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Employers get control by turning to lockouts

Jim Spencer, Star Tribune (Minneapolis) –

WASHINGTON – In his first 30 years as a labor lawyer, Harold Weinrich rarely advised corporate clients to lock unionized workers out of their jobs. In the last decade, labor law rulings favoring employers have changed his mind.

These days, “the employer is in control,” said Weinrich, who counsels employers on labor relations as a Washington-based partner at Jackson Lewis, a top workplace law firm. In lockouts, “the employer sets the time, and the employer sets the duration.”

As professional musicians and professional hockey players in the Twin Cities are just learning and as sugar beet processors in northwestern Minnesota have grasped painfully for 14 months, companies and even non-profits are getting more aggressive with take-it-or-leave-it offers.

Locking out employees is still a risky strategy for a company’s income and its image, experts say. But in a country struggling to recover from the worst economic downturn since the Great Depression, it often works.

For employers, the end game usually involves one of two scenarios, said University of Minnesota economist John Budd: “Unconditional surrender of the union” to major concessions on pay, benefits or hiring and firing or “holding out long enough that workers find jobs elsewhere.”

Definitive numbers are scarce, but most experts agree that lockouts are on the rise. They have happened across the country everywhere from power plants to pro sports, auction houses to nursing homes, and these days at the Minnesota Orchestra and St. Paul Chamber Orchestra.

In the past couple of years prominent lockouts occurred at Consolidated Edison in New York, Caterpillar in Canada and Cooper Tire in Ohio, as well as with National Football League referees, the National Basketball Association and, now, the National Hockey League.

No work for 14 months

In northwestern Minnesota, American Crystal Sugar offers a vivid example of the lockout strategy.

The farmer-owned cooperative locked out roughly 1,300 employees on Aug. 1, 2011. Federal law allowed the sugar beet processor to hire replacement workers temporarily, but ACS can operate its plants indefinitely with those workers as long as the union refuses to accept its final contract offer.

“It was our intent to offer a fair proposal,” said Brian Ingulsrud, American Crystal Sugar’s vice president for administration. “We wanted to avoid the lockout.”

Ingulsrud said a lockout was necessary to keep sugar beets from degrading in storage in the event of a strike. Experts added that a strike would have given employees power to abruptly stop working amid the sugar beet harvest, potentially forcing the company to make concessions.

“Timing matters,” Budd said.

ACS made a take-it-or-leave-it offer that included a pay raise but increased employees’ cost for health care. The contract also expanded the company’s ability to hire outside contractors and reduced the role of seniority in promotions.

Sugar boiler and union leader Gayln Olson said the contract took away power acquired over decades of collective bargaining. Although they are struggling to find other jobs, Olson and his fellow union members have voted three times not to accept what ACS is offering.

Ingulsrud declined to say how much direct effect the lockout has had on the company’s financial results. But he called the lockout “an investment in the future to have a contract that fits modern-day economic realities.”

Short-term sacrifice

This give-a-little-to-get-a-lot approach marks the decision by most employers who force showdowns with organized labor at a time when union membership at private companies has shrunk, said Rick Hurd, a professor of labor relations at Cornell University.

“The goal,” he said, “may be to replace the union by attrition.”

Hundreds of locked-out union workers at American Crystal Sugar have already taken early retirement, union leader John Riskey conceded.

Weinrich said any work stoppage is not for the faint of heart. “It has to be part of a long-term strategy to achieve long-term positive operating results,” he said. “You have to be able to accept some pain.”

But the current economic climate makes it easier for employers to handle the hurt, the U’s Budd said.

In recent years, he said, lockouts have tended “to end with more of a whimper than a bang. Workers look elsewhere for jobs because they’re so desperate for income. If no one comes back to work, you’re in a new hiring situation.”

No replacing top talent

Hiring replacements is not as easy in professional sports and the arts.

“I can’t see other hockey players doing that,” said Darroll Powe, a Minnesota Wild forward dealing with the National Hockey League’s current lockout.

Powe, the Wild’s representative to the players’ union, is “optimistic that we will play hockey this year.”

Cornell’s Hurd said it is clear that lockouts have become a bargaining tool in pro sports. But these lockouts are about timing and controlling costs, not union busting.

“Pro sports people are the most gifted,” Hurd explained. “There’s no way owners want to replace them.”

At the Minnesota Orchestra and the St. Paul Chamber Orchestra (SPCO), management imposed lockouts after seeking big salary cuts that union members would not accept.

Lockouts are a first for both groups, and union members complain that the actions impose for-profit mentality on non-profit organizations.

“Part of [SPCO management’s] proposal was to get donors to give money to buy out everyone over 55,” St. Paul bassoonist Carole Mason Smith said. “That’s half the people in the orchestra. They were going to replace them with younger, cheaper players.”

Administrators counter that the orchestras must cut costs to stay solvent. The SPCO buyouts are voluntary. A 15 percent pay cut for those who stay is not.

In a letter to patrons, SPCO president Dobby West said musicians’ salaries had risen while the orchestra cut administrative expenses.

Now, West said, the orchestra must “align our fixed expenses with our sustainable revenue.”

The Minnesota Orchestra wanted musicians to take pay cuts averaging 33 percent even as it spends $52 million to renovate Orchestra Hall, including $14 million in state bonds.

The money was designated by donors and the state for renovation, said orchestra president Michael Henson. It can’t be used for musicians’ salaries.

He said the orchestra does not want to replace its players. But he warned that with operating losses running in the $6 million range and a depleted endowment, it is “not financially realistic” to continue paying musicians at their current rate.

Clarinetist Tim Zavadil called the lockout “a bullying tactic.”

“Why spend $52 million [on renovations at Orchestra Hall]” he asked, “and take health insurance away from my 5-year-old son?”

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