consultants are sandburs

Sunday, January 17, 2016

Does union solidarity and courage among rank and file matter?

And despite the below posted story of pending SCOTUS bad news efforts; with a headline as above, of course the story will say yes.

That said, start the story November 12, 2013, Motley Fool reporting a new sheriff in town:

Western Refining (NYSE: WNR ) announced today that it has signed and closed a deal to acquire the general partner of Northern Tier Energy (NYSE: NTI ) for $775 million. Western is purchasing the stake, which includes 35,622,200 limited partner units, from the privately held ACON Investments and TPG.

[...] The deal boosts Western's refining capacity to 242,500 barrels per day, and improves the refiner's access to Bakken and Canadian crude supplies. The move also expands Western's distribution footprint to include the upper Midwest, where Northern Tier's assets are located. Northern Tier's retail assets include more than 200 convenience stores, which should integrate nicely with Western Refining's own slate of 200 stores.

Western Refining financed the deal with $550 million in debt, paying the remainder, including fees and expenses, with $245 million in cash. The partnership's units were trading up more than 8% on the news by mid-morning.

Hank Kuchta, CEO of Northern Tier Energy, said in a statement that, "We are excited to welcome Western Refining as a new strategic partner and investor that is committed, as much as we are, to Northern Tier Energy's long-term success. We thank ACON and TPG for their support over the past three years ... "

With the refinery having a limited partnership structure, and it unclear at Crabgrass what might attract limited partners beyond a going concern business, (i.e., possible hidden tax savings perks), it appears Western near the end of the 2013 tax year became general partner and owned the lion's share; with Crabgrass research into who owned Western, itself and in what business format, not done. While some data formats such as "short interest history," and "short percentage of float," are unfamiliar to Crabgrass, guru focus lists info about the Northern Tier Energy limited partnership where a sharp change in institutional ownership is apparent between Dec. 2013 and March 2014, roughly corresponding to Western's involvement. Same source; insider management holds little of the venture's capital shares, and diverse institutional ownership positions exist - the usual suspects.

A labor contract situation developed soon after Western's participation entry and with no right-to-work freeloaders mixed among the union local's membership to complicate cohesion, it looked as if the refinery with its trainloads of Bakken oil might face a strike; see, e.g., here, indicating a vote to strike was made mid-December, 2013.

Strib reported Jan 1, 2014, on the impasse settling somewhat quickly, short of workers walking out and setting up a picket line. The Teamsters local had this to say, winter 2014:

Local 120 Refinery Workers Stand Up to Management, Get Great Contract

Local 120 Teamsters working at Northern Tier Energy’s refinery in Minnesota voted overwhelmingly to strike if necessary in order to protect public safety and good jobs.

Management proposals to cut jobs, seniority rights and workers’ pay as much as 40 percent would have forced senior workers off the job and seriously undermined the safety of operations. A strike was set to begin midnight, December 31.

“We went right to the edge of the cliff,” said Chris Riley, a Local 120 business agent who represents about 190 Teamsters at Northern Tier. “But our members held strong.”

In the end, workers didn’t have to strike. Union and company negotiators reached a tentative agreement hours before the contract was set to expire.

Without the solidarity of the members and innovative strategies from the Teamsters Union, the workers would have ended up with a concessionary contract that put lives at risk.

“We just kept telling the company no,” said Joe Riley (no relation to Chris Riley), who has worked at the refinery for 35 years in just about every position imaginable. “They wanted to cut jobs, we told them no. They wanted wage cuts, we told them no. We were 100-percent backed by the union. Instead of cuts, we got raises, a three-year contract, bonuses and no jobs lost.”

“The Teamsters were united to win,” said Teamsters General President Jim Hoffa. “The company knew it. Their investors knew it. Northern Tier simply could not withstand a shutdown of its only refinery.”

Lesson learned? Hard to say. One lesson, Freedom Club's will to undercut unions would have likely affected the Northern Tier outcome had Freedom Club, and their right-to-work zealots had their way. Which means knowing who stands in the right-to-work camp is critical knowledge for all who work for a living, and that it is only common sense for allied-in-interest workers to be voting pro-union instead of for right-to-work anti-unionism, wherever it is and from whomever in politics the right-to-work agenda of lessening of union bargaining clout is advanced.

Non-union workers, especially those suffering at the current minimum wage or barely greater should note that when cohesive as a group their plight is sympathetically regarded by those in politics favoring unions since they also favor minimum wage floors being raised while unions also would always welcome expansion of memberships.

Long term, what does it all mean? Keynes noted that in the long term we're all dead. Short term, union cohesion carried the day to the benefit of Northern Tier workers not getting as little daily pay as management would have had it, and management kept the refinery machinery cooking the firm's product and profit.

