How a Bankruptcy Reveals Benefits of Membership

It was hardly a surprise when Chicago-based Smurfit-Stone Container Corp. filed for Chapter 11 protection on January 26, 2009. Falling product demand, rising raw material prices and excessive debt combined with an industry-wide slowdown to trigger the bankruptcy filing.

Smurfit-Stone is North America’s second largest maker of containerboard and a highly unionized company with nearly 500 IAM members among its 21,250 employees worldwide. Unlike employees at a non-union company, these workers will have the benefit of considerable legal resources and experience on their side throughout the restructuring process.

Thanks to a concerted effort by Machinists, Steelworkers, Electrical Workers and other unions representing workers at Smurfit-Stone, one of the first steps taken by the company after filing for bankruptcy was an agreement to honor existing collective bargaining agreements, including wage rates, benefit plans, sick leave, vacation pay and retiree health care benefits.

The bankruptcy process can take months and even years to complete, and there is no guarantee that labor contracts will remain unchanged. The initial steps taken in the Smurfit-Stone bankruptcy, however, are an encouraging sign. 

Securing the commitment to honor retiree benefits in bankruptcy is especially noteworthy. In many bankruptcies, retiree benefits are the first to be eliminated. Former employees are not considered to be members of the bargaining unit, and despite their vulnerability, bankruptcy courts will typically give their interests a lower priority than active employees.

“The Machinists and other unions at Smurfit-Stone will do everything possible to ensure that workers and retirees are well-represented and fully informed throughout the restructuring process,” said International President Tom Buffenbarger. “The benefits of union membership are readily apparent in good times, but when the gloves come off and it’s a fight for survival, union membership and union resources can make a critical difference.”

Since declaring bankruptcy, Smurfit-Stone has secured $750 million in Debtor in Possession (DIP) financing, which will allow the company to continue to operate during the restructuring process.

New Contract Averts Strike at L-3 Vertex

After an overwhelming strike authorization vote by IAM members at L-3 Vertex in Meridian, MS, and Kingsville, TX. Representatives for L-3 made a revised offer that was voted and approved by a large margin, averting a work stoppage.

The absence of caps in employee health care contributions was a major stumbling block in the original offer from L-3. Annual raises of 3.5 percent in each year of the three-year pact remained the same, but health care premiums for members were capped in the new offer. In addition to the caps, company contributions to the IAM Pension were increased from .85 cents to $1.50 over the term of the agreement and time required to gain additional vacation benefits was lowered.

 “We’re happy a new offer was made,” said Aerospace Coordinator Frank Santos. “We know how important our mission was, and it was imperative we settle the problems without a work stoppage. I believe all sides, our members, the Navy and L-3 walked away winners. We couldn’t have done it without strong leadership from District 776 Business Rep Jody Bennett, who led the negotiations, District 73 Business Rep Joe Harrington and the union’s coordinated bargaining committees from Meridian and Kingsville.”

The IAM represents a combined membership of about 550 maintenance and support employees at Naval Air Stations (NAS) in Meridian, MS and Kingsville, TX.

The membership operates training and support programs for the Navy’s T-45, a two-seat carrier-capable training aircraft. Last December, the IAM reached agreement with L-3 at the NAS Pensacola, FL, facility, which also supports the T-45 program.

 L-3 Vertex is a division of L-3 Communications, one of the nation’s largest Defense Department contractors.

“The IAM’s experience and expertise in negotiating contracts under the Service Contract Act paid off again with a strong agreement for the members in Meridian and Kingsville,” said Southern Territory GVP Bob Martinez. “I want to extend my thanks and congratulations to everyone for a job well done.”

Machinists Say Canada Needs Pension Insurance

“Canada needs a national pension insurance program to protect workers from the effects of corporate pension irresponsibility,” said Canada GVP Dave Ritchie, in response to a growing national debate on private pension plans.

In a submission to the federal government in Ottawa, the IAM is calling for the federal government to set up an insurance fund to guarantee pension funds when the plan sponsor fails. The IAM also calls for legislative changes to increase pension security, including restrictions on employers’ use of surplus for pension holidays.
 
“In the current environment, many Canadian workers and retirees are concerned that the pension benefits that were negotiated will not be there when they need them, as corporate executives have put their own interests before those of pensioners," said Ritchie, who cited Air Canada, which received a special authorization to defer its required pension contributions while under creditor protection in 2004. As soon as it exited creditor protection, Air Canada management moved to dismantle the airline, selling off assets, and removing over $2 billion for distribution to investors and management. All the while, they continued to underfund the pension plan.

"Now, with the company in a precarious financial condition and its pension seriously underfunded, Air Canada employees and pensioners face an uncertain future," said Ritchie. "The federal regulator should have acted to prevent the extraction of profits at the expense of pensions. The changes proposed by the IAMAW would help protect the benefits that workers have negotiated and earned.”

