The Grays of Fairness

The Grays of Fairness

American Crystal Sugar Company's lockout: a perfect stalemate.

Sometimes a journalist can get so deep into a subject, it’s hard to come out of it. It’s like character acting—you really have to get to know the subject and the characters you want to portray to thousands of people if you’re to have any chance of capturing their interest, and time.

It was that way for me regarding American Crystal Sugar Company. Weeks after talking with more than 30 people about its lockout on the icy Red River Valley, I still felt a bit agitated and annoyed at how both sides seemingly have good points, but are unable to settle—a perfect stalemate.

Let me try to give you a sense of what I mean through three slightly fictionalized scenarios:

Scenario 1. You joined a company years ago under a contract providing full health and dental coverage with minimal deductibles and no copays, a competitive salary and bonus plan, stock warrants and annual allocations of stock options based upon performance, matching retirement fund contributions, and more. You’re working your tail off, but don’t mind given this compensation and benefits package.

But then your CEO tells you your job description has been rewritten, and the new version is void of job security language contained in your previous contract. Additionally, your benefits are reduced and your health care costs are going to soar, given your family of five’s medical needs. You’re also told that if you don’t formally agree to the changes within three months, you’ll lose your job—as well as the stock warrants and options you were counting on as part of your retirement plan. Meanwhile, you know there aren’t other positions likely to open anytime in the near future in this market that would fit well with your interests and experience.

Scenario 2: Your sister has worked for the same employer for more than 30 years and is looking forward to retiring with a pension and health care coverage she says she’s paid for over the years in lieu of greater wage increases. You’re happy for her, given the increasing number of horror stories from friends and colleagues whose parents or siblings don’t have adequate postretirement health care, savings, or pensions.

Then you receive a phone call from your sis. She tells you that her health care coverage is tripling in cost, and it’s looking like her employer will soon eliminate her position and create a new one, allowing it to bring in someone who’s younger, more technically savvy, and all-around cheaper to employ. If she loses her job now, she’ll receive little in pension, and no health insurance. These changes are occurring even though her employer is reporting record profits and increasing executive compensation by six figures.

Scenario 3: Demand for your product has helped your company report stellar revenues, profits, and margins the last three years. Capital expenditures on automation and other outlays have delivered solid returns on investment. Productivity, raw material costs, and fixed overhead are holding steady, and demand for your product continues to increase.

But there’s maybe one year before there will be a significant drop in price support for your primary product, and you can’t do anything to stop it (foreign competition is coming). Meanwhile, energy prices, health insurance, pension obligations, and other costs continue to increase. Your company’s health care costs rose 300 percent since 1998: It’s paying an average of $13,198 a year per employee—well above the national average of $9,000. The union representing factory workers doesn’t trust you when you tell them costs have to come down fast, and refuses to accept any changes your team proposes to its contract.

If you empathize even slightly with one or more of the individuals in the scenarios above, you understand what it’s like today for Crystal Sugar’s leadership, 1,300 locked-out factory workers, and related families and friends. It’s complicated, but I keep thinking somebody has to take the first step and start negotiating in good faith again.

That’s easy for an outsider like me to say. And ordinarily, a company’s business is its own. In this case, however, a company and its union’s actions are disrupting local economies (at least $12 million in lost wages and local spending thus far), wreaking havoc on the finances and emotional well-being of thousands of families, hurting the company’s financial results for its current fiscal year, and stirring up concerns about negative impacts on the nation’s $19.5 billion sugar industry.

As part of the current farm bill, the U.S. government limits the quantity of foreign, cheaper sugar imported into the country. When sugar demand increases like it did in 2011, companies such as Crystal Sugar receive more for it—and people like us, and the food manufacturers that use sugar to make their products, pay more.

That’s fuel for a fire lit last October by U.S. Senator Dick Lugar (R– Indiana) and U.S. Representative Marlin Stutzman (R–Indiana), who introduced the Rural Economic Farm and Ranch Sustainability and Hunger Act. Their bill aims to cut $16 billion, or 24.5 percent, from the current U.S. farm bill. Included in the cuts is a repeal of sugar import controls. This month’s story explains why the Crystal Sugar lockout could make it even harder for the sugar industry to keep its protections in the next farm bill.

Who knows—maybe the lockout will be settled between the time we go to press (January 13) and the time you read this. I hope it is. Other lockouts in the U.S. and in Canada have run anywhere from one week to six years. The union representing Crystal Sugar’s factory workers (a different local) waited 10 months before a new contract was negotiated last July for 237 locked-out workers at Roquette America, a grain milling business in Keokuk, Iowa.

One last note on Crystal Sugar’s lockout: It’s one of the biggest in recent years and is potentially precedent-setting for other management teams and unions. Minnesota, by the way, ranks eighth in the nation in union members as a percentage of all wage and salaried workers, according to the U.S. Bureau of Labor Statistics.

Related Stories