The Emporia Gazette

May 27, 2012

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A second union representing thousands of Interstate Bakeries Corp. employees on Wednesday broke off talks over wage concessions, further jeopardizing the increasingly shaky future of the Kansas City-based baking company.

The Bakery, Confectionery, Tobacco Workers and Grain Millers International broke off its talks with Interstate two days after its largest union, the International Brotherhood of Teamsters, ended negotiations and threatened a strike in Southern California.

Interstate owns and operates Dolly Madison bakery in Emporia.

The strike threat came after Interstate announced it was closing four bread plants in Southern California and eliminating 1,300 positions, including the jobs of more than 500 Teamsters who deliver and sell bread and snack cakes for Interstate.

Teamsters official Rich Volpe said a strike there might spread throughout the country, making Interstate’s chances of survival grim.

“I don’t think it could ever come back,” Volpe said, who is international director of the union. “Too many customers would walk away.”

Interstate filed for Chapter 11 bankruptcy reorganization in September 2004 citing rising costs, including those associated with employee benefits, amid declining sales. Both the bakery workers union, which represents many of the employees in Interstate’s 49 cake and bread bakeries, and the Teamsters, which primarily sell and deliver the company’s products, have already agreed to some concessions since the bankruptcy filing.

The two unions, which together represent about 20,000 of Interstate’s 25,000 employees, both say the company is going too far in demands for concessions pertaining to wages, health and welfare benefits and changes in work rules.

Frank Hurt, bakery workers union president, said in a statement that the two sides had made progress since Monday, but in the end there were too many gaps they were unable to bridge.

Without giving details, he said Interstate was unwilling to balance wage and benefit cuts with a financial stake in the reorganized company for union members.

“We were willing to do our part, but the company just wanted too much,” Hurt said.

He said the union would return to talks if the company thought real progress could be made.

Still optimistic

Dave Loeser, acting executive vice president of human resources for Interstate, remained optimistic, saying the company looked forward to resuming talks with the bakery workers union after religious holidays that began this week.

“Our company values its relationship” with the bakery workers union “and is committed to reaching an agreement that will enable us to survive and preserve the jobs of its employees,” Loeser said.

The company also announced Wednesday that it had eliminated two layers of sales management and 215 jobs and consolidated its 10 profit centers into eight business units.

The breakdown between the Teamsters and Interstate came primarily over drastic changes Interstate wants to institute to modernize its distribution system.

The Teamsters claim the changes Interstate wants to make would cut wages by 10 to 25 percent for half of the 10,000 members who work for Interstate, while requiring them to pay a portion of their health-care premiums.

The bakery workers union, however, said it supports Interstate’s efforts to remake its distribution system.

“We were prepared to recommend to our members that they agree to changes in their contracts that would permit the company to institute a revolutionary transformation of its delivery system,” Hurt said.

“We were prepared to recommend that they absorb significant cuts in their health benefits, even after having agreed to scale those benefits and wages back in the last round of bargaining.

“Unfortunately, by the time discussions broke off, the company was asking for more than we believed our members would ever agree to.”

Part of the break off concerns what Interstate was willing to offer its union members in terms of a future financial stake in the company, but the bakery workers union didn’t provide specifics.

“(This) bankruptcy is one of a series of U.S. corporate bankruptcies in the last several years in airline, auto, steel and other manufacturing industries in which companies have looked to its workers to bail them out of financial distress brought on by factors over which the workers had no control — over capacity, unwise business acquisitions and expansions, and just plain corporate incompetence,” Hurt said.

And despite the givebacks by the unions, Hurt said now Interstate wants more.

“But the company’s continuing inability to restructure its balance sheet and to increase its revenue through increased sales and prices has sent it back to its workers for even more,” Hurt said.

Management sacrifices

He also asked why rank and file workers were asked to give up even more while those in top management don’t seem to be making similar sacrifices.

“Our members are not highly paid professionals like pilots and mechanics who took hits in the recent airline bankruptcies but could still enjoy a superior standard of living.

“There is simply a limit to what can reasonably be asked of them, particularly when upper-level management has been receiving huge salary increases as well as current and forward-looking bonuses even as the company struggled through bankruptcy,” Hurt said.

“The consortium of banks that hold the company’s loans and potential new investors can look to this union to cooperate as it has throughout its history, but they cannot expect our members to carry the full weight of the company’s failures,” concluded Hurt.

Until recently, all the parties in the bankruptcy reorganization have indicated they were getting along in their discussions about the company’s future.

Volpe said that all changed with the arrival earlier this year of Craig Jung, who was hired as a permanent chief executive officer.

“Predictions in this instance are hard to make because Craig, he’s the odd factor in all this,” Volpe said. “He’s new, and I could not predict what he might do, or may not do, but I hope others around him are advising him.

“But there’s a saying — never grab a wolf by the ears, because once you have, you can’t let go, but pretty soon you have to.”