Mikkel Pates, Forum Communications Co., Published July 26 2011
American Crystal Sugar could be facing lockout of 1,300 union employeesMOORHEAD – Is American Crystal Sugar Co. headed for a lockout with its 1,300 union employees on Monday? Or will the last-minute brinksmanship end in an agreement?
It’s too soon to say, but union officials say time is running short to replace the Moorhead-based co-op’s seven-year labor contract.
Officials of the Bakery, Confectionery, Tobacco Workers and Grain Millers Union (BCTGM) warn that the farmer-owned cooperative may be headed toward its first labor impasse in 30 years. They officially accuse the processing company of not negotiating in good faith.
They say if an “equitable” deal isn’t reached by Sunday’s deadline, the company will lock them out.
Brian Ingulsrud, Crystal’s vice president for administration and a company negotiator and designated spokesman for the talks, says the four days scheduled for negotiations this week “will give us the time to reach an agreement, and that is our goal.”
Meanwhile, Ingulsrud said the company has a contingency plan for hiring replacement workers if a union contract can’t be reached.
The company’s latest offer was a 1.25 percent annual pay increase over five years. At the same time, executive base salaries have gone up from 6 percent to 26 percent in the past two years. Executives’ salaries account for only a third of their total compensation, which has bulked up by 40 percent to 125 percent as the beet crops and sugar prices have swelled.
Unruffled, Crystal officials maintain their first priority is to make a deal. They dispute any comparisons between executive and union contract compensation.
Crystal is unique as an agribusiness in the region. It deals with a relatively high-value crop, compared to cereal grains. The biggest difference is that the processing is owned by the farmers as a closed-membership cooperative. Shareholders have both the right and the obligation to produce beets for the cooperative.
Last year’s crop is expected to return a record $1,500 per acre, on average, in gross income to the co-op’s growers because of record beet yields and high sugar prices, company officials say.
Although the company increasingly automates its systems, Crystal remains a major employer in its towns – Drayton and Hillsboro in North Dakota and Crookston, East Grand Forks and Moorhead in Minnesota.
Union workers earn between $30,000 and $50,000, without overtime, union officials say. At the lower end of the pay scale are pay loader operators and sugar warehouse workers. At the top end of the scale are more skilled welders, mechanics and boiler operators.
In 2004, when the current labor agreement with Crystal’s union workers was reached, it followed three-year contracts passed in 1999 and then extended by two years in 2002.
David Berg, then a vice president, was the chief negotiator for the labor contract.
“That one there, we went to 11:30 p.m. on a Saturday night, and neither of us was happy,” says John Riskey, president and business agent for the BCTGM local that represents Drayton, East Grand Forks and Moorhead. He’s also a negotiator for this contract.
In 2007, Berg became president and chief executive officer, and things have changed.
In 2011, the co-op’s negotiation team is led by Joe Talley, Crystal’s chief operating officer. Talley, an accountant, is accompanied by a team that includes Ingulsrud and Jim Dawson, a company lawyer from a Minneapolis firm.
On the union side, there are 15 people – one to three members from each of the factories or sites as well as Riskey and Steve Bertelli of Illinois, regional vice president of the International BCTGM. This week, the group will be joined by Mark Froemke of Grand Forks, a former Crystal employee who for six years has been on leave to work full time for the AFL-CIO of Minnesota, an umbrella union with which the BCTGM affiliates.
On July 14, the two sides were joined by Jeanne Frank, a Twin Cities-based federal mediator.
Back and forth
Talks started May 6. The union offered 25 proposals on a four-page document, and explained them.
Crystal put out a 40-page proposal, with no explanation, that offered nothing on years, wages or benefits. Union officials say the company’s proposal would allow the company to eliminate all jobs and fill them with contract workers without consulting the union.
They proposed a one-year contract, which among other things, called for a 5 percent pay increase. Benefits would stay the same. The company came back with a seven-year contract proposal with no specific wage changes but with health insurance cutbacks.
The union countered with a three-year proposal, with 5 percent annual increases, but no health insurance changes. The company countered with a five-year proposal at 1.25 percent annual increases, keeping the 40-page initial proposal largely intact. Health insurance cutbacks would effectively cut a $30,000 single worker by 8 percent, if they have a $500 deductible, for example. A $50,000 family policy would have wages cut by 16.75 percent, if they had a $500 deductible.
“That’s where it stands right now,” Froemke says. The two sides have agreed on a few other things, mostly housekeeping matters.
Three and a half days were scheduled to negotiate this week, union officials say.
Crystal officials have told union negotiators they are unavailable to negotiate after Thursday because Talley and Berg are attending a sugar conference in Vermont. Union officials say they’re willing to work around the clock through the weekend to hammer out a deal.
Crystal says a lockout may be needed to protect shareholders and customers. Froemke says this kind of thinking is “offensive” because the workforce has worked to make Crystal a profitable company, and that implies the workers would undermine the company.
“If we don’t have customers, we don’t have a job,” he says. “If we don’t have growers, we don’t have a job.”
The union is not threatening a strike.
The company has told union negotiators it is making arrangements to bring in non-union contractors to run the plant if a lockout occurs.
Union officials say the company is doing well financially and seems to share that with top executives more than with workers.
They note that Berg’s total-compensation annual pay package went to $1.97 million in the company’s fiscal year 2010 – up 23 percent from $1.6 million in 2009, which was up 69 percent from $946,775 in 2008. Similarly, Talley’s total compensation increased by 17.5 percent in 2010 and 22.5 percent the prior year. Ingulsrud’s increased 21 percent in 2010 and 45 percent in 2009.
Ingulsrud says the executive and worker compensation packages are different. “Executive pay is designed to go up and down with the profitability of the company,” he says. “I don’t think union employees would appreciate a wage system that worked that way,” he says. “I think they want more of a reliable income. I don’t think you’ll see many union contracts where pay is reduced in years when the company is less profitable.”
Executives sign up for those kinds of fluctuations, Ingulsrud says.
Berg’s base salary – not the bonuses – is at $554,077. That increased by 9 percent in 2010 and 26 percent in 2009. Chief Financial Officer Tom Astrup’s increased by 6 percent and 8.5 percent in the same two years. Talley’s base salary increased by 12 percent and 7 percent, Ingulsrud’s by 6 percent and 8.5 percent.
Froemke contrasts those gains with a multi-year contract that had worker raises at 2 percent annually.
“We’re willing to work,” Froemke says. “There is no need for a lockout, and this union will do everything possible to make sure we get a fair contract that works for everybody.”
Mikkel Pates writes for Agweek