Pressmen's union approves contract concessions with Star Tribune

Pressmen at the Star Tribune ratified a concessionary contract Tuesday night that includes layoffs and pay cuts but goes a significant step toward keeping the company afloat.

The contract, approved by a vote of 72-5, will save the company about $3.5 million a year.

Terms include unspecified wage reductions believed to be in the range of 17 to 40 percent and 24 layoffs, first through volunteers and then through reverse seniority if there are not enough volunteers. The agreement also reduces manning requirements on the newspaper's presses.

The union, Teamsters Local 1M, is allowed to retain its own health plan with a cap on contributions from the company.

The local's attorney, Andrew Staab, issued a statement that said, "In spite of the lopsided vote margin, there was a great deal of reluctance and anger. But the alternative was no agreement with the company at all."

Star Tribune Publisher Chris Harte said, "We are very pleased the union has approved this agreement. It is critical to our future success. We will continue negotiating with our other unions for the cost savings we need to achieve financial stability going forward."

The new contract for the 116 pressmen is the second approved this week. The Teamsters local that represents the newspaper's mailers approved a new contract on Sunday. The company now will turn its attention to its delivery truck drivers and the union that represents the newsroom. The company seeks to reduce labor costs by $20 million a year from among its 800 union employees. Tuesday's vote capped a tense month during which the company used bankruptcy proceedings in an attempt to void the pressmen's existing contract and impose new wage scales and manning provisions.

The tentative agreement was reached after two days of hearings before U.S. Bankruptcy Judge Robert Drain that painted a dire financial picture of a Star Tribune beset by heavy debt levels and unprecedented declines in advertising revenue.

Tuesday night's vote was a reversal from last year, when the pressmen twice rejected concessionary contract offers.

The new workplace language in the contract could help the Star Tribune land outside commercial printing contracts, including the Pioneer Press, according to testimony from management during the bankruptcy hearing last week.

The company also is looking for $10 million in cost reductions from its smaller, non-unionized workforce and has been steadily laying people off and leaving open jobs unfilled in recent months.

Without concessionary contracts, the company faced the possibility of liquidation at the request of lenders who want to recoup as much of their investment as possible, Drain warned last week.

A financial analyst hired by the pressmen's union argued that debt, not labor costs, was the company's biggest problem.

But during testimony in the bankruptcy hearing last week, Star Tribune executives said falling advertising sales represented the biggest problem and noted that advertising revenue was down 30 percent for the first two months of 2009 compared with the same period in a less-than-stellar 2008. The only alternative, executives said, is to cut expenses, including payroll.

The Star Tribune is one of several newspapers that have sought Chapter 11 bankruptcy protection from creditors. But it is part of an industry that across the board is bleeding green in lost revenue.