May 6, 2011 Volume 112 Number 9

Koch brothers have presence in Oregon

By DON McINTOSH, Associate Editor

At a Georgia-Pacific paper mill in Wauna, Oregon, and three company warehouses in Portland, 900 members of United Steelworkers (USW) and Inland Boatmen's Union (IBU) are poised to go on strike.

On the surface, the disputes are about health care and pension issues. But the disagreements may also be stemming from ideas from higher up than Georgia-Pacific's own management. GP was bought in 2005 by Koch Industries, the privately-held conglomerate owned by billionaire brothers Charles and David Koch (pronounced "coke"). Charles Koch lays out his business theories in "The Science of Success: How Market-Based Management Built the World's Largest Private Company." Local union leaders say the book has become the bible for GP managers.

The two brothers espouse a hard-line anti-government, anti-regulation philosophy, and over the years have supported those ideas with over $100 million in donations to conservative think tanks, Tea Party groups, and Republican candidates. They've also broken new ground in proselytizing employees, sending packets last year to all local Georgia-Pacific workers urging them to vote for Republican candidates like Dino Rossi and Jaime Herrera Beutler in Southwest Washington and Chris Dudley in Oregon. Sixteen of the 19 Washington candidates Koch Industries endorsed were Republicans; the other three were members of the conservative Democratic "road kill caucus."

USW representative Gaylan Prescott said in his nearly 30 years in the labor movement he's never seen that level of direct political involvement by an employer.

"They're just right in your face telling you who to vote for, telling you if these people don't get elected, it's going to have negative effects on their business and consequently your job."

USW represents 790 workers at the Georgia-Pacific paper mill in Wauna. The mill makes Brawny, Sparkle and Mardi Gras brand paper towels; Quilted Northern, Angel Soft and MD toilet paper; and Vanity Fair, Zee, Brawny and Mardi Gras napkins; as well as house label products for retailers like Costco, Target and Safeway.

Prescott says the main sticking point in bargaining is a management demand that employees pay "per-dependent" for health coverage, replacing the current one-size-fits-all model. GP pays for-profit United Health to administer its self-insured employee health benefit, and employees pick up 25 percent of the cost. That percentage wouldn't change under the management proposal.

"Going from a composite rate where everyone, regardless of family structure, is paying the same for health care to a system where people are going to be charged based on the number of children they have … that's a sea change in the way our members absorb the 25 percent premium share," Prescott said.

"It's my belief that per-dependent pricing is a Koch philosophical issue that has permeated bargaining," Prescott said. "It's not economic. It's purely related to social engineering. It's one of those libertarian ideas where they want to drive home the costs of having children."

Prescott said the union repeatedly expressed frustration with the proposal, but the company so far won't budge. Members authorized a strike in votes tallied April 25. The next bargaining session is set for May 24.

Meanwhile, workers at three GP warehouses in Portland have also authorized a walk-out. IBU, a division of the International Longshore and Warehouse Union, represents about 110 GP workers at three Portland warehouses. About 80 members at Front Avenue and Rivergate Industrial District warehouses work under a contract that expired March 2010, and 30 members at a Kelley Point warehouse work under a contract that expired March 2011. Bargaining for the former has been under way since February 2010.

The two sides disagree on how to cope with investment losses the IBU's multi-employer pension fund suffered during the financial meltdown of 2008. To preserve benefits, GP would have to make up for the losses by increasing its pension contribution 6 percent a year from its current $8.25 an hour. GP is proposing that the last two increases in the proposed four-year contract come out of employee wages.

GP also wants an annual limit of 10 percent on how much more it will contribute to the health and welfare trust through which IBU members get their health insurance. This year, health care insurance rose 18 percent at the trust, and forecasts are for increases above 10 percent in coming years. Workers' contribution to health insurance costs went from 0 to 25 percent over the last five-year contract and is now $276 a month for family coverage.

IBU sent notice of intent to terminate the contract, meaning workers could strike at any time.

In retaliation, IBU alleges, GP dramatically cut how much product it ships through the Kelley Point warehouse. Normally, GP ships by barge from the Wauna mill to Portland warehouses. Now, IBU leaders say, 80 trucks a day from Wauna are heading to GP facilities in California. [The change began before an April 22 accident in which a cargo ship ran into and damaged the Wauna dock.] IBU has filed an unfair labor practice charge with the National Labor Relations Board (NLRB) protesting the change — saying GP is punishing workers for the vote, causing them to fear further retaliation, and that the company didn't bargain over the change.

IBU also says GP tried to muzzle local leadership: On Dec. 2, GP forced bargaining committee chair Dave Franzen, under threat of termination, to sign a "last chance agreement" pledging to treat managers with dignity and respect or be fired without recourse to the normal grievance process. Nothing in the union contract allows a sanction of that kind. IBU protested, but GP refused to bargain over any aspect of the agreement, IBU charges in an unfair labor practice filing over the action.

A third charge alleges that GP is failing to bargain in good faith, instead adopting a "take it or leave it" posture that is not helpful to reaching agreement.

The charges could give workers a little extra protection if they strike: employers are allowed to permanently replace workers in "economic" strikes, but not in strikes called to protest unfair labor practices. GP management has communicated that its planning will make any work stoppage "invisible" to customers.

Further bargaining is scheduled May 10 and 11 for the Kelley Point unit.

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