by Walter Brasch
AR Senior Correspondent
September 6, 2011
CORPORATE AMERICA SENDS A LABOR DAY MESSAGE
BLOOMSBURG, Pa., Sept. 6, 2011 -- For most Americans, the only significance of Labor Day is that it concludes a three day weekend. For Kirk Artley, it means he has about six weeks left of employment.
On Aug. 24, RR Donnelley, a Chicago-based mega-corporation that claims to be "the world's premier full-service provider of print and related services," told Artley and the other 283 workers at the Bloomsburg, Pa., plant that "economic conditions" forced the closing of the book printing facility. The workers said they would take significant pay cuts if that would save the plant. RR Donnelley rejected the offer.
Under the termination agreement, the workers, both management and labor, wouldn't have priority rights to bid for jobs at any other plant. "We were told we could apply for open jobs just like anyone else," says Artley, a bindery technician and president of Local 732C of the Graphic Communications Conference, a Teamsters division.
Apparently, there was no way to integrate a couple of hundred workers into a corporation that employs about 58,000. What the corporation - which had income of about $10 billion last year - did agree to do, after negotiations with the union, was award severance of one week's pay for every year of service, and to pay for half the cost of their health insurance for up to nine months, depending upon length of service.
The corporation told the workers the Bloomsburg plant was no longer profitable. They claimed there was no way the Bloomsburg plant, with its eight rotary offset web presses and five bindery lines, could be competitive in an industry that was moving to digital books. They said other plants would absorb the work.
If the company had even contemplated changing the nature of production at Bloomsburg to deal with a changing industry, and re-training the workers, that was never made known to those still employed. Every day, the workers did their jobs, put up with management, and then went home.
By federal law, there has to be a 60-day notice to the workers. But there is no law to require corporations to tell them the truth.
Contrary to corporate statements and a popular belief that print books are doomed by the emergence and significant increase in publication and sales of digital books, there is still a consumer interest in print.
Overall, about 2.57 billion books were sold in 2010, a 4.1 percent increase since 2008, according to data compiled by the Association of American Publishers (AAP). Net sales revenue last year was $27.94 billion, a 5.6 percent increase from two years earlier. The AAP reports there were 603 million copies of trade hardcover books published last year, a 5.8 percent increase from two years earlier, with net sales revenue up about 0.9 percent.
For trade softcover books, sales were about one billion copies, up 2.0 percent from 2008, with net sales revenue of about $5.27 billion, according to the AAP. The only significant decrease was mass market paperbacks (sometimes known as the supermarket or rack paperbacks).
In 2010, net unit sales were 319 million, a decrease of 16.8 percent from 2008; net revenue was $1.28 billion in 2010, down 13.8 percent from two years earlier, according to the AAP. The Bloomsburg plant printed Harlequin romances and some other mass market paperbacks, but they were a small part of the overall production.
RR Donnelley itself, with assets of about $9 billion, is profitable, although its stock has had wide fluctuations in 2011. Its net sales for 2010 were $10.02 billion, up from $9.86 billion the year before. For the first half of 2011, Donnelley had net sales of $3.86 billion, up about 5.7 percent from $3.65 billion a year earlier. Its second quarter net sales were $2.62 billion, an 8.6 percent increase from a year earlier.
The company's CEO, Thomas J. Quinlan III, earns about $2.6 million in total compensation, with a five-year combined compensation of about $13.6 million, according to Forbes. In contrast, hourly workers in the Bloomsburg plant received an average of 2 percent pay raises each year.
"Just last month, the company told us we were profitable, that it had no plans to close us down," says Artley, "and now they say we aren't profitable?"
No well-run corporation makes a decision in less than a month to close a 370,000 square foot plant, with an estimated market value of about $8.4 million. But, that is what the corporation wants the workers to believe.
The union did get Donnelley to agree it would not shut down the plant and then re-open it and resume printing books. There was no corporate agreement that it wouldn't "re-tool," and establish other printing or digital services. And there was definitely no agreement to retrain or rehire any worker. Based upon past practices, RRD Donnelley is more likely to try to sell the empty building and land.
A clue to what the corporation was going to do may have been disclosed in October 2010 when it trumpeted that it had developed the ProteusJet high-speed, ink-jet printers, and was shipping one a month to various plants. The printers were designed to handle short run and one copy at a time print-on-demand publishing. None of those printers were scheduled to be delivered to Bloomsburg.
Bloomsburg still produced several long-run publications for major publishers, including the Idiot's Guide series and the Twilight vampire books, as well as several fiction best-sellers.
But the plant was developing a specialty as a short-run printer (generally 1,000-3,000 copies of a title), with a three-day turn-around. In the current book industry, shorter runs with faster turn-around times are becoming more of an industry standard, especially with the rise of more small independent regional publishers.
Yet, Donnelley was closing a plant that could have been part of a major expansion to meet the new publishing platforms. "That's one of the things that baffled us," says Artley.
At its peak, the Bloomsburg plant was averaging about seven million books a month; that number dropped to about two million a month, and then picked up to five million in August. Although Donnelley kept reaffirming that the change to digital technology, combined with a decreasing economy, were the problems, there are other truths it didn't tell the workers.
