• Article by: Matt McKinney
• Star Tribune
• September 12, 2007 - 9:44 PM

Union leaders cheered a new labor agreement announced Wednesday at Hormel Foods Corp. even though it allows the company in limited cases to stretch some shifts beyond eight hours without paying overtime.

The alternative work schedule nearly stalled negotiations last week before the union agreed to allow the company to implement the schedule in a few limited areas, with eight maintenance workers out of 1,350 total employees at the Austin, Minn., plant, for example. The employees will work an average of 40 hours a week, but on some weeks may be scheduled for more, with compensating time off in other weeks.

The nearly 4,000 employees at five Hormel food plants across the country will see their salaries rising an average 10 percent over the next four years.

The United Food and Commercial Workers union heralded it as a "breakthrough contract" because of the salary increases, improvements to health care coverage and greater pension security.

"It was a very good contract," said Mark Lauritsen, director of the food processing, packing and manufacturing division of the UFCW. Members told him it was the best contract they've had since the 1970s. "I think it was also important to the company, because you'd be able to attract and retain the best help."

The labor agreement grants raises of $1.40 to $1.80 an hour over four years and includes a formula for pension benefits that will increase payments by more than 10 percent, according to the union. The contract raises lifetime medical benefits 25 percent to $1.25 million and lowers some drug copays.

The average salary at Hormel plants will rise from $15.75 to $16.75 over four years -- among the highest wages within the 1.4 million-strong UFCW, it said. The average wage for unionized workers in the meatpacking industry last year was $12.60 an hour, according to the Bureau of Labor Statistics.

Food industry analyst Eric Larson cautioned against comparing Hormel with the rest of the meatpacking industry, saying that its business model of buying prebutchered hogs distinguishes it from other meatpackers.

"You're not comparing apples to apples with a lot of the other companies," he said.

A Hormel spokesman did not immediately return calls Wednesday for comment.

Negotiations began in June. A settlement was reached Sunday, according to Richard Morgan, president of Local 9. He said 69 percent of the union membership voted in favor of the contract.

The negotiations hung up on a company request that some workers volunteer for flexible schedules that included 10- and 12-hour shifts, according to Morgan. The union eventually agreed that eight maintenance positions would take the new flex shifts, but the plan would not affect the bulk of the plant's workers in the production area.

"They wanted it in production, and we couldn't have that," Morgan said.

The company had disappointing results in its most recent quarterly report released in August, with Chief Executive Jeffrey Ettinger blaming the rising cost of beef, chicken and pork for results that fell short of expectations. Food and energy costs will continue to rise, the company said in its most recent quarterly report.

Hormel shares rose 5 cents Wednesday to $35.49.

Matt McKinney • 612-673-7329

Matt McKinney • mckinney@startribune.com