Is Striking The Best Option?

By Greg McFarlane | November 27, 2012 AAA
Is Striking The Best Option?

How do you best resolve a labor grievance? If you're an individual employee, you can take it up with your boss and, progressing beyond that, quit. If you and your coworkers have assigned your negotiating rights to a labor union, however, things can get a bit more heated.
Strikes have been around since the dawn of organized labor. In fact, they're a large part of why labor got organized in the first place. As society has gotten more affluent through the centuries, and workers' grievances have advanced from minimizing the coal dust in their lungs all the way to getting their elective cosmetic surgeries paid for, labor disputes continue to garner attention. The latest work stoppage to find its way into the popular consciousness involves an industry that, to be diplomatic, is not exactly of crucial national interest. It isn't aerospace nor automotive but rather junk food.

Hostess Brands, maker of Twinkies and Ding Dongs, recently announced it would liquidate rather than wage a labor war. Hostess filed for bankruptcy in 2004, restructured and came out of the proceedings as a private company. Within seven years the company again had problems making its obligations, such as union pension benefits that Hostess spelled out and agreed to contractually.

Things Change
Circumstances change, and sometimes it becomes impossible for a party to a contract to uphold its end of the bargain. However, there's the more practical and longer-term solution: both parties can agree to tear up the previous understanding and try to renegotiate from a new position. In this case, it means that the Bakery, Confectionery, Tobacco Workers and Grain Millers International might get less than it wanted but better that than all of nothing.

In January, Hostess filed for bankruptcy yet again. The company cited pension obligations as just one contributing factor. Another factor was the medical benefits it had agreed to pay. The union refused to break the contract, and Hostess management called its workers' bluff. On Nov. 16 the company announced it'd be shutting down permanently.

Few people question the incompetence of Hostess' management. After all, the company faced an overwhelming financial crisis a mere seven years after going to the extreme measure of declaring bankruptcy. While the union shouldn't be expected to continue to concede on points it already agreed to, at some point management's failure becomes everyone's failure.

NHL Woes
The NHL isn't an enterprise in the sense that Hostess is, or was, but rather a collection of 30 businesses that operate as one when negotiating labor agreements with their players. In 2004-05, the league attempted to get its players' union to agree to tie gross payroll to league revenues. The union balked, the league locked the players out and the impasse continued for 10 months, which was long enough to wipe out an entire season.

With the pie not getting any larger, the National Hockey League Players Association eventually agreed to a modified series of demands. Even with a new contract signed, the immediate fear on both sides was that the league would never recover its customer base. Of course it did, and within a year fans had largely forgotten that the previous season had never existed.

Unfortunately, there's a history of labor strikes in pro sports, and once again the NHL finds itself in a similar situation. Today, the story is much the same as is was in the mid-aughts. The league argued that it deserves concessions simply because of the generally poor economy. A bolstered union maintains that it's being asked to concede what it did previously and then some.

Professional sports inspires extreme devotion. Millions of fans who see their regularly scheduled TV games preempted by sitcom reruns want a resolution. Ultimately, the customers are the last stakeholders to be listened to in these and almost all other disputes.

The Bottom Line
Unions rarely enter strikes lightly. While labor-management disagreements will continue as long as there exist humans on either side, it's usually only as a last resort that workers will go to the trouble of not working. When a union's demands are unreasonable, as they sometimes are, management can often wait the other party out until the parties reach a mutually beneficial solution.

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