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Union Fighting Wage Cuts at Kaiser Cement

In an earlier era, thousands of cement industry workers across the nation would have been on strike for months if their employers had done what about a third of the cement manufacturers are doing today: unilaterally cutting wages and benefits by up to 50% and refusing to renew union contracts because the unions will not sign agreements accepting the drastic reductions.

In intriguing contrast, however, another third of the cement makers have signed new union agreements, paying wages slightly above their old levels, which averaged about $13 an hour and offered reasonably good fringe benefits.

And the final third of the cement manufacturers are also paying the union scales, although they have not yet completed negotiations for new contracts.

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Aware of the difficulty that unions in general are having in winning strikes these days, the cement industry unions are using what seems to be an increasingly effective alternative tactic to deal with the wage-cutting companies: Workers continue on their jobs while the union leaders wage a massive campaign--primarily on Wall Street--concentrating first against one target company, Oakland-based Kaiser Cement Co., alleging that the firm has such poor managerial skills that it is a risky investment.

Kaiser was chosen as the initial target among the wage-cutting companies because it was the first major cement firm to make reductions in wages and benefits and because it has refused to sign a new union contract that does not include those reductions.

The idea is to “publicize Kaiser’s mismanaged investments to company stockholders, investors, brokers, public officials and the American public generally,” explained Kent Weaver, representative of the AFL-CIO Cement, Lime, Gypsum and Allied Workers division of the Boilermakers Union.

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With the help of a public relations firm, Los Angeles-based Strategic Media, the union believes that Kaiser may be hurt economically as much as if a strike were called and thus be pressured into “treating its workers with a modicum of respect,” Weaver said.

The use of the corporate campaign instead of a walkout is a clear indication that the union is, at best, doubtful about its ability to wage a successful strike. However, Myron Bernstein, vice president of Kaiser Cement, said that the union’s strategy is failing.

It is true that Kaiser stock has fallen since the union’s campaign started. It is now down near its 52-week low of $13.625 a share, compared to a high of $19.50. Kaiser closed Tuesday at 14.50 a share, unchanged from Monday’s trading.

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But Bernstein said the overall drop is attributable to the fact that the company lost about $2.1 million in the first nine months of this year.

“The ‘corporate campaign’ against us is a joke,” he insisted.

Nevertheless, the union claims credit for the lower stock prices.

But the campaign doesn’t stop there. The union is using another interesting tactic, taking out full-page ads in business publications comparing Kaiser Cement with the nation’s largest cement company, Lone Star Cement, which has a signed union contract and pays its workers about $13 an hour, compared to the $8 hourly average paid by Kaiser. In addition, Lone Star maintains full fringe benefits for its workers, while Kaiser has dropped many of its benefits.

The ads contend that Lone Star is making a profit, with high productivity, because of the company’s “faith in the American work force.”

Another issue in the union’s battle against Kaiser is the charge that Kaiser wasted nearly $60 million by investing in a Hong Kong cement plant that failed, and now Kaiser is “making its cement workers in its U.S. plants the scapegoats for its Hong Kong fiasco,” the union says scornfully. (Kaiser wrote off its entire investment in the ailing Hong Kong plant last year as “entirely worthless.”)

Kaiser’s Bernstein says the Hong Kong investment was not a poor managerial decision when it was made in 1979. But later, the uncertain economic future of Hong Kong (which will revert to Chinese control in 1997) made it less attractive, and “by the time production came on line, there was the recession and a vast surplus of cement in the Pacific Rim that severly depressed prices, even in mainland China,” he said.

These days aggressive management, even in prosperous industries, often seems ready, almost eager, to demand that workers take pay and fringe benefit cuts even though such corporate demands can trigger long, costly strikes.

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The bitter strike-lockout in the Southern California supermarkets is an example of what happens when workers and their unions refuse to accede to management’s demands for major contract concessions.

The supermarket strike-lockout was not really surprising because--while supermarket resistance to union proposals, not management demands, has caused previous strikes--the food industry has had frequent labor problems in recent decades.

But the situation is dramatically different in the cement industry.

For nearly 40 years, there have been relatively harmonious relations between the cement firms and their workers. Managers of companies like Kaiser have, for the first time, started slashing labor costs as a weapon to help them compete with other domestic cement makers, who so far have done well without adopting a similar policy.

While demand for cement has been increasing steadily in the past few years, imports today make up nearly one-fourth of cement sales in the United States, compared to only about 3% just three years ago.

