The Multinational Monitor



Challenging Management

The Three Worst Labor Disputes of 1989

by Robert Weissman

The 1980s were devastating to the U.S. labor movement. Ronald Reagan's abrupt firing of striking air traffic controllers in 1981 set the tone for the decade. The 1981-1982 recession and the eruption of a "competitiveness" crisis only made conditions worse, providing business with a rationale for its unbridled attack on organized labor and workers' interests.

As employers demanded more and more concessions, workers found unfulfilled their traditional expectation that each contract would bring improved wages, benefits and working conditions. Even profitable companies demanded worker give-backs--in anticipation of future difficulties.

Organized labor was unable to cope with the Reagan-era onslaught and the movement drifted aimlessly for most of the decade. In 1984, Democratic Presidential contender Gary Hart branded labor a "special interest," a label which stuck; unions were no longer viewed as representing the interests of the majority. By the end of the decade, the unionized portion of the work force dropped below 18 percent.

Nineteen eighty-nine brought with it two of the most bitter labor disputes of the decade. Eastern Air Lines and Kitston Coal Co. precipitated strikes by attempting to break their workers' unions. Bad faith bargaining, demands for wage cuts, the use of scabs, judicial limitations on union tactics and unilateral abrogation of existing contractual rights have characterized both strikes.

In both instances, the unions startled the companies' executives by responding with aggressive campaigns. The Pittston workers emerged from their conflict with a largely favorable settlement; the Eastern struggle continues, though the outlook for the airline's former employees is bleak. Labor sympathizers hope that the examples of Pittston and Eastern--contrasted with the many timid union campaigns throughout the decade--will help revitalize the labor movement in the 1990s.

For Third World workers, the 1980s were a dreary decade as well. International Monetary Fund (IMF) demands for austerity had a severely negative impact on workers' welfare. The increasing mobility of international capital made it difficult for workers to secure gains from employers. Companies were willing and able, at the first signs of labor militancy, to pick up their equipment and move their operations to countries with lower wages, fewer safety regulations and weaker or no unions. Desperately trying to lure foreign investment, governments often repressed workers and their representative organizations in order to preserve "a good business climate." As one example among many, Multinational Monitor has chosen the activities of American Cyanamid in South Africa to represent the repression workers had to combat throughout the Third World in 1989.

American Cyanamid vs. Black South Africans

On November 6, 1989, South African Cyanamid, a major supplier of cyanide to the South African gold industry and a subsidiary of American Cyanamid, fired all of the black workers at its two main production sites, in Witbank and Isando in the Transvaal. The 220 fired workers, all members of the Chemical Workers Industrial Union of South Africa (CWIU), an affiliate of the Congress of South African Trade Unions (COSATU), had been striking over retirement benefits since October 16, 1989.

The CWIU had asked Cyanamid to transfer the workers' pension funds to the Chemical Industries National Provident Fund (CINPF), a multi-employer fund managed by business and worker representatives. The German chemical company Hoechst and several British chemical firms operating in South African have already joined the CINPF.

Cyanamid initially threatened to dismiss all the strikers on November 1, but withdrew the threat when the CWIU agreed to call off the strike if good-faith efforts were made to negotiate a settlement to the conflict. Five days after agreeing to negotiate, Cyanamid fired the striking workers.

On November 8, 1989 the company sent a letter to all of the recently dismissed workers offering them their jobs back if they agreed to remain members of the company's pension fund and not to demand membership in the CINPF. No workers accepted this offer.

Unable to break the united front of the dismissed work force, Cyanamid rehired the workers at the end of November. The company's decision was partially in response to international pressure, according to Ron Crompton, General Secretary of the CWIU. The Amalgamated Clothing and Textile Workers Union coordinated the efforts of U.S. labor unions, members of Congress and investors in American Cyanamid to force the South African subsidiary to reinstate the fired workers.