The Northern Tier - Local 120 outcome was win/win to settle short of a walkout in that sense; but things settled on terms the workers would never have had per the right-to-work mythology of "each worker able to bargain his or her future one-on-one freely with the employer." Whether any contrary concessions from the union local to Northern Tier ownership were given in exchange, perhaps in pension entitlements, is unclear from the degree of web research conducted, although such give-and-take is feasible in peer-to-peer negotiation, vs the evil one-sidedness of the lone-individual-to-empire alternative.

BOTTOM LINE: In the majority of cases the stupidity of any/all union-hating "freedom to negotiate separately" argument is glaring, but it continues. When bargaining power is uneven as in a multi-state refinery employer dealing with an aging population of largely fungible members of a workforce, that "freedom" mythology is a bad fiction, the one-on-one contract "freedom" there being the freedom to get disadvantaged by big management.

Situations can differ. In a small single-site machine shop with specialized tooling and skilled labor required to run the tools via a small workforce number, there is more person-to-person give and take possible, as would also be the case with a small computer and communications firm with a lead owner-salesman and a handful of technicians with varied skill sets and background experience. That latter example is not Best Buy with Geek Squad workers, but even there the workforce is not unskilled labor.

Last, a caveat: Long term, renewable energy enters the picture in an ever growing way, and quick-charge electric automobiles or hybrids for longer commutes or cross country together with oil supply-demand balancing where the Saudis control pricing by altering their vast production levels in cryptic ways present an uncertain future for refinery needs nationwide and worldwide, but for the present, the union worked and would have had a far bigger rock to push up a steeper hill if Minnesota legislators were to have earlier followed or bowed to offensive Freedom Club union-busting aims and methods. Long term, even the best minds can only speculate while short term fluctuations might be only temporary but might also foreshadow lasting economic adjustment.

What that means in terms of politics and voting, is that the ideal candidate will be well qualified and wise, learned and with vision, but with a pro-labor vs an anti-labor leaning, as best as such can be determined from what voters are told, and what candidates may do with a hope of not being called out to defend an arguably anti-union position.

Reading more carefully, a detail or two needs comment, such as the oil trains must go elsewhere than the Northern Tier refinery, since they have an existing (low publicized?) pipeline; Strib's item near the end reporting:

In 2006, the Teamsters struck the refinery for seven weeks, eventually reaching a settlement that included a 3.5 percent wage increase and a $1,500 ratification bonus. At the time, Marathon Oil Corp. owned the refinery, but it sold it and other assets in 2010 to two private equity funds.

They created Northern Tier Energy, a publicly traded master limited partnership based in Ridgefield, Conn. In November, the equity funds sold their interests to Western Refining, a publicly traded oil company based in El Paso, Texas. It now has a controlling stake in the Northern Tier Energy general partnership.

The company also has 163 company-operated and 74 franchise SuperAmerica stores in Minnesota and Wisconsin and owns a stake in a pipeline that delivers Canadian and North Dakota crude oil to Twin Cities refineries.

How the Super America outlets maintained supply during the 2006 strike was not mentioned and has faded into history. Western is publicly traded, a Texas headquartered firm. The nuances of going from "a publicly traded master limited partnership" to "the Northern Tier Energy general partnership" as an organizational change without any driving business necessity likely relates to tax loopholes for the wealthy and how to use the same. Bless our tax code and who's favored.

While cleaning up detail, those UPDATE fact clarifications represent a distinction without a difference.

__________FURTHER UPDATE_________
If the unions are not backing minimum wage reform for the most exploited workers, who will be? If union allies are not a majority in both Minnesota legislative houses while Dayton remains in office, what can be done? With this upcoming November election holding a strong possibility of GOP majority status in at least one of the state legislative houses, is there some other path for low-wage worker relief? The answer for the Twin Cities is yes, see, e.g., the San Francisco minimum wage ordinance details page suggesting that Minneapolis and/or St. Paul can use city ordinance powers in a comparable way. That is why ALEC is pushing for state-by-state legislation that would expressly intervene to prohibit ordinance authority to do so. See, here, here, and the new "A Legislator for Every Corporation" "ALEC" sidebar item. While it is unlikely former low-wage barista Abigale Whelan is a friend of minimum wage reform, electing people who are, wherever there is a contest in Minnesota, is how the job can get done statewide. A place to start? The upcoming SD35 special election. Where else? Demand to know, where do the two parties' candidates stand on minimum wage reform. Or just vote stupid, or don't care if it's not your ox being gored. And enjoy your Tea while so voting.

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