American Crystal Sugar workers vote today on contract

  • Article by: MIKE HUGHLETT , Star Tribune
  • Updated: December 1, 2012 - 6:41 PM

Union workers will decide Saturday to accept a contract offer that would end one of the longest labor stoppages in recent Minnesota history.

Union workers at American Crystal Sugar vote Saturday on whether to accept a contract offer that would end one of the longest labor stoppages in recent Minnesota history.

It's substantially the same contract they've already rejected three times, but the margin of rejection in the last vote in June was considerably lower than in 2011 votes. And the workers -- locked out since Aug. 1, 2011 -- are hurting more than ever as unemployment benefits have expired.

"I'd expect a closer vote," said John Budd, a labor relations expert at the University of Minnesota's Carlson School of Management. "Seasonal jobs [for locked-out workers] are harder to come by in the winter, and winter is a harder time to be without income as far as heating bills."

Still, Moorhead-based Crystal Sugar, the nation's largest sugar beet producer, hasn't budged on its offer. "It seems curious to me that Crystal Sugar can't find something to compromise on," Budd said, "something to make the workers feel OK about voting 'yes.'"

Crystal Sugar, a farmer-owned cooperative, locked out 1,300 union workers at its five Red River Valley plants after 96 percent of workers rejected a contract offer. Replacement workers were brought in, including at plants in Crookston, Moorhead and East Grand Forks.

While the contract would raise wages by a relatively healthy 13 percent over five years, it would entail significant increases in workers' health care costs. Also, it would give management more rights in determining key workplace issues. For instance, seniority -- a basic union tenet -- would lose its importance in worker advancement.

"This is about power -- a shift in power from a partnership to unilateral power on management's part," said Peter Rachleff, a history professor and organized labor expert at Macalester College in St. Paul.

Labor strife had been rare at Crystal Sugar over the past three decades. Indeed, the sugar workers union, Crystal's executives and its farmer-owners worked together in Washington, D.C., to preserve a program that protects the U.S. sugar industry from foreign competition.

Now, the Crystal lockout has become Minnesota's longest work stoppage in decades. In comparison, the bitter strike at Austin-based Hormel Foods in the mid-1980s lasted 10 months.

Three months after the lockout began, members of the Bakery, Confectionery, Tobacco Workers and Grain Millers union voted on a similar Crystal contract offer, but 90 percent of them said "no." As the economic toll mounted, some workers in June asked for a third vote; 63 percent were still against the deal.

Since then, unemployment benefits for Minnesota workers -- a significant economic cushion -- have expired. For many, those benefits provided over $1,000 per month. On average, Crystal Sugar workers make $40,000 before overtime.

By federal law, replacement workers are deemed temporary in a lockout; so union members would go back to work if they approve Crystal's contract offer. Still, a "return-to-work" agreement must be negotiated, and talks over that could get tricky, too.

Many union workers have moved on to other jobs. About 520 of them have notified Crystal Sugar they've retired or quit, up from about 400 in June, said Brian Ingulsrud, a company vice president.

The lockout has hurt the company's bottom line, too. Its cost of sales in the fiscal year ending Aug. 31 was up by $180 million over the previous year, partly due to costs incurred from the lockout, according to Crystal's annual report recently filed with U.S. securities regulators.

The report also showed that Dave Berg, the firm's CEO, got an 11 percent increase in base pay to $654,000 during the fiscal year, which started a month after the lockout began.

But Berg got no short-term cash bonus, whereas he pulled in bonuses of $414,000 and $341,000 in the previous two years. The CEO's cash bonus "ranges from 0 percent [of base salary] for unsatisfactory performance to a maximum of 90 percent for outstanding performance," the report said.

Budd said public relations may have played a part in the lack of a cash bonus for Berg, who made a total of $1.7 million in Crystal's last fiscal year.

"It would further fan the flames," Budd said, "if the CEO was getting an additional bonus while workers are on picket lines losing their unemployment and their houses."

Mike Hughlett • 612-673-7003

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