Lower production in Bloomsburg could be because RR Donnelley sales people were leading some potential customers to the company's Crawfordsville, Ind., or Harrisonburg, Va., plants. However, one major customer balked at moving the contract. The Penguin Group, one of the five largest publishing conglomerates in the world, wanted to keep a major part of its production in Bloomsburg. Penguin, which owned one of the presses and one of the bindery lines in the Bloomsburg plant, accounted for as much as three-fourths of all titles produced in Bloomsburg, according to Artley.
One critical issue for Penguin was that RR Donnelley wanted to determine where the books would be printed, perhaps yet another sign that it was planning to phase-out Bloomsburg production.
A source in Donnelley management who is familiar with the Penguin situation, and who asked that his name not be used, says that the publishing company preferred the quality produced at Bloomsburg, and the close access to its distribution warehouse in Pittston, Pa., about 50 miles northeast of Bloomsburg. The Bloomsburg plant is also close to I-80, a major interstate that connects the New York City metropolitan area with San Francisco.
The union had agreed in January to extend its current contract, and then signed a two-year agreement, assuring Penguin executives there wouldn't be any labor issues in Bloomsburg. About that time, Donnelley finally agreed to allow Penguin to have its books printed in the Bloomsburg plant and signed a two-year contract.
The closing of the Bloomsburg plant, which requires Penguin to have its books printed in Harrisonburg, Va., and then shipped about 300 miles northeast to Pittston, would increase transportation costs about three times, according to one person familiar with the contract. Because Penguin signed a two-year contract with the assurance that books would be produced in Bloomsburg, it would be justified in declaring a breach of the contract and moving its work elsewhere, or demanding substantial financial considerations from Donnelley.
In 1993, RR Donnelley bought Haddon Craftsmen, which produced numerous books that reached best-seller lists, and which had developed a reputation not only for high quality printing but also as a good place to work. Haddon Craftsmen had begun during World War II as a merger of three companies.
The Bloomsburg plant was added in 1964. In 1980, six employees bought Haddon, which now had plants not only in Scranton, its main plant, but also Dunmore and Allentown. Sullivan Graphics bought the company in 1989 and then sold it to RR Donnelley four years later.
Within two years, Donnelley announced it was thinking about closing the 400,000-sq. ft. press and bindery in Scranton, and unify all operations in Bloomsburg.
Steve Zeisloft, a union officer for 10 years, including four years as vice-president, recalls Donnelley "essentially told us the company could expand if we worked with them, and if we didn't they would shut down the plant and take the work elsewhere."
The threat of shutting the Bloomsburg plant, however, was undoubtedly a scare tactic. The Scranton bindery was in an old brick building; the Bloomsburg plant was newer, and had significant room for expansion.
Donnelley had several demands. It demanded government concessions and assistance. The Commonwealth gave the company $350,000; the county, local school district, and local township all waived taxes the first year and gave extremely favorable reduced rates the next four years.
For the new contract with the union, known as the Green Contract, the corporation also demanded that most hourly workers take pay cuts, that they pay more for health care, that it would now take 15 years instead of 10 years for workers to earn a four week vacation, and that their union gives up the "closed shop" mandatory membership requirement.
Union workers would keep their jobs, but new employees would be allowed to choose whether or not to join the union. More important, new employees would not have to pay "fair share" contributions for representation, something common in unionized shops. Thus, the union would negotiate contracts, deal with workplace conditions and grievances, and provide for the common welfare of the workers, but receive no compensation from non-union members. In exchange, Donnelley agreed to increase the size of the plant and the number of employees.
The "Green Contract" went into effect in June 1996, the same month the bindery expansion was completed.
Kirk Artley was one of more than a thousand who applied for a couple of hundred new jobs. He had been a Marine for 14 years and held jobs in other factories. The company, he says, "discouraged us from joining the union," but like many, "I saw the necessity to be a member."
For the next 15 years, union- and non-union employees worked side by side. "We were family," says one 30-year press technician, "and some employees saw a reason why the union was necessary." Only because more than half of the workers were union members could Management not request decertification and the elimination of the union.
Several long-time employees say the atmosphere under the new owner changed. "The rules and regulations weren't as stringent under Haddon, yet we still produced the quality," says Mark Harris, a press technician who was union president 1998-2006. Donnelley "kept telling us quality is the most important part," says Harris, "but at the same time they kept telling us they wanted more numbers."
Adding to the workers' frustration was that most plant executives had never worked in production.
The new owners were "more interested in profits than in the workers," says one 30-year employee, who asked that his name not be used. Another employee, who worked under Donnelley and the previous owners, says, "We did what we could with what we had, but you could only do what they let you do." Artley explains, "We were constantly giving extra maintenance to the presses, trying to maintain quality."
Pride of workmanship was the main reason there wasn't a significant decline in overall quality. Some of the presses were three decades old; with one exception, any "new" presses brought into the plant were already used. Because the four Harris presses were obsolete, says Artley, "we had to do our own machining to create parts."
