Is the Federal Government Helping to Bust Unions?

Defense contractor Honeywell pushed concessions onto striking workers—and unions say Washington supported the company behind the scenes.

Mike Elk November 20, 2011

IAM Local 778 members picket outside the federally-owned Honeywell facility on October 10, 2011, in Kansas City, Mo. (Photo by IAM Local 778)

For the third time in three years, defense con­trac­tor Hon­ey­well Inter­na­tion­al Inc. is deploy­ing union-bust­ing tac­tics in a gov­ern­ment-affil­i­at­ed work­place – and a fed­er­al agency is fail­ing to stop the corporation’s behav­ior. This rais­es ques­tions about whether Hon­ey­well, a top con­trib­u­tor to the Demo­c­ra­t­ic Par­ty in the 2010 midterm elec­tion cycle, is wield­ing polit­i­cal influ­ence to suc­cess­ful­ly weak­en unions. 

'Nobody can screw you like your friends,' says AFL-CIO Metal Trades Department President Ronald Ault. 'We had better labor relations under [Bush appointed-DOE Secretary] Sam Bodman than [President Obama's DOE Secretary Steven] Chu."

In 2009, Hon­ey­well threat­ened to bring in fed­er­al troops to replace Hon­ey­well con­trac­tors threat­en­ing to strike at a mil­i­tary facil­i­ty in Jack­sonville, Fla. In 2010, the com­pa­ny brought in scab replace­ment work­ers to oper­ate a ura­ni­um facil­i­ty in Metrop­o­lis, Ill. (The fed­er­al gov­ern­ment lat­er ruled that Hon­ey­well cheat­ed on qual­i­fi­ca­tion tests so that it could replace strik­ing Unit­ed Steel­work­ers union members.) 

Now, union work­ers on strike at a plant in Kansas City, Mo., allege that the Depart­ment of Ener­gy (DOE) is abdi­cat­ing its respon­si­bil­i­ty under fed­er­al law by allow­ing Hon­ey­well to engage in ille­gal bar­gain­ing while the com­pa­ny attempts to force a con­ces­sion­ary con­tract on an Inter­na­tion­al Asso­ci­a­tion of Machin­ists and Aero­space Work­ers (IAM) union local. On Octo­ber 10, 840 Hon­ey­well work­ers – mem­bers of IAM Local Lodge 778 and con­trac­tors at a fed­er­al facil­i­ty that pro­duces com­po­nents for nuclear weapons –went on strike, alleg­ing that Hon­ey­well had bar­gained in bad faith.

Local 778 Grand Lodge Rep­re­sen­ta­tive Steve Nick­el claims that Hon­ey­well ille­gal­ly bar­gained in bad faith by attempt­ing to force the union to either accept con­ces­sion­ary con­tracts or go out on strike. Nick­el claims that Hon­ey­well informed them via express mail let­ter of their refusal to accept the union’s pro­pos­al before the bar­gain­ing peri­od had expired at the end of Octo­ber 7, and then pre­pared for a strike. He says the com­pa­ny engaged in take-it-or-leave-it bar­gain­ing when it refused to nego­ti­ate fur­ther. (Hon­ey­well declined to com­ment for this sto­ry, but an ad the com­pa­ny ran in the Kansas City Star on Novem­ber 8 read, Hon­ey­well has pro­vid­ed a last, best and final offer” and con­tin­ues to bar­gain in good faith.”

In my fif­teen years fil­ing board charges, I have nev­er seen such a clear-cut case of a com­pa­ny engaged in bad faith bar­gain­ing,” Nick­el says. 

Local 778 filed an unfair labor prac­tice com­plaint with the Nation­al Labor Rela­tions Board imme­di­ate­ly after union mem­bers reject­ed Honeywell’s final con­tract offer in ear­ly Octo­ber. But late last week, the NLRB ruled against the union, ren­der­ing strik­ing union mem­bers inel­i­gi­ble for unem­ploy­ment insur­ance and giv­ing Hon­ey­well the right to per­ma­nent­ly replace work­ers. Late on Novem­ber 15, the NLRB ruled against the union in an ini­tial set of board charges; thus deny­ing the work­ers the right to col­lect unem­ploy­ment while out on strike as well as giv­ing the com­pa­ny the legal author­i­ty to per­ma­nent­ly replace the workers. 

As a result of the rul­ing, many work­ers on strike became dis­cour­aged and some crossed the pick­et line. On Sun­day, Novem­ber 20, union mem­bers rat­i­fied a six-year con­tract, which both man­age­ment and the union agree is large­ly the same con­tract Hon­ey­well ini­tial­ly pro­posed. It includes a two-tier wage sys­tem (new hires are the low­er tier), the elim­i­na­tion of defined-pen­sion plans for new hires and the elim­i­na­tion of retiree health­care after 2017. Retiree health­care had been a stick­ing point for work­ers at the Mis­souri facil­i­ty, giv­en that they work with the tox­ic mate­r­i­al beryl­li­um, which is asso­ci­at­ed with high rates of lung cancer. 

