Monday, October 29, 2007

Albertsons and the Other Union Battle

Followup to my post from this morning.

Normally I don't pay attention to Wonder Bread, and normally I don't buy bread at Albertsons anyway, which is why I hadn't noticed the Interstate Brands sign until this morning.

If you didn't see the picture that I took, this is what it read. This is what the Albertsons sign read:

Interstate Brands Corporation
has made the strategic decision
to no longer deliver bread to
Southern California retail stores.

At this point we the shoppers are supposed to say, "Oh that evil Interstate Brands Corporation! Why are they being so mean to Albertsons?"

I was wondering what the REAL story was behind this whole thing. Well, here's what Indymedia said back in September:

In late August, Interstate Bakeries, makers of Wonder Bread, Millbrook Dodger Dog hot dog buns, and Hostess cakes, announced its exit from the Southern California bread market. The Los Angeles Times reported the sad demise of the historic icon and brand Wonder Bread....

According to company employees speaking anonymously...Wonder Bread and other products will continue to be available. Interstate will truck them in from a new Interstate bakery in Henderson, Nevada that opened in 2003. Exactly what products will continue is not known....

The "exit" is for purposes of negotiating with the unions. The company will close its Southern California union plants and terminate its union agreements while continuing to sell with product from Nevada. After a year or two, the company will decide that trucking is too expensive, build new bakeries in Southern California, and say prior union agreements from its closed bakeries no longer apply.

Indymedia neglected to mention that Interstate Brands is also going the bankruptcy route - or more, accurately, the "we're already bankrupt and may liquidate" route. This report is also from September:

Bankrupt Interstate Bakeries Corp. said Thursday it could be forced to liquidate if it is unable to extract major concessions from its 20,000 union workers soon....

The Kansas City-based company, once the nation’s largest wholesale baker, sought protection from creditors and time to reorganize the business in September 2004. At the time, the company cited escalating costs, including for pay and benefits for employees, amid declining sales.

At stake is the future of one of Kansas City’s largest companies and the maker of such iconic brands as Hostess Twinkies and Wonder bread.

Interstate officials contend that union concessions are crucial for the remain a stand-alone entity.

In the filing, Interstate said that it had obtained financing commitments for its reorganization plan but that those commitments were contingent on extracting additional concessions from union workers.

The company’s two main unions are the Teamsters, whose members sell and deliver its goods, and the Bakery Workers, whose members bake and package the products....

Rich Volpe, international director of the Teamsters, said Thursday the filing by Interstate was a tactic to keep interested buyers at bay.

Volpe said he knew of at least two parties that had expressed interest in the company. One is Yucaipa, an investment company led by Ron Burkle of Los Angeles, which owns stakes in several companies, including grocery chains. The other potential investor, Volpe said, is an equity firm affiliated with J.P. Morgan.

Neither has expressed an interest publicly....

Since filing for bankruptcy, the company has shut down seven bakeries and announced the closings of four more at the end of October. Interstate has laid off more than 7,000 employees, with its work force shrinking to 25,000.

So, in effect, Albertsons wants its customers to get mad at a company that is trying to grind down its unions. Meanwhile, in the Pacific Northwest:

One side says negotiations are going nowhere.

The other side says labor talks are on track and agreement is possible soon.

At issue is the lack of a contract between Safeway, Albertsons and Fred Meyer stores and the grocery workers union.

Meanwhile, what about the battle between Interstate and its unions? According to Interstate, that was settled a month ago:

KANSAS CITY, Mo., Oct 22, 2007 (BUSINESS WIRE) -- Interstate Bakeries Corporation (IBC or the Company) (OTC:IBCIQ) today filed a motion with the U.S. Bankruptcy Court requesting authorization to enter into an agreement with Silver Point Finance LLC to provide the Company with up to $400 million in exit financing upon IBC's emergence from Chapter 11. In addition, the Company is also seeking Bankruptcy Court permission to enter into a Plan Funding Agreement with JP Morgan Chase Bank, N.A., McDonnell Investment Management LLC, Quadrangle Master Fund Ltd., and Silver Point Capital, L.C. (the Plan Supporters), holders of approximately 48 percent of the funded amounts outstanding under the Company's pre-petition senior credit facility. The Company has requested that the Bankruptcy Court schedule a hearing on the Motion for November 7, 2007, which is the same day that IBC's continued motion to extend the period in which it has the exclusive right to file and solicit acceptances of a plan is scheduled to be heard....

As previously announced, IBC reached agreement with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union leadership on September 28, 2007. Thus far approximately 90 percent of locals have ratified the modified agreements. The Company continues to bargain with the International Brotherhood of Teamsters (IBT), but has not yet reached agreement with IBT leadership on all contract changes necessary to implement IBC's business plan and fulfill the requirements of Silver Point's financing commitment.

So, it's ironic that IBC has reached agreement with the bakery workers, who lost their jobs in Southern California, but not with the truckers, who are presumably getting more business because of the loss of jobs in Southern California.

Meanwhile, southern Californians are making the "strategic decision" to quit eating Twinkies.

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Anonymous said...

IBC is forcing the teamsters to take a $100 a week pay cut. The teamsters already agreed to a $55 a week cut for 6 years. So each of the 5,000 drivers will be $8060 short a year of pay if they get what they want. IBC has hired 2 or 3 new members for there board at $500,000 each. Plus all hourly people are making the same or more (bakery, mech., store personal. So this means the salesman have to make more to pay for the people who are not making the money for the company. Makes sense to me, if we were a tree I would add more branches at the top and cut more of your roots (routes). I thought you pruned the dead branches and watered the roots? I guess you don't need roots to grow.