Wednesday, Jul 27, 2011, 3:27 pm
Locked-Out Armstrong Workers Head Back to Bargaining Table (as Temps Take Their Jobs)
Conflict continues as private equity firm—whose kingpin paid millions to see pro-labor John Mellencamp—'bleeds the company dry,' union leader says
For the first time in Armstrong World Industries' history, the corporation on July 17 decided to lock out workers from its ceiling tile plant in the small town of Marietta, Pa. The 260 union workers, members of the United Steelworkers (USW) Local 285, had been working without a contract since June 1. They rejected the company’s last offer on June 15, but continued to come to work hoping they could return to the bargaining table with the company.
The rural workers feel they are treated like second-class workers compared to workers at larger Armstrong-owned ceiling tile plants. While union workers at other factories have the right to retiree healthcare coverage in their contract, workers in Marietta don't. The USW members objected to the proposed contract because while it included a pay increase of 2.5 percent, it also contained increases in healthcare costs, freezes on company pension contributions for current employees, elimination of pensions for new hires, and what union officials argue are changes to seniority systems, job placement and overtime scheduling that would negatively affect union workers.
After the union refused to ratify the contract in June, Armstrong proposed another contract—this time without a signing bonus of $1,000 and a lump 401(k) contribution of $400. USW International Representative Tom Jones calls it an illegal act of regressive bargaining. After workers refused to vote on it, opting instead to return to the bargaining table, Armstrong decided to lock them out early last week.
“We think by locking us out, they are trying to send a message to the other (Armstrong) locations where contracts are set to expire,” said Jones. “They are afraid of us bargaining together.”
(Jones is referring to three other union-represented Armstrong plants—two USW-represented facilities in Macon, Ga., Pensacola, Fla., and a Machinists union-represented facility in Lancaster, Pa.—whose contracts will expire this fall. If that happens and Marietta workers were still without a contract, all the workers could go on strike together, creating significant leverage by making it difficult for Armstrong to shift production to other plants.)
The Lancaster, Pa.-based company has begun hiring scabs, telling the Intelligence Journal/Lancaster New Era that it's “had more than 80 responses to its advertisement...seeking temporary help.” Contract talks will resume on Friday—but it's far from clear how soon the locked-out workers will get back to work.
Private equity in action
Armstrong's tough negotiating tactics may have to do with the private equity firm TPG Capital—formerly known as the Texas Pacific Group—which essentially controls Armstrong as its majority shareholder. In 2009, TPG Capital, which has $48 billion in assets, took a minority interest in the company, but that interest has since grown, according to USW's Jones.
Union officials allege that as the de facto controlling interest in the company, TPG Capital has been running up massive amounts of debt that it never intends to pay off while giving dividends to their stockholders.
Last December, for instance, Armstrong World Industries took out a $1.05 billion loan and then turned around and gave shareholders a special cash dividend of $13.74 per share (a combined payout of more than $800 million to shareholders), which largely went to Armstrong's two largest shareholders—TPG Capital and an asbestos victims funds trust.
“They are taking out a huge debt to pay their dividends and in the process bleeding the company dry,” says John Bevel, president of USW Steelworkers Local 285's Unit 441. “Now they are looking to stop funding the pension in order to limit the company’s pension obligations in order to make the company easier to sell.”
The scenario of private equity firms drowning companies in debt and then evading pension obligations in order to cash out before a company's stock price plummets is scary to Armstrong workers.They find themselves stacked against a powerful and distant firm that is politically connected and has little interest in their livelihoods.
Some of TPG's partners are top Democratic fundraisers. One of its partners, Rick Schifter, recently attended an exclusive meeting of 30 top Democratic fundraisers with President Obama at the White House organized by the Democratic National Committee.
Another one of the founders and leading partners of TPG Capital, David Bonderman, is noted for his lavish lifestyle and his personal net worth of $2 billion. In 2002, Bonderman threw a 60th birthday in Las Vegas featuring private live performances from The Rolling Stones and John Mellencamp, the pro-labor songwriter who wrote "Small Town." The party cost an estimated $7 million, according to music industry publications.
Now, locked-out workers in one small town in Pennsylvania are left wondering what type of values their company—and the private equity firm standing behind it—represent.
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Mike Elk wrote for In These Times and its labor blog, Working In These Times, from 2010 to 2014. He is currently a labor reporter at Politico.
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