I am writing this blog entry, in its entirety, for the second time. After Sunday's post on deep practice, making mistakes and correcting them, you may think that I am successfully pushing myself to self-critique and revise. But no, it’s a simple case of a computer glitch losing an hour’s worth of work and – after a bit of rage, glass of wine, and good night’s sleep – forcing me to do the whole thing over again. After that post, however, I can only conclude that this was a sign that I should in fact push myself to rework and revise, and improve upon the prior version. You’ll have to take my word on the improvement part.
I promised a blog on last week’s New Yorker article, Out of the Bronx: Private Equity and the Cookie Factory, by Ian Frazier (subscription required). And as promised, I read the NLRB decision in the labor dispute, available here (.pdf). After the initial blog crash, I found some more sources - a radio interview with the striking employees, for example. (As it turns out, there is also a documentary about the strike, "No Contract, No Cookies," which I'll admit to not having seen. HBO subscription required for this one.)
And I find that the more I learn, the more questions I have.
Let me begin with a brief synopsis. Stella D'Oro began as a family-owned business in Bronx, and during that era, the employees became represented by the Bakery, Confecionary, Tobacco Workers and Grain Millers International, Local 50. At some point the family sold the business to Nabisco, which in turn sold to Kraft, which, in 2006, sold to a private equity fund, Brynwood Partners. Brynwood purchased in the middle of the term of a collective bargaining agreement, and the labor dispute arose during neogtiations for a successor contract. During those negotiations, Brynwood told the Union and employees that it needed wage and benefit concessions because the business was not profitable and, without concessions, it would have no alternative but to close down. After months of negotiating without agreement, on August 14, 2008, the employees decided to go on strike. They offered to return more than seven months later, on May 1, 2009, but Stella refused to take them back. Two months later, on June 30, 2009, an NLRB administrative law judge found for the Union (on the NLRB General Counsel's complaint), holding that Stella had violated federal labor law and was required to take the employees back to work.
This fleeting victory ends the success part of the story, for the employees. The bad part came just three months later, when Brynwood announced on September 8 that it had sold the business to another corporate bakery, Lance, Inc. Exactly one month later, the Stella plant in the Bronx closed for good. Lance moved the Stella product line to one of its factories in Ohio, and the 130-plus employees in the Bronx received a severance of one week's pay for each year of service, and set off to look for new work.
Actually, there was one more success. On August 27, 2010, the National Labor Relations Board affirmed the decision of the administrative law judge. Of course, by this point another legal feather in the cap wasn't good for very much. The legal battles, and victories, do not touch on Brynwood's decision to sell Stella, or Lance's decision to move the work to Ohio, and they can't bring the work back to the Bronx. In fact, (unless I'm missing something, a lawyerly caveat) the best that the employees can hope for as a result of the Board's decision (which is currently on appeal to the Second Circuit) is backpay giving them the wages they should have earned from the date of their offer to return from the strike on May 1, 2009, until the time when the employer shut down the business five months later. That is, five-month's wages is the all that is still at stake here, as far as I can tell.
The New Yorker article seems to contemplate whether the decision to strike was a good one. Frazier notes that two years later, "most" of the employees have either retired or "are still looking for new jobs." (The employees on the radio show reported that about 25 of their coworkers, out of 130, had found new jobs.) He goes on to muse that the Stella D'Oro strike seems "similar" to Occupy Wall Street (of which strike leader Mike Filippou is a supporter, he tells us) because both are "not about specific demands but about inequality."
This caught my attention, and I'm wondering if Frazier is correct, or if he is idealizing the Stella strike. Or is it possible that there was a hint of idealism among the strikers themselves? And if there was, is that a bad thing?
Hearing about the events, with the benefit of hindsight, it is nearly impossible to avoid concluding that the strike was the wrong choice - and I am trying to avoid viewing this entirely through the 20/20 lense of hindsight. I am reminded of the guiding image in the excellent new book by Joe McCartin (my former professor, I'm proud to report), Collision Course: Ronald Reagan, the Air Traffic Controllers and the Strike that Changed America. McCartin uses this image of a "collision course" to describe the unfortunate trajectories of the union's and employer's positions, showing how the conflict between the union and the Reagan administration ultimately led, first to a massive strike, and then, to breaking the union and a loss for the labor movement as a whole. Though I am admittedly simplifying, this image comes to mind here.
Here, the employees were justifiably angered and motivated by what they viewed as the private equity firm's greed. I was struck listening to employees Filippou and George Kassai in the WNYC interview by how they so proudly discuss their years of commitment to the company and its product, and accuse the company of making inferior cookies after its cost cutting. In the negotiations, Filippou appeared to understand Brynwood's calculus: he remarked that the employees knew that the employer could just close the facility, sell the brand and real estate, and make a profit in the process, or it could obtain the concessions it was requesting and then still sell the company, but at an even greater profit. 355 NLRB No. 158 at 21. The employees clearly understood that Brynwood could sell the company at any time, but as I understand it, this paradoxically seemed to fuel their motivation to fight the company.
While the employer's perceived greed, the principle of fighting "inequality" (a la Occupy Wall Street), seemed to motivate the employees through the eight-month strike, the truth of this perception was ultimately their undoing. Filippou was correct that Brynwood could sell at any time and, indeed they did.
So what were the employees to do? Is the takeaway from the Stella story that every time employees go up against a private equity fund, the employees have to capitulate to whatever demands the employers makes of them?
This New York Times article looking at labor and private equity suggests - thankfully - that employees have had better outcomes in other cases. As best as I can tell from the Union website, the U.S. Foods strike profiled in the article resulted in a new contract in December 2011. These employees were fighting none other than the king of private equity firms, Kohlberg Kravis Roberts. The Times article also mentions a victory by employees when Hugo Boss "reversed a decision to close a factory in Ohio after succumbing to an aggressive union-led campaign." The union, Workers United, gives credit for bringing Hugo back to the bargaining table to the findings of a NLRB regional investigation; the business press remarks that Ohio's pension fund threatened to pull the €110 millon it had invested with the private equity owner. I'll refrain from drawing conclusions from my two sentences of research, but this certainly suggests that the battle of labor against private equity must be, at the very least, fought on many fronts.
Rather than conclude with some sense of undeserved authority, let me instead share the questions that remain in my mind: what lessons can the labor movement (such as it is) take from the Stella battle? Do the Stella employees in fact regret their decision to go on strike? What would they have done differently? Was there any way to predict, at the time, the course of events that would unfold? Do private equity-owned-employers require a different calculus than typical employers for the employees and unions that try to stand up to them?
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