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Union rejects American Crystal 4-year contract deal

American Crystal Sugar Co. union employees on July 26, 2022, voted to reject a four-year labor pact that offered 17% in pay increases over four years, to replace a five-year deal that expires Aug. 1, 2022. The Bakery, Confectionery, Tobacco Workers, and Grain Millers initially will suggest new negotiation dates and isn’t suggesting a strike vote. Crystal, a Moorhead, Minnesota, farmer-owned cooperative, says it doesn’t “intend” to lock workers out, as it did for 22 months from 2011 to 2013.

Smoke comes out of the top of an American Crystal Sugar plant at Drayton in 2018.
The American Crystal Sugar Co. and its Bakery, Confectionery, Tobacco Workers, and Grain Millers union will go back to negotiations after union members voted July 26, 2022, to reject a "final offer" for a contract that would replace the one that expires Aug. 1, 2022. Photo taken April 10, 2018, at Drayton, N.D.
Mikkel Pates / Agweek
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MOORHEAD, Minn. — American Crystal Sugar Co. employees on Tuesday, July 26, rejected a four-year labor contract proposal that would have raised pay by a total of 17% over four years.

The farmer-owned sugar processing cooperative has been negotiating with the Bakery, Confectionery, Tobacco Workers, and Grain Millers union. The two parties met in Grand Forks, North Dakota, in mid-June and then again July 14-20.

John Riskey, president of BCTGM Local 167G, which includes Crystal factories at Drayton, North Dakota, East Grand Forks, Minnesota, and Moorhead, Minnesota, confirmed the rejection vote late Tuesday but said he could not reveal how many members voted, the vote percentage or whether it was rejected at all locations. In a text, he said the vote was “huge.”

Riskey said the union would be contacting the company by letter, to notify them of the result and to propose new negotiation dates. Riskey said no strike vote is imminent.

“I'm disappointed, and kind of surprised,” said Lisa Borgen, Crystal’s vice president of administration, when Agweek contacted her about the vote and informed her of the outcome. Borgen, who represents the company in negotiations, said the contract proposal would have meant no full-time workers at the company would make less than $20.60 per hour.

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The average wage would have been $27.68, if it had been accepted, she said.

"There would have been no 'take-aways' in the negotiations," she said. "All proposals were additions to wages, pensions, time off."

No lockout intent

Borgen confirmed Riskey’s report that the company does not “intend” to lock out workers. But she said, "It would be a dereliction of our duty if we would not have a contingency plan if they choose to strike.” And she added, “It’s unfortunate our employees are going to continue to work under an expired contract, and now they won’t get increases they should have,” under the final offer.

American Crystal is owned by 2,600 farmer-shareholders, producing beets on about 436,000 acres in the Red River Valley. The company presented a “final offer” to the union, dated July 19, 2022. The contract covers about 1,189 employees at seven locations. The vote was held from 3 p.m. to 9 p.m. on Tuesday, July 26, 2022, at locations throughout the company. The current five-year “master agreement,” negotiated April and May 2017, will expire July 31, 2022.

The company had offered a $1,000 “ratification bonus,” if the contract had been approved by Aug. 1, 2022, and said the bonus would be withdrawn.

Prior to the vote results, Borgen said that if it were to fail, she said she didn’t believe there would be an “appetite for a strike,” but that they could go back to a negotiation table. “The bottom line is the company made a final offer.”

American Crystal locked out workers for 22 months after contract talks failed in 2011 . Workers in the spring of 2013 accepted the contract on the fifth vote. The 2017 talks ended amicably.

Ratification bonus

Borgen confirmed that Crystal in January 2022 had asked that talks could start in April and May, ostensibly so that any changes in the contract would result in a smoother transition between the two contracts. But they eventually agreed on June and July.

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Borgen said the new contract was set at the shorter, four-year period in part because both sides are concerned about a changing economy. Riskey said he thought the one-year difference in the contract length was insignificant.

The "ratification bonus” would have gone to all “year-round and campaign employees” who are “actively employed” or “on layoff status” as of Aug. 1, “and continue to be employed at the start of the 2022 campaign.” The bonus doesn’t go to harvest and temporary employees.

Asked if the ratification bonus would influenced the vote, Riskey said it averaged about 12 cents an hour over the four-year deal, so probably not. Borgen said the bonus was an attempt to “immediately” help employees who are grappling with high gasoline prices and inflation.

“Hopefully, some of those expenses will be coming down” as the effect of higher wages from the contract settle in, she said.

The company proposed to increase pay scales for 16 jobs by particular categories. “A total of 21 specific jobs have been paid over the contract wages for many years,” a summary of the contract said. “These wages will be made permanent before the annual increases are added.”

Play-by-play

According to a play-by-play of the negotiations, on a company website:

  •  The union initially asked for $10 per hour increases across the board, plus a 10% increase in the first year, and additional 24% increases over three years, as well as an increase in 401K pension funds over a contract.
  • The company countered with an offer for a five-year contract with 4% increase the first year and 6% annually over four years, and a total of 10% over five years.”
  • The union counter-proposed n $8 per-hour  across-the-board increase, with 8% increases each year over a four-year contract.
  • The company counter-proposed a 4% increase the first year, and then 5% increases over the last three years of a four-year contract, with a new paid leave program for births.
  • The company’s final offer was the 7% increase  the first year, 4% the second year, followed by two, 3% increases — a total of 17% across the years.

In the rejected proposal, the company offered that vacation will accrue every two weeks rather than year. Employees would receive a fourth week of vacation after the 10th year of service (instead of 15 years under the previous system). At 20 years of service they receive five weeks a year. Employees who started work employment prior to Aug. 1, 2011, and have 25 years of continuous service receive six weeks of vacation.

Vacation balance

Also under the rejected proposal, employees would receive earned vacation in an “available balance” each pay period, instead of waiting for a lump sum the following January. Under the current system, vacation carries over up to 1.5 times an annual accrual amount into the next calendar year.

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The new contract language also allowed 40 hours of paid leave whether an employee has a “birth or adoption” of a child.

The company’s use of “temporary workers” was an important concern for the union, Borgen noted. The contract specified that temporary workers (former employees, retirees, others) will not replace full-time positions but will provide “relief for prolonged vacancies” and aren’t eligible for paid time off or medical coverage and cannot work more than 180 days “unless mutually agreed between the union and management.”

On the day of the vote, Riskey shared website advertisements being circulated by a union steward that described hiring terms and bonuses for temporary workers for Express, an employment agency Crystal hires to provide workers for the company.

Borgen said the description of temporary worker bonuses cannot be compared to permanent employee contracts in the negotiations. Express Employment Professionals provides some 2,000 workers who come in to work the beet harvest, working a month and maybe six weeks with no benefits.

“It’s a transitory workforce,” she said. “We get work campers from across the country and people from the community to earn extra money. There is no comparison between bonuses and incentives to get these temporary workers to get the beet harvest and our permanent year-round employees.”

She also confirmed that Express was hiring 50 workers from Mexico on temporary work visas for Crystal’s harvest, but the co-op doesn’t hire them.

“It’s a new thing because we need workers,” she said.

Mikkel Pates is an agricultural journalist, creating print, online and television stories for Agweek magazine and Agweek TV.
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