Stella D'Oro Workers Fight Equity Fund's Plant Shutdown, Attack on Middle-Class Jobs

A Bronx union local is fighting the private equity fund Byrnwood Partner's decision announced last week to close the Stella D'Oro plant rather than bargain with the union for a fair wage. It was also revealed this week that Byrnwood Partners has received well over $175,000 in taxpayers subsidies to keep its factory operating in the Bronx, but it's shutting it down anyway, claiming it's not willing to pay union pay and benefit demands.

Union leader Joyce Alston, the president of Local 50 of the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCGTM) International Union, proclaimed:

We cannot allow the private equity predators at Brynwood Partners to ignore the law. The company cannot simply ignore the decision of a federal administrative law judge and it cannot punish the workers at Stella D'oro for exercising their rights under the law by filing unfair labor practice charges, winning their case and conducting a 10 month unfair labor practice strike in defense of the law.

If the rule of law is to mean anything, the National Labor Relations Board should get an injunction to stop this shutdown and enforce the judge's ruling and the national labor law. At the same time, we stand ready, willing and able to reopen negotiations with the company.

When the decision was announced last week, Alston declared, "The private-equity predators at Byrnwood Partners thought they could refuse to bargain with us, deny us information, break the law, tear up our contract, force a strike and break the union." Alston now says of the closing, "They're doing it out of spite: if they can't get you one way, they'll try another." So on Tuesday, the union fought back, as a union press release explained:

Workers at Stella D'oro Biscuit Company in the Bronx moved this week to stop the shutdown of their factory by private equity predator Brynwood Partners of Greenwich, CT. BCTGM Local 50, the union that has represented the bakery workers for over 40 years, filed charges on Tuesday with the National Labor Relations Board, denouncing the threat to close the Bronx facility and transfer production as illegal "retaliation for the protected concerted activity of Local 50 and the bargaining unit," specifically the union's successful pursuit of an unfair labor practice charge, "engaging in an unfair labor practice strike and prevailing" before an Administrative Law Judge.

In another step, the union also petitioned the regional director of the NLRB, Celeste Mattina, to use the Board's power to ask a federal judge to issue an injunction (under section 10J of the labor law) to prevent Brynwood Partners from closing the factory, destroying the bargaining unit and preempting compliance with the judge's decision and further bargaining with the union.

Further, in an attempt to reopen negotiations, the union exercised its right to demand bargaining over both the renewal of the expired collective agreement and the company's decision to close the plant and relocate production.

The announcement last week that the speculators from Greenwich intended to close the bakery rather than comply with the ALJ's ruling was also an affront to the Bronx community and the State and City governments. Members of the community rallied to support the strikers in an effort to sustain the Stella D'oro jobs and the modest wages and benefits they provided.

The city of New York granted the company tax abatements to reduce the costs of keeping the factory in the Kingsbridge section of the Bronx and the company had accepted taxpayer subsidies through a 2008 Manufacturing Assistance Grant of $175,000 from the Empire State Development Corporation (which was withheld during the strike).

"Apparently Brynwood, whose website brags that its investments have earned a 28.8 percent overall rate of return, thought it was under no obligation to give back to the community and to its workers," wrote corporate researcher Phil Mattera in a July 10 blog posting, "Corporate Cookie Monsters."

Local media outlets have lashed out at the equity fund, too, but the firm is responsible only to its investors, not to the public that subsidized the firm with tax subsidies and abatements or to the community that needs the factory to stay alive or to the workers who have worked there, often for decades. As The New York Daily News editorialized:

After 11 months, an administrative judge with the National Labor Relations Board ordered Brynwood to put the strikers back to work, finding that the company had engaged in unfair labor practices.

It should have been a major victory, but Brynwood responded, outrageously, by announcing that it would shutter the venerable maker of cookies, breakfast treats and breadsticks in 90 days.

There are two possibilities here, both horrendous.

The first is that, after buying Stella D'Oro from the giant Kraft conglomerate, Brynwood discovered it could not earn a reasonable return as a New York manufacturer while providing living wages and benefits.

