Company brought in replacements after the union rejected contract.
MOORHEAD, MINN. - Thirty years of labor peace at a Red River Valley institution, American Crystal Sugar, ended Monday with 1,300 workers locked out of their jobs.
It's one of the biggest labor stoppages in the state in recent years, and one that involves one of northwestern Minnesota's largest private employers.
Moorhead-based American Crystal, a farmer-owned co-op and the largest U.S. beet sugar producer, made good on its lockout threat after workers resoundingly rejected a contract offer Saturday. The old contract, which covered Moorhead and four other Red River Valley plants, expired at midnight Sunday.
At about 7:50 a.m. on a grim, rainy Monday, replacement workers -- three big white Ford vans full of them -- rolled through the main gate of the Moorhead plant to keep production going. They drew cold stares and cold comments from union worker toting picket signs.
The same thing occurred at American Crystal plants in East Grand Forks and Crookston, as well as Hillsboro and Drayton, N.D.
Rejecting the contract "was a hard decision, but we just couldn't let them take this over," said Peter McDougall, a mechanic and a 30-year American Crystal veteran.
The comment summed up several workers' opinions that the contract they turned down would diminish union strength and jack up health insurance so much that it would erode wage increases the company proposed.
No new negotiations have been set, and the company has termed its previous offer "final." Still, "We would be open to talking again," said Brian Ingulsrud, American Crystal's vice president for administration.
Getting a federal mediator back in place to restart talks might take one to two weeks, he said. "The ball is in their court," Ingulsrud said. "We gave them a very good contract offer."
In locking out the workers, the company has taken an unusual step, said Marshall Tanick, a labor and employment-law lawyer in Minneapolis. This year's lockout of National Football League players got a lot of attention, but Tanick said few other lockouts have had an effect in Minnesota in recent years.
"I can't recall when the last one was," Tanick said. "[Lockouts are] extremely rare, especially in Minnesota."
Meanwhile, American Crystal Sugar workers in Minnesota say they'll soon file unemployment claims. In this state, locked-out workers -- unlike striking workers -- are usually eligible for unemployment benefits. That is not the case in North Dakota.
Replacements for the locked-out union members are being provided by Minnetonka-based Strom Engineering, which specializes in such work. But since the work stoppage is a lockout, not a strike, workers cannot be replaced permanently, said Aaron Sojourner, a labor economist at the University of Minnesota's Carlson School of Management.
Money wasn't key issue
Turnout was high for Saturday's contract vote, and 96 percent of the workers voted against the deal. Their beef wasn't about money: The company's five-year contract offer called for a 4 percent raise in the first year; 3 percent in the second; and 2 percent in each of the next three years.
Workers also would get a $2,000 signing bonus. Workers on average make $40,000 a year at the plant, $50,000 with overtime.
But the company's contract offer would bring union workers into the company's health plan for nonunion employees, which the union says would more than double out-of-pocket health care costs.
"It's outrageous," said Lois Herchert, a packaging forewoman and a 33-year veteran at the company. "There's got to be better insurance than what they offered."
Ingulsrud said the "plan we are offering [the union] is the exact same plan management has. It's a good plan," covering more worker health expenses than the average corporate plan, he said.
The other big sticking point for the Bakery, Confectionery, Tobacco and Grain Millers union workers is contract language over seniority and contracting out union jobs to non-union employees.
American Crystal added a clause to its "final offer" to address union fears of contracting out jobs. The company would be prevented from subcontracting work done by union employees that would result in layoffs, Ingulsrud said. "It's as crystal clear as we could possibly make it."
But union workers on the picket line Monday still were suspicious of the company's intentions. "They have too many wiggle words," said Tony St. Michel, an electrician who's worked at American Crystal for 35 years. "I believe they could contract out my job."
Thirty years of labor peace
The last labor stoppage at American Crystal was a strike in 1981. Michel noted that until lately, labor relations had been fairly good, and management and the union worked together successfully to keep in place a tariff system that restricts most foreign sugar imports into the United States.
"It torques me is that we've stood shoulder to shoulder with them to get what's best for the farmer and the sugar beet worker, and now they do this," he said, echoing other workers on the informational picket line Monday.
Several, too, noted that the lockout comes at a time when business is good for American Crystal Sugar and its farmer owners. Wholesale refined U.S. sugar prices during the second quarter were 15 percent higher than a year ago and 35 percent higher than the same time in 2009, federal data shows.
"Everybody is doing good," McDougall said. "The farmers are making money. And they've got their sugar [tariff] program."
'Sugar prices are high'
Ingulsrud acknowledged that "sugar prices are high right now and things look good." But he said other costs have risen significantly, while sugar prices "will inevitably come back to normal."
American Crystal Sugar has 2,800 shareholders from 875 sugar beet farms. The cooperative's 15-member board is made up of farmers.
At one time, a cooperative or nonprofit company -- like the Twin Cities hospitals involved in a labor showdown with nurses last summer -- might have been "kinder and gentler with its workers," said Peter Rachleff, a Macalester College history professor who specializes in labor studies. "There is now just one rule book being used by companies across the country."
Star Tribune staff writer Dee DePass contributed to this report. Mike Hughlett • 612-673-7003