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American Crystal: Burnt Sugar
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American Crystal: Burnt Sugar

Leadership at American Crystal Sugar may win the battle, but at what cost?

Last year, Twin Cities Business explored Moorhead-based American Crystal Sugar Company’s decision to lock out 1,300 union workers after handing them a radically different contract and refusing to accept any modifications. It was and is one of the largest union conflicts in the country.

We produced an analysis story and Editor’s Note with the goal of presenting both sides. It was my hope that matters would be resolved in what was a game of chicken affecting more than 1,000 families in already poor economies. But they weren’t, and as we go to press, the union is asking the few members it still has—perhaps reduced by two-thirds (see this month's feature story, ”Stealth Labor”)—to vote for a fifth time April 13. Even if members finally agree to the contract, there won’t really be much of a union left. (Update: Workers did ratify the contract.)

Over the years I’ve studied hundreds of business leaders and probably a dozen unions, and quite a few instances where highly regarded businesses became embroiled in situations that tarnished their reputations. Crystal Sugar may end up topping the list of those with the worst lapses in business ethics.

Yes, I dare use the word “ethics,” realizing there are different ways of considering what is ethical based on one’s background, culture, and many other factors—and that many of you may think that how a company operates (and treats people along the way) is strictly its own business as long as it follows the law. I’m aware of this after spending a portion of my career as editor of a national magazine called Business Ethics, where we explored situations ranging from Monsanto’s sincere desire to feed the world through genetically engineered crops to the challenges of doing business with China, where, at the time, forced labor produced most of the goods and intellectual property theft was rampant, among other ethical quagmires.

Business ethics and the related “corporate social responsibility” are most often defined as revolving around a company’s ability to be responsible, fair, and respectful to all of its constituents—investors, suppliers, customers, employees, and the community. Minnesota is recognized around the country and the world as home to a host of corporations that support this way of thinking. We even launched the international Caux Round Table Principles for Business.

Where things get murky is when leaders have to balance the sometimes conflicting needs of their constituencies, or when unexpected challenges flare up. Perhaps most common is when investors are suffering, so leaders look to cuts in employee headcount and benefits. When, how, and for how long these adjustments are made must be weighed and measured. And logically explained “whys” can be shared responsibly and respectfully with those negatively affected by the outcome; my CEO when I worked at Lawson Software was good this way. Some corporate leaders, however, decide to treat people like cattle, or worse.

This is how Crystal Sugar’s leadership has treated its union workforce.

The company has good business reasons for changing its contract with the union representing workers at its five sugar beet processing plants. For example, health care costs were too expensive and well above national averages. The union rejected a contract which, on the surface, seemed pretty good—it included a 17 percent pay raise over five years, a $2,000 signing bonus, and increased benefits paid to pension funds (which is more than what most of us were being offered at the time). The union balked, however, because the offer changed or eliminated what are typically the most coveted elements of a collective bargaining agreement—worry-free health care benefits, seniority rights, job security, and a fair grievance process.

All of this seems fairly typical in collective bargaining. What was radically different, however, was that there was no bargaining. The company offered these terms May 6, 2011, and following a few meetings with union leaders, began locking out employees if they didn’t accept the contract as-is by July 31.

Planning a contract/lockout strategy with 1,300 replacement workers waiting in the wings before actually negotiating and bargaining in good faith with the existing workers isn’t the way leaders of good conscience run their businesses. And it goes against our state’s reputation for good corporate citizenship.

What’s sad in all of this is not only the lives damaged by such tactics, but also the ruin of a corporate name. Crystal Sugar had a stellar reputation among generations of families as a company that takes care of its employees, as a place where employees were proud to work and do what was necessary to become more efficient. Today, Crystal is a soulless operator of sugar beet processing plants that is so intent on its way as the only way, that it’s lost sight of what made it great: the ability to serve all of its constituents well.

And what’s already a cold region in our state has, this spring, gotten a whole lot colder.

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