In demanding that Cyanamid join the national provident fund, the CWIU challenged the way pension funds are administered. Most South African workers are not able to collect the money their employers contribute to pension funds, the union argued. Only upon reaching retirement age are workers able to draw benefits commensurate with the contributions both they and their employers have made to the pension fund. Workers making early withdrawals on pension funds receive only their direct contribution to the fund--the company's contribution is never recovered. Most workers lack job security, however, and are not able to wait until retirement age before drawing on their pensions.

In contrast, provident funds allow workers, upon leaving a company, to draw benefits equivalent to the money contributed by both the worker and the employer, Crompton explained to Multinational Monitor. Provident funds are also more flexible than pensions. For example, workers can draw on them for loans. Provident funds also offer workers the option of receiving their benefits as a lump sum.

Many of the questions the union raised about pension funds resonate in the United States as well. "Who gets the real benefit from all those billions tied up in the pension funds?" Crompton wrote in Trustee Digest. "Someone is using pension fund money as investment capital and it is definitely not workers. And yet it is workers' deferred income--their money." "Why is it so important to keep workers and unions at arms length in the retirement benefits area?" he asked. "One can estimate that at least a third of the value of the stock exchange ... is attributable to retirement fund investment and, of that, a significant amount belongs to blue collar workers. In short, the workers have somehow come to own a considerable chunk of the country."

The issue of control of pension funds, Crompton wrote, "is a question of money and power, plain and simple ... It is a question of the maintenance of white privilege." Using the national provident fund, as the CWIU demanded, would shift control of the workers' retirement fund away from the company and toward the workers; union representatives, in conjunction with business representatives, would manage the money.

The reinstatement of the workers has not ended Cyanamid's attacks on its black workers and the CWIU. The company is charging that the union's provident fund proposal is an unfair labor practice under the recently enacted Labour Relations Act. South African unions have criticized the Act, arguing that it constitutes "an outright attack on them," according to Kate Pfordresher of the New York Labor Committee Against Apartheids Additionally, while other foreign companies have grudgingly acknowledged the role and legitimacy of political strikes in South Africa, Cyanamid refuses to do so. Cyanamid seems intent on continuing its practice of demanding that workers not participate in general strikes protesting apartheid and disciplining those workers who do participate.

For these practices and others, Crompton rates Cyanamid the worst employer among the U.S. multinationals doing business in South Africa. Cyanamid makes "magnificent statements in the United States," he said, but it engages in far "different practices on the ground in South Africa."

The dogfight at Eastern

Since March 4, 1989, 8,500 Eastern Air Line employees, members of the International Association of Machinists and Aerospace Workers (IAM), have been on strike. These workers are not just on strike against a company but also against a man: Eastern's chief executive officer, Frank Lorenzo.

Eastern has engaged in vicious attacks on its work force from the moment Lorenzo gained control of the carrier in 1986. Workers charge that Lorenzo was never interested in managing the company efficiently and profitably. He acquired Eastern for other reasons, they argue. First, he hoped to transfer Eastern's assets, at discount prices, to its parent company, Texas Air Corp. Second, by purchasing and dismantling Eastern, he hoped to eliminate a chief competitor of Texas Air's flights in the eastern section of the United States. Lorenzo's actions lend credence to the workers' charges.

Under Lorenzo, the company transferred airplanes, airport gates and other assets, including Eastern's valued System One Direct Access reservation service, to Texas Air and other Lorenzo- controlled airlines--all at bargain rates. Since Lorenzo's other airlines are non-union, he was able to replace the unionized work force at the Eastern facilities with non-union laborers who work at lower wages.

The stripping of Eastern's assets deepened the financial woes it had been experiencing under Lorenzo's predecessor, Frank Borman. This set the stage for the onslaught against the airline's work force.

Lorenzo installed veteran anti-union executives from Continental Airlines in the top Eastern managerial positions. He abrogated important components of Eastern's contract with the IAM. In 1987, he demanded major cuts in labor costs. Having already provided $1 billion in givebacks in the 1980s and already working for lower wages than the employees of every other unionized airline, it is not surprising that Eastern's workers refused this request.

