the firm would soon be back in bankruptcy court for the third time.

Hostess seeks executive bonuses as it puts employees out of work

Bloomberg reports that Hostess Brands will seek permission from a bankruptcy judge to pay executives as much as $1.75 million in bonuses to oversee the liquidation of the company and lay off 18,500 workers. Hostess, which filed for bankruptcy in January for the second time in eight years, announced on Friday, November 16 that it would liquidate the company rather than seek a fair deal on a new contract with striking bakery workers.

The workers went on strike on November 9 after Hostess tried to implement terms of a final offer that 92 percent of BCTGM members rejected in September. The final offer would have cut wages by 8 percent, increased worker health care costs by 20 percent, and ended eight-hour work shifts.

Workers rejected the offer because in 2009 they agreed to concessions that helped get Hostess out of its first bankruptcy, then watched as money that should have been used to invest in making the company strong again was diverted to pay executive bonuses, a large debt obligation, and fees to the private equity companies.

Before declaring bankruptcy, Hostess stopped paying money into the workers’ pension. BCTGM estimates that Hostess now owes $160 million to the workers’ pension.

Meanwhile, Richard Trumka, president of the AFL-CIO, blasted the private equity firms, Ripplewood Holdings, Monarch Alternative Investments, and Silver Point Capital, which own Hostess, and praised the striking workers for taking a stand against Wall Street greed:

Pundits should be applauding the bakery workers of Hostess Brands for standing up to Wall Street interests and standing for decent working standards and the middle class.

The truth is that the Bain-style vulture capitalists invested in Hostess to profit not by making quality products, but by bleeding the company of every dollar before discarding it.

They’re doing it because they can, because that’s what Wall Street  speculators do when they get their hands into a company’s till.

And today, the millionaires are walking away, with an added twist.  They’re blaming the bakers and others who faithfully made the iconic  Twinkies and other Hostess goods for decades—not for untold riches but  for a decent paycheck and good benefits.

Trumka said that in 2011, Hostess reported sales of $2.5 billion but ended up losing $341 million because of payments on nearly $1 billion worth of debt that the private equity companies took on to purchase Hostess.

Trumka said that it was heartbreaking to see so many workers hurt by Wall Street greed, but that he is inspired the courage of the bakery workers who have taken a stand against this greed.

“The unified bakery workers rejected the last cruel deal from  executives by a vote of 92 percent. They chose to raise their heads with  pride, as well they should,” Trumka said. “One way or another, working people in America have to stop this race to the bottom.”

Hostess files for liquidation; strike continues

Hostess Brands on November 16 filed a motion in federal bankruptcy court seeking permission to close down its business and liquidate its assets. The company had threatened to liquidate if a strike by its bakery workers continued past a 5:00 P.M., November 15 deadline. The deadline came and went; the bakery workers remained on strike, and the company began liquidation proceedings on Friday morning.

Hostess on Friday suspended operations at its 33 bakeries across the US; Workers at the 24 bakeries that have been on strike remained on strike.

On Saturday, November 16, Bloomberg reported that C.Dean Metropoulos & Co., a private equity firm that has saved other struggling US food and beverage brands from oblivion, is considering buying Hostess. Metropoulos owns Pabst Brewing Co. and purchased Chef Boyardee, Vlasic Pickles, and Bumble Bee Tuna when they were facing difficulties.

Before the November 15 deadline, strikers at one Hostess, according to USA Today,  remained defiant in face of the news that Hostess planned to shut down its operations. “You have to take a stand for what you believe in,” said John Smith, who has worked for Hostess for 22 years, to USA Today. “They gave us a take-it-or-leave-it deal. We can’t take the financial abuse.”

Smith works at Hostess’ Indianapolis bakery where on Thursday afternoon about 45 workers walked the picket lines, and chanted, “No pension, no deal.”

In July 2011 before it filed for bankruptcy, Hostess unilaterally stopped making contributions  totaling about $160 million to the workers’ pension fund.

After it filed for bankruptcy in January 2012, the company sought new labor agreements with its unions, including its two largest unions BCTGM, which represents bakery workers, and the Teamsters, which represents workers at its distribution centers.

After months of negotiations, it made a final offer that included an 8 percent wage cut, a 20 percent increase in worker health care costs, and work rule changes designed to eliminate jobs.

By a narrow margin, Teamster members voted to accept the final offer. BCTGM members, on the other hand, voted overwhelmingly to reject the offer, and the union began striking after Hostess began unilaterally implementing its final offer.

BCTGM leaders blamed Hostess’ financial troubles on mismanagement, and objected to the way that the company tried to dig itself out of its hole by shifting more costs to its workers.

“The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share,” said Frank Hurt, BCTGM president.  “The Wall Street investors who took over the company after the last bankruptcy attempted to resolve the mess by attacking the company’s most valuable asset – its workers.

“They sought to force the workers, who had already taken significant wage and benefit cuts, to absorb even greater cuts including the loss of their pension contributions. I have said consistently throughout this process that the BCTGM is a highly democratic organization and that our Hostess members themselves would determine their future. By an overwhelming majority, 92 percent, these workers rejected the company’s outrageous proposal, fully aware of the potential consequences.”

Teamster leaders said that they too were frustrated by Hostess’ mismanagement but that had hoped to work “constructively (with Hostess) to find a solution to preserve jobs.”

The Teamsters on Thursday issued a statement urging BCTGM to hold a secret ballot of BCTGM members at Hostess to determine if the workers want to continue their strike in light of the company’s announced intentions of winding down its operations.

If Hostess carries through with its liquidation plans it would mean the closure of 33 bakeries, 565 distribution centers, 550 outlet stores, and 5,500 delivery routes.

Hurt said that striking workers would be glad to return to work and help the company fight through its bankruptcy if Hostess rescinds “the horrendous wage and benefit reductions, including pension, and the restoration of the cuts that have already taken place.”