The second possibility is that Brynwood, which boasts annual gains of almost 30% for its investors, is seeking to make a killing off Stella D'Oro -- and otherwise is willing to let the company die, workers be damned.

Either way, to its great discredit, the Greenwich, Conn.-based investment fund is playing the hardest of hardball with working people's lives.

The attorney for Byrnwood Partners was unavailable for comment, but will presumably challenge the retaliation claim in court.

As Tula Connell of the AFL-CIO Now blog pointed out last week:

Workers returned Tuesday to the job at Stella D'oro Biscuit Co. in the Bronx after a judge ordered the company reinstate the 136 employees who had remained strong throughout a brutal 11-month strike. But before they could even walk through the doors, they were greeted with the anti-union response by the company's private equity firm owners, the 21st century's mutation of the robber barons: Brynwood Partners announced it would shut down operations in October. ("Private equity firms" is the euphemism those leveraged buyout corporations adopted after leveraged buyout got a bad name in the 1980s.)

Established more than 75 years ago, Stella D'oro is a nationally known maker of specialty baked goods and until recently was a family-owned business. But a series of corporate buyouts ultimately resulted in Brynwood's 2006 purchase of the company. And a private equity firm's only reason for existing is to make money -- lots of it. Even robber barons ultimately had to ensure they had enough workers on the job because those companies made money by making things. Not so for today's private equity firms. Closing shop and making off with the profits is what they do.

In fact, the Greenwich, Conn.-based Brynwood admitted as much to the union's attorney, Louis Nikolaidis, according to Juan Gonzales at the New York Daily News.

"Last year, they told us upfront, because we're a hedge fund, our investors expect a higher rate of return, and your members should expect a wage cut," Nikolaidis says.

In my reporting on the strike for AlterNet, the workers and union leaders made clear what was at stake in this fight:

The strike marks an important turning point in the fight against the lowball tactics of private-equity firms determined to destroy unions to boost their own profits. Chief mechanic Mike Filippou says proudly, "We showed other people [in the country] how to fight this." Joyce Alston also told me:

"Hopefully, the American people will put a stop to firms buying up companies and then destroying them. At some point, we will not have a middle class. Our workers have taken on this fight for themselves and for everyone else. In truth, it's the fight of their lives."

This week's legal actions show they're not giving up.

As one union expert, Ray Scannell, the Director of Research & Education for the BCTGM International, told me in by email Wednesday:

The local union is also calling on the city of New York to act to protect the investment it made through tax abatements in the continuing operation of the Stella D'oro facility in the Bronx.

The union is ready to reopen negotiations for a new contract and for negotiations over the decision to relocate production.

After nearly a year on strike, union leaders clearly believe that, in some ways, the fight to save the plant has only just begun.

Comments

[maddy48]

What kind of profits did this equity firm hope to derive from this Bronx buscuit factory? And what kind of returns are they expecting to make in this crappy economy? This is the shame & destruction of American enterprise. Hey, Chamber of Commerce - maybe equity firms out to be "regulated" from buying viable businesses & dumping them to keep ghost profit numbers. This started in the 70's w/ leveraged buy-outs & the ever popular junk bonds, now CDS & junk that passes for ECONOMY in a junk nation. Shame.

[steelmill]

Thanks for posting this,it needs to be talked about

[mbaty]

Wow. This is so wrong. Money is just too important in our society--necessary for our very survival. And money is capable of making very unethical people very powerful while disempowering very wise, compassionate people. It's time to do some creative, out of the box thinking about how we approach the essentials of life. These kinds of company strategies are economic suicide to America, but then again, perhaps it's time for our economy to be reincarnated.

[AZBoomer]

If the fund cannot make the return on investment that their investors expected/r­equired/de­manded by keeping the plant open than it should close. why can't the union make concessions? Especially in today's economy. We are all asked to make sacrifices but the union can't/won't? The union workers need to get real or get unemployme­nt....

[Mike Elk - Huffpost Blogger]

great piece art!