For 15 months the IAM sought to negotiate with Eastern over the company's desire to slash wages and benefits 28 percent. The National Mediation Board intervened and on January 31, 1989 ordered a 30-day cooling off period in an effort to resolve the impasse.

On March 4, the IAM members walked off the job and went on strike. In an impressive display of solidarity, they were joined by the airline's pilots and flight attendants, who also had suffered from Lorenzo's oppressive tactics and demands.

William Winpisinger, then President of the IAM, described Lorenzo's attitude toward Eastern's workers to Multinational Monitor. "He starts off by refusing to talk to anybody from any union ... And he told us very promptly he was going to cut our wages in half. And he had it all his own way, firing people left and right ... They'd come down and take you right out from the jet shop, they'd come down with two security guards, grab you, march you right out of the goddamn place. Like a common criminal."

On March 9, 1989, less than one week into the strike, Eastern declared bankruptcy. In 1983, Lorenzo had successfully busted Continental Airlines' unions by declaring bankruptcy. In 1989, however, a revised federal bankruptcy code prevented him from unilaterally pulling out of union contracts. Nevertheless, with Eastern's creditors clamoring for payment, bankruptcy was his only option.

With the company's future in the hands of bankruptcy court Judge Burton Lifland and examiner David Shapiro, the IAM sought to find a buyer for Eastern. The workers wanted the company to survive, but they were no longer willing to tolerate Lorenzo. When Peter Ueberroth appeared ready to purchase the company, Lorenzo refused to accede to a union demand that a trustee run the airline while ownership was being transferred, and the deal was scuttled. While the IAM continued its search for a buyer-- and offered huge concessions to potential buyers--Lorenzo proposed his own reorganization of Eastern, involving a substantial downsizing of the airline.

The viability of Lorenzo's vision of a downsized Eastern remains uncertain. Eastern was able to meet, a couple of weeks late, its target of 800 daily flights by December (The carrier flew approximately 1,000 per day before the strike.) Scab employees are working for wages ranging from 33 to 40 percent of what Eastern's unionized workers made.

In a big boost for Lorenzo, the pilots and flight attendants ended their solidarity strikes at the end of November, after President George Bush vetoed the "Eastern Blue Ribbon Panel Bill," legislation which would have set up a committee to make recommendations to end the strike.

Still, it is not clear whether Eastern will be able to emerge from its financial mess. Through the first three quarters of 1989, Eastern lost an estimated $820 million and is now $2 billion in debt. A study by Eastern's creditors determined that the airline would lose another $521 million from 1990 to 1993. On December 28, Eastern announced it was laying off 600 workers and cutting the wages of half its work force by 10 to 20 percent. And although the company is currently flying 800 flights per day, its planes have been only about 50 percent full.

Most significantly, the IAM's workers remain solid in their support for the strike: only 300 of the 8,500 represented workers have crossed the picket lines. The union is maintaining its pickets, spearheading a boycott of Eastern, pressuring Eastern's board of directors to settle the strike and continuing its maneuvering in bankruptcy court and its search for a buyer for the airline.

The IAM designated December 8, 1989 as "Stand up to Lorenzo Day." In fact, the union is ready to stand up every day against this most fanatical of union-busting corporate executives.

Class warfare in Virginia

"Welcome to class warfare in southwestern Virginia." That is how United Mine Workers of America (UMWA) Vice President Cecil Roberts greeted over 1,000 members of the United Auto Workers (UAW) who had come to demonstrate in solidarity with the 1,900 members of the UMWA who began striking against the Pittston Coal Company on April 5, 1989. Roberts' language was not exaggerated; the ruthless actions of Pittston and the courageous response of the mineworkers brought class conflict into sharp relief.

The UMWA's contract with Pittston expired in February 1988. With the expiration of the contract, Pittston cut off health care coverage for 1,500 pensioners, widows and disabled miners. The UMWA continued negotiations nonetheless. In November 1988, after bargaining in bad faith for the entire year, the company unilaterally declared the negotiations at an impasse, stated it had made its "last best effort" and refused to negotiate further.

On April 5, 1989, after postponing an ealier strike

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