Since 2009, Hon­ey­well has been con­fronting unions at its facil­i­ties across the coun­try as it tries to reduce its labor costs. The For­tune 100 com­pa­ny based in New Jer­sey has demand­ed that work­ers accept a two-tier wage sys­tem that pays new hires rough­ly half of what cur­rent employ­ees are paid. Hon­ey­well calls for the adop­tion of a retire­ment sys­tem that would pay out new employ­ees rough­ly $25,000-$30,000 total over the course of their career, Nick­el says. The com­pa­ny has also refused – in Kansas City and else­where – to budge from its posi­tion that union work­ers drop cur­rent health­care cov­er­age in favor of the health­care cov­er­age nonunion work­ers receive, which is a high-deductible insur­ance plan mixed with a health­care sav­ings account. 

Some of these peo­ple can’t work until their 60s, when they are eli­gi­ble for Medicare. They wind up going on med­ical dis­abil­i­ty, so they need some­thing for them and their fam­i­lies,” Nick­el says. 

Not the same old bar­gain­ing story

But there is anoth­er dimen­sion to the Kansas City con­flict that makes the strug­gle there more than just the now-famil­iar sto­ry of a cor­po­ra­tion try­ing to push con­ces­sion­ary con­tract down a union’s throat. Fed­er­al con­tract pro­vi­sions stip­u­late that because Hon­ey­well oper­ates the Kansas City facil­i­ty as a con­trac­tor for the DOE’s Nation­al Nuclear Secu­ri­ty Admin­is­tra­tion, the cor­po­ra­tion can be reim­bursed for the full cost of all wages and ben­e­fit increas­es that work­ers receive.

DOE ser­vice con­tract pro­vi­sions sim­i­lar to the fed­er­al Ser­vice Con­tract Act allow for the DOE to reim­burse work­ers’ com­pen­sa­tion. Depart­ment reg­u­la­tions give con­tract offi­cers uni­lat­er­al pow­er to increase pay­ment to con­trac­tors if any costs, includ­ing wages, go up (these offi­cers can also refuse to cov­er such increas­es, if they exceed typ­i­cal indus­try com­pen­sa­tion pack­ages). Increas­es have been rou­tine­ly approved, accord­ing to the IAM, dur­ing the 12 years Hon­ey­well has oper­at­ed the Kansas City facil­i­ty as the prime con­trac­tor.

So if it doesn’t ulti­mate­ly bear the costs of its work­ers there, why is Hon­ey­well so dead-set against the sta­tus quo when it comes to union work­ers’ wages, pen­sions and health­care plan? The short (and coun­ter­in­tu­itive) answer is that the com­pa­ny stands to prof­it from the strike – both finan­cial­ly and politically. 

Before the strike began in Octo­ber, Hon­ey­well mangers had union work­ers over-pro­duce nuclear weapon com­po­nents in order to build up inven­to­ries, accord­ing to the IAM. Since the strike began, the com­pa­ny has used sev­er­al hun­dred nonunion employ­ees at the plant to con­tin­ue some pro­duc­tion and ship­ment of goods. Accord­ing to Honeywell’s web­site, 203 ship­ments were sent out the week of Octo­ber 31, 21 days after the strike began. 

A cru­cial point that helps Honeywell’s bot­tom line is that the company’s con­tract with the fed­er­al gov­ern­ment is fixed on prod­ucts deliv­ered, not labor cost. This means that if Hon­ey­well keeps pro­duc­tion nor­mal at the Kansas City plant, it can claim the $7.5 mil­lion per month it would nor­mal­ly pay 840 strik­ing work­ers as prof­its. The fed­er­al con­tract is fixed till 2013, so Hon­ey­well could make a huge wind­fall prof­it by antag­o­niz­ing work­ers, and inspir­ing them to remain on strike. 

The com­pa­ny is in a sweet spot: Under fed­er­al labor law, it can hire replace­ment work­ers. Indeed, the com­pa­ny has already announced plans to hire as many as 600 scab replace­ment work­ers, at half the aver­age union worker’s salary, as it digs in for the strike. 

Behind the scenes DOE pressure?

But this strug­gle is about more than just cor­po­rate prof­its, accord­ing to union offi­cials. By push­ing for major con­ces­sions from work­ers, Hon­ey­well may be cur­ry­ing favor with the DOE, which is look­ing to save mon­ey as politi­cians on Capi­tol Hill look to close the fed­er­al deficit.

In 2006, DOE attempt­ed to imple­ment the Direc­tive 351.1, which effec­tive­ly for­bids the nego­ti­a­tion of defined ben­e­fit pen­sion,” accord­ing to the AFL-CIO Met­al Trades Depart­ment. Because of strong oppo­si­tion in Con­gress and a bit­ter fight between orga­nized labor and the DOE, it was nev­er implemented.

The direc­tive says that con­trac­tors will not be reim­bursed for the costs of defined ben­e­fit plans for new hires, or for post-retire­ment health care,” and it will penal­ize con­trac­tors with defined pen­sions for cur­rent employ­ees that cost above a cer­tain amount, the Met­al Trades depart­ment says (PDF link).

