Waren Buffett, Russell Apparel, and Union Busting

We know that Warren Buffett believes we are undertaxed. We also know that the Oracle of Omaha has consistently spoken out against the excesses of Wall Street, but has strangely been silent on the role of the rating agencies in the recent housing bubble. Perhaps Buffett’s reticence is because his Berkshire Hathaway owns 20% of Moodys.

Now we learn that Warren Buffett, the capitalistic icon of the Democrats, is a union buster.

Berkshire’s subsidiary, Fruit of the Loom, acquired Russell Apparel, the sporting goods company, in 2006 for $607 million.

750 of the 1800 employees at Russell’s Choloma, Honduras plant voted to unionize in 2007. Russell responded by shuttering the plant for “economic reasons.” The company now claims to be saving $2 million annually by ending the lease on the facility. Russell denied anti-union animus played a role in the decision to close the plant.

What goes in Honduras does not stay in Honduras. Moises Elias a Bovado and Norma Estela Mejia Castellano, union leaders, are touring United States campuses, crying out about the Honduras closure.

College students are concerned about sweat shop operations in the apparel industry. Roughly two dozen colleges have responded to the union leaders by canceling their licensing agreements with Russell. Among the campuses dumping Russell are Columbia, Cornell, Georgetown, Harvard, Houston, Miami, Michigan, NYU, Penn, Purdue, Rutgers, Washington, and Wisconsin.

Buffett is notorious for buying value investments at a bargain. The Russell asset though is rapidly depreciating, consistently losing universities to Nike, founded by Phil Knight.

Buffett could learn from Knight, who has been a substantial contributor to the academic and athletics programs at his alma mater, the University of Oregon. Students voted in 2000 to boycott Nike on the Oregon campus. Phil Knight responded on April 17, 2000 by announcing that he was summarily cutting off his alma mater without another nickel. He cancelled a $30 million pledge to the University.

Nike is still featured at Oregon, and Knight has renewed his generosity to the Ducks.

Buffett, with an undergraduate degree from Nebraska, and an MBA from Columbia, has not been so generous to Columbia.