Saturday, October 10, 2009

Stella D'Oro Abandons Da Bronx

“Stella, Stella,” cries out Stanley Kowalski in A Streetcar Named Desire on the New York stage. “Stella D’Oro” cries the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, as Da Bronx plant closes down.

Workers chanted “Whose factory? Our factory!” during the New York City Labor Day Parade last month.

The owners heeded the advice of the great New Yorker, Horace Greeley: “Go West, young man, go West.” Stella D-Oro is headed West a century later to a non-union facility in Ashland, Ohio. The 135 union workers in the Bronx will join the growing ranks of unemployed in New York as the industrial base of the City continues to shrink.

Stella, the baker of breadsticks, fudge stars, and biscotti, has been an institution in Da Bronx since 1932.

Stella, always popular on the East Coast, has gone through a series of owners in recent years, including the private equity firm Brynwood Partners. Brynwood asked the union a year ago asked for concessions. Workers were paid $18/hour with full medical coverage, up to ten weeks annually of leave time, and a pension plan. The contract was too sweat for the owners, who wanted to cut salaries to $13 per hour over 5 years, and eliminate the pension plan. The workers were shocked by the demands. Brynwood wanted to measure the workers pay by CVS standards. It also wanted to flip Stella for a profit.

The union workers responded in a traditional manner.

They struck in August 2008 and filed unfair labor practices charges against the company.

That’s fairly typical in labor disputes. A hearing officer for the National Labor Relations Board found for the Union and ordered reinstatement and back pay for the workers. That’s also fairly common in labor disputes.

The company’s response was atypical. Brynwood sold the bakery to Lance Snacks, a non-union company. Lance announced it was closing the plant and moving production to the Ohio facility. In essence, it was buying the brand names and recipes of Stella without the headaches.

In other words, Lance did not acquire the union agreement or the existing workforce. That too sometimes happens in purchases.

Unfortunately for the proud, loyal union workers, Stella D’Oro has been a dying asset. Nabisco purchased the company for $100 million in 1992. Nabisco’s successor, Kraft, sold it in 2006 to Brynwood for $17 million, and Brynwood in turn sold Stella D’Oro at a loss to Lance.

In a capitalistic economy, either investors receive a return on their capital investment or the investment fails. Even non-profits have to earn a return or rely on gifts to survive. Stella made great products, but not a profit. The Union in theory won the 11 month strike, but it was a pyrrhic victory. Brynwood cut its losses. The owners, and not the workers, own the factory in a capitalistic society.

The sale to Lance was also prompted by union activities. A new wave in labor disputes is to bring outside pressure on the employer, such as through public demonstrations. Last May, 100 striking workers picketed in front of Brynwood’s headquarters in Greenwich, Connecticut.

Publicity, acrimony, and unemployment followed. Lance wanted the cookies, but not the acrimony. The workers were left with the short end of the bread sticks.

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