The industry has been unable to get the Reagan Administration to put any restrictions on imports even though the government has agreed that foreign cement firms are guilty of “dumping” cement, or selling cement here for a lower price than it actually costs in order to gain a major foothold in the U.S. market. The obvious problem with this practice is that it virtually drives out any competition. And, it’s illegal.

Industry officials say, for instance, that Korean companies sell cement in Korea for about $60 a ton, but those companies deliver cement across the Pacific to the United States for $34.40 a ton, which, they say, is less than the cost of production.

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But, aside from battling foreign competition, U.S. cement industry executives spent substantial amounts of time and money fighting an eight-year antitrust lawsuit that alleged that they were engaged in a nationwide conspiracy to fix cement prices.

The antitrust lawsuit didn’t end until Nov. 6, 1984, when the case was dismissed after the companies agreed to pay what were termed “nominal settlements” to the states of California and Minnesota, the only remaining plaintiffs in the bitterly contested legal action.

However, even though the companies had been accused of collusion on almost every corporate decision in order to fix uniform, non-competitive prices, wage and fringe benefit costs were not a factor in the case.

The first signs of labor troubles, after those years of harmony, came when Kaiser and some other firms made their unilateral wage and benefit reductions, saying the cuts had to be made to meet the foreign competition and low prices for cement.

Lone Star and many other companies, relying on increased productivity and other factors that the unions praise as “sound management” practices, seem to be thriving without such reductions.

But Lone Star, the unions and its members realize that, with significantly lower labor costs, Kaiser may some day set the contract pattern for the “good guy” cement managers (such as Lone Star), forcing them to make similar cuts in wages and benefits of their workers.

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And that could mean--if the campaign against Kaiser doesn’t play well on Wall Street--that the firm’s workers may be forced to resort to the more familiar tactic of striking to protect their members working at Kaiser and at the companies that have not yet cut wages and benefits.

Dispute at L.A. Charity

After decades of relatively harmonious relations with its unionized employees, the Los Angeles Jewish Federation Council is now embroiled in a bitter dispute with a union that charges the council with “union busting.”

The dispute directly involves only about a dozen of the more than 500 federation employees. But it could affect current negotiations for a new contract covering all of the employees.

Les Spitza, president of the AFL-CIO American Federation of State, County and Municipal Employees Local 800, which represents the federation employees, says the “union busting tactics of federation executives” are rupturing the traditional close bonds between the charity and its employees.

Federation officials, he said, are using “deception to take away the legal and moral rights of staff employees” who work for the federation’s weekly publication, the Jewish Community Bulletin.

Officials of the federation deny the charge that stems from the philanthropic organization’s plan to start publishing a new, “independent” weekly newspaper early next year.

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At issue is whether the newspaper, which will replace the present weekly publication is, in reality, totally independent from the federation council. If it is an entirely new organization--barely linked to the federation other than an affinity of interests--the agency executives may, as they claim, be entitled to hire an entirely new staff and bypass the union unless, at some future date, the new staff votes for union representation.

Ted Kanner, executive vice president of the federation, insists that the new publication will indeed be “completely independent.”

Employees of the Bulletin can apply for jobs with the new publication, which is expected to begin publication early next year. But they will have no automatic right to the jobs and, if they are hired, they may have to take pay cuts if they have no union to protect them.

But Spitza, the union leader, says management’s argument is “ridiculous” and the new publication is “indisputably and closely linked” to the federation and not entirely independent, as Kanner claims.

As proof, Spitza notes that, among other ties, federation executives will appoint most of the new publication’s board of publishers, provide automatic subscriptions for about 50,000 contributors to the United Jewish Welfare Fund and have advanced an estimated $600,000 to the new paper to guarantee its operation.

“This action of the council dismissing our members who are Bulletin employees is in gross disregard of their rights and a flagrant violation of our union contract,” Spitza charged.

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Kanner says that Bulletin employees who don’t get jobs with the new publication can take other jobs in the federation if they have enough seniority and that they are entitled to severance pay if they leave the federation entirely.

The federation’s contract, now being renegotiated with the union, already has some attractive benefits, such as a 37 1/2-hour work week, up to one month’s vacation a year, plus 19 paid holidays a year (including Jewish religious holidays).

But Spitza said that, while some features of the union contract are good, the union “may, at a minimum, be forced to file unfair labor practice charges against the federation with the federal government for dismissing Bulletin employees and illegally bypassing the union.”

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