IAM Member at NWA is Sister of the Month

Ruth Dorsty, a 21-year IAM member has been named Sister of the Month for March. Dorsty began her career as a member of Local 1894 in New York, where she worked as a Reservations agent at Northwest Airlines. When the New York office closed, Dorsty transferred to Minneapolis, MN, and joined Local 1833.  Both locals are affiliated with District 143.

During her IAM career, Dorsty has held the position of Vice President, Secretary-Treasurer and Trustee for District 143.  She currently serves fellow members as a General Chairperson for District 143. 
Dorsty advises fellow sisters to get more involved and to begin by listening.  “When you hear of a need, volunteer to help,” said Dorsty. “Be persistent and do your best to work well with others.”
 
With the merger of Northwest and Delta Airlines on the horizon, Dorsty finds her job more demanding, but also more rewarding. In addition to her responsibilities to her Northwest sisters and brothers, she also takes time to educate Delta employees about the benefit of working with an IAM contract.

“If you ever wanted to get involved, now is the time to do it,” advises Dorsty. “When it comes to this Northwest / Delta campaign, there’s plenty of work for everyone.”

Machinists Ratify New Agreement with MCI

Canadian members of Local 1953 in Winnipeg, Manitoba, have ratified a new collective agreement with Motor Coach Industries (MCI), giving more than 700 IAM members the traditional benefits of a new agreement in addition to fresh restrictions on contracting work to outside vendors.

“It took a while but we now have significant changes to contract language concerning management rights and contracting out,” said District 181 Directing Business Representative Wayne Relf. “The company no longer has the right to do what it wants to whomever it wants. As far as contracting out is concerned, in the past the company would only consult with the union when it was practical to do so. Now the language has imposed limits on the reasons for contracting out and the company must also consult with the union before it acts.”

The three-year agreement provides for wage increases of 3.5 percent, retroactive to February 1, 2009, three percent in 2010 and two percent in 2011. Other agreement highlights include an option of accepting a $1,250 signing bonus in cash, or as a deposit to the existing MCI Group RRSP or Group Pension Plan; a 7th week of vacation after 35 years of service; increased maximum annual dental benefits and additional pension contributions for members with more than 25 years of service.

The 714 members at MCI manufacture highway passenger buses for the North American motor coach industry.

Spanish Leadership Group Reunites at WWW Center

Members of the Spanish Leadership Working Group reunited this past week to build upon the successes of the Spanish Leadership I and Spanish Leadership II programs offered at the Winpisinger Center.  In addition to reviewing and updating classroom materials for these two programs, the group is developing materials for the Spanish Advanced Leadership pilot program scheduled to debut in 2010.

“We are pleased to be able to expand our program offerings for our Spanish-speaking members,” said Chris Wagoner, Director of the William W. Winpisinger Education and Technology Center. “We are also excited to welcome the three newest members of the Spanish Working Group: District 141 General Chairperson Daniel Lebron, District 143 General Chairperson Richard Suarez, and District 725 Organizer Calixto Tapia.”

Members and Locals interested in learning more about the Spanish Leadership programs can get information at the Winpisinger Center website winpsinger.iamaw.org   Districts and Locals interested in enrolling members in the April Spanish Leadership I Program can click here for enrollment forms; enrollment forms for the Spanish Leadership II Program in June can be found here.

El Grupo de programación en Español se reúne en el Centro Winpisinger

Esta semana pasada se reunieron miembros del grupo que planea las clases de Liderazgo en Español para continuar el éxito de la programación de Liderazgo I y Liderazgo II en Español.  Además de repasar y poner al corriente los materiales para estos dos programas, que están en el segundo y tercer año, el grupo está empezando a desarrollar los materiales para el programa piloto de Liderazgo Avanzado en Español que se llevará a cabo en el año 2010.

“Estamos feliz de poder aumentar los programas ofrecidos para nuestros miembros que hablan Español,” dijo Chris Wagoner, Director del Centro de Educación y Tecnología William W. Winpisinger.  “También estamos entusiasmados de ofrecer una bienvenida a los tres nuevos miembros del grupo de programación en Español: Daniel Lebron General Chairperson Distrito 141, Richard Suárez General Chairperson Distrito 143 y Calixto Tapia Organizador Distrito 725.”

Miembros y Locales interesados en aprender más sobre los programas de Liderazgo en Español pueden encontrar información en el sito del Internet del Centro Winpisinger, winpsinger.iamaw.org.  Distritos y Locales interesados en inscribir a sus miembros en la clase de Liderazgo I en Español de Abril de este año pueden hacer “click” en el siguiente sitio para las formas de inscripción; las formas de inscripción de Liderazgo II en Español que llevará a cabo en Junio de este año se encuentran en el siguiente sitio.

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