Redemption through Pain

Ricardo Torres
March 22, 2012 — 2,708 views  
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In January of this year, Hostess filed for bankruptcy, just three years after emerging from their previous bankruptcy with ninety-three billion dollars in sales.  This is compelling news, especially since the Teamsters are threatening to strike Hostess while in their weakened condition.  The union is refusing to accept concessions as the company is trying to negotiate to maintain the ability to operate and show profitability.  In essence, the Teamsters are willing to take Hostess to the brink of destruction and beyond if they don’t get what they want.

This “scorched-earth” negotiations strategy is nothing new for the Teamsters (and other unions).  Unions know and understand that their only true strength is their ability to inflict enough harm on a company, which in turn forces them to cave-in to union demands.

I often watch the news or read the newspaper and wonder if others realize how shortsighted union officials can be.  Even in the midst of crippling economic times, union officials don’t seem to understand that a “great” contract is worthless if the company goes out of business.  But then I think back to my time when I was a union official.  It was early in my career when I realized that the union’s main goal was to get elected to office.   It wasn’t about the issues that drove employees to seek the union’s “help”.  It was about the perception we created to justify our existence.  You see, most people don’t have any understanding of the complexities of running a business enterprise, and they really don’t have any desire to understand.  I often find myself laughing when unions like the UAW tell the media that they are “partners” with the companies that employ the workers they represent.  The union really wants the public to believe that the long-term health of the companies is in the best interest of everyone involved.  That is until their demands are not met and they walk out on strike.  They seek “redemption through pain”.

Many unionized companies have tried to negotiate themselves out of similar downward spirals toward bankruptcy like the one that Hostess is now facing to no avail.  Large steel and automotive companies, and companies in almost every industry, have suffered the consequences for attempting this strategy.  I had many opportunities to see this from the union side firsthand when I was a union official.

While I was working for United Steelworkers, I remember working on the Steel Pack Pattern Negotiating Committee.  This was the first time I was involved with the Steel Pack Committee.  The steel industry was in danger of becoming insolvent and a tough stance was taken on the part of steel companies over job classifications.  Steel companies were insisting on initiating a massive cross training program with the goal of reducing thirty-five job classifications down to just five.  The steel companies believed that this effort was a “do or die” scenario and were willing to face a strike on the issue.  It was a deal killer.  I also was informed that the steel producers were trying to reach this goal for years and were predicting financial ruin if these concessions were not met.  We knew the steel companies were ready for war and, to be perfectly honest, the unions had to react.  The loss of these union dues-paying members would have destroyed us.

The strange position taken by the steel companies for many years was that they were trying to balance their financial situation as steel prices were dropping and the U.S. was being flooded with cheap steel.  The steel mills were falling apart and needed a quick infusion of revenue to modernize old mills that were drowning under the immense burden of legacy costs.   We (the union) knew that they couldn’t afford a strike.  We knew that it would be easier for them to give in to our demands, with the hope that the industry would grow strong enough to eventually let them put forth a long-term plan to cut costs and put the steel industry in a better position to withstand future recessions.

I also remember starting contract negotiations with a large multi-national glass production company.  We had less than 40% union density within the U.S. operations with this company.  For years, we were trying to get the company to give us a neutrality agreement. Since the company was foreign-based we had the unions from their home base country put pressure on them to the point where it was affecting their relationship.

We discovered that the company was in the process of trying to sell part of their glass division as negotiations were heating up.  This was because they had lost money over the previous five quarters, but that didn’t have any effect on our position.  We were just as determined to take away heavy increases from the bargaining table as when the process started.  We had a strong survivorship clause in the contract.  We knew how dire their financial situation was and knew that they needed to sell these divisions to survive.  They never could survive without the sale and we knew no one would consider purchasing them with severe labor strife in progress.

We held our ground and let the company negotiators know we had gained strike authorization and that we were making our preparations for a protracted strike.  We flooded the media with information about our “lack of progress” at the negotiating table, as we knew this would discourage potential buyers.  The end result of this strategy was getting our card check and other things we were demanding.  Once we received what we wanted we went on to continue our relationship as “partners with the company”.

Unfortunately this policy of destruction toward union goals isn’t limited to negotiations and the threat of strikes. It has become much more advanced. Today we see social networking allowing anyone to communicate with the world.  We also see the rise and popularity of mass protests and the speed in which they take place.  This is affecting how unions can take advantage of the energy from these movements.  In recent months, we have heard the buzzword “Occupy” more and more as unions and the Occupy Wall Street groups have started to coordinate their activities.  More and more, we are hearing reports of workers across the country occupying plants or office buildings to close them down and to bring publicity to their “cause”.  These activities are really nothing new.  When I was a strike coordinator, we took over many office buildings and took control of shareholder meetings, news bureau offices, hotel lobbies and many more businesses.  I was coordinating unions in support with the SEIU during their Justice for Janitors campaign, and helped them take over shopping malls and other major enterprises to pressure owners into recognizing their union.  But nothing compares to the uncertainty that we are facing today.  A perfect example is the United Electrical Radio and Machine Workers of America (UE) who is occupying the Serious Materials factory, the former Republic Windows plant.  Now the Occupy Chicago movement’s labor committee (the Occupy Wall Street and state subsidiaries now have labor committees) has announced that they will support the takeover of the factory.  We see this happening more frequently all over the country and question how the collaborations between the unions and Occupy movements will upset basic current labor law.  Can the Occupy movement occupy strike lines after the union gets hit with an injunction to limit its strikers to only a few at a time?  The ruling would only apply to the union or strikers under their control.  How could they be responsible for the so-called “outside leaderless” organization’s activities that occur outside these facilities? What about secondary boycotts?  The union would not be directly participating and would have “no control” over an “enraged group of citizens” who are frustrated with perceived injustices committed by large corporations.  Aren’t they just exercising their “constitutional rights” by expressing their outrage onto anyone who is associated with this company (yes, this is tongue-in-cheek)?  Only time will tell where all of this will lead, but one thing is certain.  Labor federations are going to continue to push the legal envelope to the brink of the law.  Just remember, unions have their own agenda.  They are looking out for their own growth and reasons for existence.  It has little to do with the best interest of corporate survival.



Ricardo Torres

Permanent Solutions Labor Consultants

A former union official, Ricardo Torres currently leads PSLabor Consultants. The success at PSLabor lies in the "Inside Edge" that Ricardo and his staff brings to the table when developing union-free strategies throughout the world.