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Back to work, but not to normal for American Crystal and union

GRAND FORKS -- Twenty months after locking out its 1,300 union workers, American Crystal Sugar is better positioned for the future with a new workforce, according to management.

"We are working to move the company and its employees forward with a fresh culture and a qualifications-based contract," wrote Vice President for Administration Brian Ingulsrud in an email last week. "American Crystal's goal is to have the best workforce in the sugar industry."

The workforce that the Moorhead, Minn., -based cooperative now has is much different from the one it locked out Aug. 1, 2011, after its unionized employees rejected management's contract proposal.

Roughly half of the 1,300 locked-out workers have resigned or retired, according to the company. Those who return will be working under a new contract that shifts power from union to management.

John Riskey, president of Local 167G of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union in Grand Forks, said workers are ready to return, even under a contract they rejected.

"Our union members are going to do what they need to do," he said. "There's no doubt we didn't get a fair contract. It wasn't a result of negotiation."

But after nearly two years of holding out, "it's really tough to say they got anything out of this," said Bruce Byars, an associate professor in UND's College of Business and Public Administration.

"The company got what they wanted. It got the union to accept their contract on their terms," he said.

American Crystal has processing plants in Moorhead; Crookston, Minn.; Drayton; East Grand Forks, Minn.; and Hillsboro. It also has packaging and transportation sites in Chaska, Minn., and Mason City, Iowa.

Changed company

American Crystal did not go through the lockout without problems as it recruited replacement workers from out of state and from communities around its factories to do the jobs of the locked-out union members.

Its annual report for the fiscal year ending Aug. 31, 2012, showed a $257 million, or 30 percent, drop in net proceeds from 2010 and higher operating costs.

Company officials have argued that the comparison was with a record year and the results were better than its 2010 numbers. Its quarterly report, filed April 15, shows improvements over the same months of 2012.

American Crystal's shareholder payment is $63 per ton of sugar beets, the second-highest for the company, according to Ingulsrud.

Aside from its financial ups and downs, American Crystal also dealt with workforce challenges during the lockout.

According to the Minnesota Department of Labor and Industry, there have been five serious injuries at Crystal's Minnesota facilities since the lockout, compared to none in 20 months before the beginning of the lockout.

The Occupational Safety and Health Administration's Bismarck offices reported no injuries or inspections for the company's two North Dakota factories since 2008. The state Workforce Safety and Insurance office does not release counts of accidents at workplaces.

Ingulsrud said the new contract, which broadens management's authority over workforce decisions such as subcontracting to nonunion workers, promotions and overtime, were worth the lockout.

"There was a cost to the lockout, but we believe the benefits of the new contract, such as being able to promote the most qualified employees, will help us to create the best workforce in the sugar industry and to remain a critical fixture to this region's economy," he wrote.

Ingulsrud credited the company's factory managers for being successful with inexperienced replacement workers.

"The experience of our factory management teams is what led us through the lockout," he wrote.

Bruised union

Union leader Riskey had a different view of the management's success under the lockout.

"They didn't get by with replacements," he said. "Further costs are going to come to light."

The return-to-work agreement approved by workers gives the company 40 days to bring workers back, and management is informing them by mail of mandatory return-to-work meetings.

Among the challenges for the union will be lingering bitterness toward the company and tensions as union members go to work alongside those who replaced them.

"It's going to be tough, but our members were professionals when they worked there," Riskey said.

After holding out through the lockout, some workers are still deciding whether they want to come back after being "kicked out to the street like this company did," Riskey said.

Along with harm done to the company's workforce, he said management needs to repair its image.

"The damage done to Crystal Sugar's reputation is incalculable," he said.

National impact

Despite their loss in numbers during the lockout, Riskey said the union will keep working for its members.

All jobs not filled by returning union members will be advertised, and new hires will become union members at worksites in Minnesota, which allows compulsory union membership.

"The day starts today for us to start bringing those members in," Riskey said.

But even if the union has new members, the new contract erodes its power and could threaten its future, said Byars, the UND professor.

"They could effectively do away with the union, slowly but surely," he said, referring to management's greater ability to subcontract jobs out to nonunion workers. If the union representation at worksites declines far enough, it could lead to decertification.

"It really reduced the union's security within the plant," he said.

The effects of the lockout also could be felt beyond its worksites in North Dakota and Minnesota.

"It'll be interesting to see what happens nationally," Byars said.

If other companies with unionized workers see that American Crystal was able to continue production while locking out the union, they could use the same tactic.

"This would particularly be true if other companies only narrowly look at the final outcome in terms of the collective bargaining agreement -- namely, that American Crystal Sugar seemingly won everything it was looking for," said John Budd, chairman of the Department of Work and Organizations at the University of Minnesota's Carlson School of Management, in an email.

Costs paid

While American Crystal was able to produce sugar throughout the lockout, the event cost the workers, their communities and the company, Budd said, "But these details will likely be overlooked."

The cost paid by workers was weathering 20 months away from their jobs, with many relying on savings and support from communities and allied unions.

"It will be hard to forget," Riskey said. "We'll try to forgive."

He said he believes management will again see the value of negotiating with the union eventually. But for now, its members are concentrating on the more immediate next step.

"We go back to work supporting our families," he said.