American Crystal Sugar Co. paid out nearly half a billion dollars last year to the 2,800 sugar beet farmers who own the co-op. This year, it's likely to be $750 million or more.
These profits are courtesy, in no small part, to the gentle clutches of protective government tariffs. For decades, the nation's sugar farmers have successfully persuaded one Congress after another to insulate them from the realities of the open market.
But what's apparently good for the company is not good for its workers.
On Monday, American Crystal followed through on its threat to lock out 1,300 union workers. The action came one day after workers rejected what the company said was its final offer.
That five-year contract would have raised pay rates by 13 percent and paid a one-time bonus of $2,000. But the new contract also would have required workers to pay more for their health insurance, and it would have given the company the right to consider specific skills, rather than seniority, when filling certain jobs.
Workers overwhelmingly voted down the contract but wanted to continue negotiating. At one point, the union even suggested an extension of the current contract.
The company's response: Go suck on a sugar cube.
You can fault American Crystal's workers for being out of touch with reality. Companies can no longer afford to provide health insurance free of charge, and the pay raises American Crystal offered were, by any standards, good ones. The union leadership had an obligation to help workers understand this new world. Just ask autoworkers.
But you also have to fault American Crystal for insisting on seniority language that it knew the union would never accept.
"We had attempted to get [that language] in prior negotiations, and we knew that it would be a strike issue to get it this time around," said Brian Ingulsrud, American Crystal's vice president for administration.
Let me get this straight: A company that spends between $1 million and $2 million a year to lobby for protection from competition wants to take similar protections away from its workers. And when those workers balk and want to talk some more, you throw them out on the street.
This is not an industry in retreat or decline. Sugar prices are near all-time highs, with demand exceeding what American Crystal and other domestic sugar producers can make. The tariffs cost U.S. consumers an estimated $2.5 billion a year.
Ingulsrud insisted that the company needs a contract that prepares for the day when sugar prices are lower. But the just-expired contract, with the seniority provisions that are now so objectionable, lasted seven years and covered a period of low prices. Judging by the bonuses and incentive payments made to top executives, it didn't seem to hurt the company's business. Between 2008 and the end of 2010, CEO David Berg's total compensation more than doubled, to almost $2 million. The average compensation increase for the top four executives totaled 75 percent over two years.
Over the years, American Crystal and other sugar producers have used employees as props in their campaigns to help kill measures that would have ended or loosened the quotas that locked in industry profits.
But once the workers rejected the contract, Ingulsrud said the company had to lock them out right away to protect the company from a strike with the harvest only three or four weeks away. "We didn't want to risk waiting until they had maximum leverage," he said.
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