Mark Harris recalls that in addition to good wages and benefits, Haddon provided the "little things that helped our morale," including company-paid Christmas parties. However, Donnelley canceled the Christmas party and all other socials. "If we wanted a Christmas party," says Artley, "we had to set it up and pay for it ourselves."
With a physically demanding 13/1 schedule, parties were rare. With few exceptions, hourly employees, most of whom stood most of their shifts and were required to work 13 straight days with one day off, beginning in the late 1990s.
Many worked double shifts. "You don't mind it if the business is dying, because you do what you have to in order to make it work," says Zeisloft, "but this was a profitable company, and there was always work."
During the past few years, Donnelley cut back on the 13/1 agreement, but would resort to new contract language that limited hourly workers to "only" 311 days a year. Families, especially the younger ones, became used to a good annual income.
They did not get used to the reality that there was little family time or that there was significant physical and mental stress because of the work conditions. Even if there was a reduction of printing contracts, the company apparently had plans only to reduce forced overtime, not eliminate it.
"We looked forward to June and October," says Zeisloft, "because those were the slowest times during the year, and we could be with our families more."
Management tended to "blame everything on the union," says Harris, who had been at the plant 32 years. Under the union contract is a three-step grievance process. If a problem couldn't be resolved at one of three levels it went to arbitration.
Under Haddon, problems tended to be solved internally, says Mark Harris. But under Donnelley, there was "a lot of blocking and stalling," with some grievances taking as long as three years before going to arbitration.
In some cases, says Harris, the union couldn't afford the cost of arbitration, especially when faced by a corporation that seemed to have endless legal resources and the desire to never admit it did anything wrong. Nevertheless, the union, says Zeisloft, "fought as hard for the non-union workers as it did for its own members."
The corporation's blatant anti-union attitude was clearly seen in 2007. The United Network International (UNI), a federation of more than 1,000 unions representing 20 million unionized workers on four continents, had sent three detailed letters to Thomas Quinlan to request a meeting to discuss workplace conditions in the corporation's overseas plants.
The alliance specifically wanted to talk with the CEO about following the recommendations of the International Labour Organisation and various national laws about the rights to join a union, bargain collectively, and issues of discrimination and child labor. Quinlan ignored the letters. In May 2008, a delegation from UNI and the Teamsters went to the Chicago headquarters to meet with Quinlan. They left a letter of concern with an assistant; Quinlan had refused to meet with them.
The corporate attitude to workers, reflected in numerous ways in Bloomsburg, extended even after the closing was announced. On Friday, Sept. 2, the state sent a Rapid Response Team to Bloomsburg. The purpose was to give the workers information about numerous social services available, to discuss government benefits, including unemployment, and to help them find other work.
At a preliminary meeting, with four union officers and three from management, the team outlined what it wanted to do and to secure the company's assistance.
According to those who were there, the Human Resources manager, who was also on the list to be terminated, asked how long the meeting with the workers would be. She was told it would be 90 minutes.
"Can it be done after work hours?" she asked, "Because we have production goals to be met."
Alan Robinson, of the state's Dept. of Labor and Industry, replied, "You're not going to like this answer. You can pay now or you can pay later."
He was referring to the reality that the longer workers were unemployed the more RR Donnelley would be paying its share in unemployment taxes.
"We were all surprised at her question," says Artley, but they were even more surprised by what she said later. Reaffirming a management attitude, she suggested, "Can we send these [workers] back to the floor … because we have production goals to meet." The planning meeting ended at that point. "We stood outside just shaking our heads in disbelief," says Artley.
Kirk Artley is 56 years old. Like most of those who have been terminated, he's not old enough to retire; in a nation that values youth, he's not a prime candidate for employment, no matter what his competence and experience are. But, he's more worried about his co-workers.
"They have mortgages, they have bills like everyone else," he says, "and now they're out a job in an area that has few new jobs." More important, most of those terminated are not only skilled labor, but have a long history in a highly technical field. Their knowledge and abilities will be lost if they are forced into other employment.
In the RR Donnelley Corporate Social Responsibility Report are four guiding principles. One is "Treating others the way that we want to be treated." It's nice rhetoric. If it were true.
Editor's Note: Bloomsburg plant management referred all calls to the Chicago headquarters. Three calls in a week to the Chicago headquarters for comment were not acknowledged or returned. Most workers at the Bloomsburg plant who voluntarily talked about the problems and issues asked that their names be concealed.
Many refused to talk until after Oct. 24, the final date of their employment. One worker said, "You never know what they could do to us even in our last month there."
Another said his reason for not saying anything was, "They could fire me and deny me the severance benefits," even though he and the company had signed a severance agreement. That fear of retaliation, whether real or perceived, was seldom seen under the management of Haddon Craftsmen.
Walter Brasch, a retired professor of mass communications, is a syndicated social issues columnist, and a member of The Newspaper Guild/Communications Workers of America, Authors Guild, and National Society of Newspaper Columnists. His latest book is Before the First Snow: Stories from the Revolution, available through bookstores, Amazon.com, or the publisher's website, www.greeleyandstone.com.