Crystal Sugar’s Profits Drop; Union Says Lockout Hurts Co.

Crystal Sugar’s Profits Drop; Union Says Lockout Hurts Co.

The sugar producer’s net proceeds declined 32 percent in its 2012 fiscal year, and the union representing its locked-out workers say that’s because of the higher costs associated with having replacement workers.

American Crystal Sugar Company’s 2012 net proceeds fell about 32 percent in its 2012 fiscal year, as the cooperative continues to be immersed in a labor dispute with its locked-out union workers.
 
For the fiscal year that ended on August 31, Moorhead-based Crystal Sugar reported net proceeds of $548.3 million, compared to a record-high $804.8 million for the prior year, according to its annual report released Wednesday. Revenue for the 2012 fiscal year totaled $1.48 billion, down 4.1 percent from its 2011 revenue of $1.54 billion.
 
Crystal Sugar—which is a farmer-owned co-op and the largest U.S. beet sugar producer—locked out 1,300 union workers in August 2011 after they rejected a new labor contract offer. The company has since been running its plants with replacement workers.
 
The Bakery, Confectionery, Tobacco Workers, and Grain Millers International union, which represents the locked-out workers, said the lockout is hurting the company’s bottom line, as the company is struggling with higher costs associated with hiring replacement labor.
 
“It’s a ripple effect,” union spokesman John Riskey told Twin Cities Business. “They bring in these workers with little experience, and as a result, production is down and profits have fallen.”
 
“The lockout is hurting not only factory workers, our families, and communities, but Crystal Sugar itself and many people for whom the cooperative has been a source of pride and profit for many years,” the union said in a press release. “Profits have fallen, beet payments are shrinking, production is down, and company debt continues to rise.”
 
The union plans to deliver a petition containing more than 100,000 signatures to CEO David Berg, calling for “a fair deal” and an end to the lockout.
 
In a recent U.S. Securities and Exchange Commission filing, the company acknowledged that the continued lockout might “negatively impact” its current and future financial performance, adding that it faced increased costs in its 2012 fiscal year, partly due to the ongoing labor dispute.
 
Brian Ingulsrud, American Crystal’s vice president for administration, told The Forum of Fargo-Moorhead that costs have risen with replacement labor, but said production still is running at high levels.
 
In its annual report, the company said that “[while] we didn’t deliver financial results to shareholders as high as we would have liked, we [are] committed to strategic actions aimed at strengthening American Crystal’s competitive structure far into the future.”
 
Company officials were scheduled to comment on the 2012 results and future outlook at an annual meeting Thursday.
 
The workers and American Crystal haven’t been able to agree on the terms of a new five-year labor contract meant to replace a seven-year agreement between the two parties that expired on August 1, 2011. The company first made its new contract offer in July 2011, and the union has since voted on it four times and rejected it each time. Fifty-five percent of the workers voted against it in the most recent vote on Saturday.
 
Meanwhile, in October, the AFL-CIO, a national organization that encompasses 56 unions that collectively represent more than 12 million workers, announced its support for a boycott of products produced by Crystal Sugar.
 
Early this year, Twin Cities Business Editor in Chief Dale Kurschner traveled to the Red River Valley to learn more about the ongoing and contentious labor dispute. To read the resulting feature story, which was published in the February issue of the magazine, click here.