Although not in effect, it has still neg­a­tive­ly affect­ed many employ­ees work­ing for DOE con­trac­tors, accord­ing to AFL-CIO. In 2010 alone, con­trac­tors in five dif­fer­ent facil­i­ties dis­con­tin­ued defined-ben­e­fit pen­sion plans out of fear that Direc­tive 351.1 might be implemented. 

But Met­al Trades Depart­ment Pres­i­dent Ronald Ault says this is about more than a cor­po­ra­tion hedg­ing its bets against a poten­tial reg­u­la­to­ry change – the DOE is qui­et­ly push­ing Hon­ey­well behind the scenes to strip pen­sions and retiree health cov­er­age so the agency can trim its costs.

Hon­ey­well would get reim­bursed for what­ev­er wage increas­es [work­ers] want,” Ault says. But com­pa­ny offi­cials do what­ev­er the DOE wants them to do. DOE could absolute­ly step in and get involved, they could direct the con­tract.” Instead, he says, fed­er­al offi­cials qui­et­ly whis­per behind the scene to imple­ment DOE 351 to cut DOE’s costs. Nobody can screw you like your friends. We had bet­ter labor rela­tions under [Bush appoint­ed-DOE Sec­re­tary] Sam Bod­man than [Pres­i­dent Obama’s DOE Sec­re­tary Steven] Chu.”

By call­ing for work­ers’ ben­e­fits to be cut, Hon­ey­well and its CEO David Cote – the only busi­ness leader serv­ing on Pres­i­dent Barack Obama’s 19-per­son deficit com­mis­sion – improves their polit­i­cal image. (Giv­en that it paid no cor­po­rate income tax­es between 2008 and 2010 despite mak­ing $4.9 bil­lion in prof­its, Hon­ey­well needs to bol­ster its image to increase its chances of win­ning more fed­er­al con­tracts.) In the Novem­ber 8 Kansas City Star ad, the com­pa­ny stat­ed it is com­mit­ted to being a good stew­ard of U.S. tax­pay­ers’ dol­lars and fed­er­al assets.” 

The Hon­ey­well-DNC connection

Final­ly, by demand­ing huge con­ces­sions, Hon­ey­well is attempt­ing to weak­en its unions, as it has done through­out the coun­try at both fed­er­al con­trac­tor and pri­vate-sec­tor facil­i­ties. A two-tier wage sys­tem weak­ens sol­i­dar­i­ty by pit­ting younger work­ers against old­er work­ers. By forc­ing the union to strike, Hon­ey­well hopes to crush the union’s will­ing­ness to resist con­ces­sions again.

Union work­ers say the DOE could be get­ting involved to help out work­ers and bring the strike to end. DOE sits back and acts like they are non-par­tic­i­pants when, in fact, they con­trol near­ly every aspect of our work­ing con­di­tions,” says Jay Puck­ett, an IAM mem­ber who works at the Kansas City facility.

DOE spokes­woman Gayle Fish­er said the Nation­al Nuclear Secu­ri­ty Admin­is­tra­tion has been an inter­est­ed but neu­tral observ­er dur­ing the con­tract dis­pute. We would like to see the nego­ti­a­tions con­tin­ue so that an agree­ment can be reached and every­body can get back to work and help ful­fill our impor­tant mis­sion here in Kansas City.”

The Depart­ment of Energy’s deci­sion not to get involved rais­es ques­tions about whether or not Honeywell’s out­sized polit­i­cal influ­ence is con­nect­ed to the Depart­ment of Energy’s deci­sion to remain neu­tral in the labor struggle. 

Begin­ning in 2009, at about the same time that Hon­ey­well began aggres­sive­ly con­fronting unions at facil­i­ties in Flori­da and Illi­nois direct­ly con­nect­ed to fed­er­al con­tracts, Hon­ey­well has sharply increased its polit­i­cal dona­tions; in 2010, the company’s polit­i­cal action com­mit­tee was the top PAC con­trib­u­tor to the Demo­c­ra­t­ic Par­ty.

In a sign of the company’s increas­ing con­nec­tion to the Demo­c­ra­t­ic Par­ty, ear­li­er this month Hon­ey­well hired Demo­c­ra­t­ic Minor­i­ty Whip Ste­ny Hoyer’s for­mer Deputy Chief of Staff Stacey Bernards as its new vice pres­i­dent of gov­ern­ment rela­tions. CEO David Cote has also done polit­i­cal favors for the White House and the Demo­c­ra­t­ic Par­ty: He helped intro­duce the president’s stim­u­lus pack­age at a press con­fer­ence in ear­ly 2009 and was cru­cial to keep­ing the pow­er­ful Cham­ber of Com­merce from oppos­ing the leg­is­la­tion, help­ing to give the Oba­ma admin­is­tra­tion a cru­cial first victory. 

Labor rights used to be a core val­ue of the Demo­c­ra­t­ic Par­ty. But its grow­ing ties to Hon­ey­well – which has late­ly dis­tin­guished itself as clear­ly anti-union – shows that these days, the par­ty is more inter­est­ed in management.

This sto­ry was updat­ed on Mon­day Novem­ber 21 to note the out­come of Sunday’s IAM con­tract rat­i­fi­ca­tion vote.

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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