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Job Protection : Takeovers--Workers Join Fray

May 08, 1987|HENRY WEINSTEIN | Times Labor Writer

LAS VEGAS — In recent months, waitresses and maids, represented by the Hotel Employees and Restaurant Employees union, petitioned casino authorities here and in Atlantic City to force Holiday Inn's parent corporation to protect workers' salaries and benefits against the risk of bankruptcy posed by the company's $2.5-billion recapitalization program.

In early April, United Airlines' pilots, fearing that the company would become the object of a hostile takeover bid, offered to buy the carrier for more than $4.5 billion.

Late last August, thousands of retail clerks and meat cutters, represented by the United Food and Commercial Workers, sued Safeway Stores for fraud in Oakland in the midst of a leveraged buyout that the union believes will lead to massive layoffs at the supermarket chain.

Innovative Methods

As these examples illustrate, employees and their unions throughout the country are attempting to cope in innovative ways with the massive wave of mergers and hostile corporate takeovers that have swept the nation in recent years. The takeover wave, according to the AFL-CIO and a growing number of economists and politicians, has had a devastating effect on workers and communities.

About 80,000 union jobs have been eliminated as a result of mergers in the last five years, according to the AFL-CIO. Other studies say that takeover fights have dislocated upward of 500,000 workers, but there is no definitive research on the topic.

Additionally, increased merger and acquisition activity has tended to lower wages, according to a recent study by Richard S. Belous, labor economist with the Conference Board, a New York-based business research organization.

'Most Important Issues'

"The impact of mergers and acquisitions on unions is one of the most important issues facing the labor movement today," said Charles Craypo, professor of economics at Notre Dame University.

In response, the AFL-CIO and several unions are pushing a variety of legislative proposals on Capitol Hill in an attempt to put some brakes on merger mania and to give workers--both union and non-union--greater protection from the adverse results of corporate takeovers.

They also are taking their case to the public in other ways. In late March, members of the Hotel Employees and six other unions held a demonstration at the Wall Street office of Drexel Burnham Lambert contending that the firm's role as a financier of corporate takeovers has led to quick profits for a few individuals and companies but job losses, lower wages, worsened working conditions and other hardships for thousands of employees.

Joe Uehlein, director of special projects for the AFL-CIO's Industrial Union Department, said that in February the department held a first-of-its-kind seminar for union officials on the effect of mergers and acquisitons on collective bargaining. He said the meeting "clearly reflects the realization that we need to be players in this corporate change game."

"There's now a willingness to say that in order to represent people we need to play a role in affecting the outcome of a transformation in corporate structure or control," said Randy Barber, who has served as a financial adviser to several unions and is the director of the Center for Economic Organizing in Washington.

Barber acknowledges that in most instances there is no way a union can stop a merger. Nonetheless, Barber said labor's efforts at protecting its members from the negative effect of corporate takeover wars are bearing some fruit.

For example, Barber noted, in 1985, the Amalgamated Clothing and Textile Workers was able to help block a management-proposed $400-million leveraged buyout at Scott & Fetzer Co., a Westlake (Ohio)-based company. In a leveraged buyout a company is purchased with borrowed money that is secured by a company's assets. The money is repaid with cash generated by company operations or by sale of its assets.

Stock Ownership Plan

Bill Patterson, the Clothing Workers' national field representative in Washington, said the union became involved when representatives of one of Scott & Fetzer's subsidiaries told workers during an organizing campaign that if they voted for the union they would not be able to participate in an employees stock ownership plan that was being created to help finance the buyout.

Barber said the union persuaded the Labor Department to block creation of the stock plan on the grounds that it was unfair to employees. "Because the ESOP (employees stock ownership plan) was crucial to the financing of the entire transaction, the deal fell apart after the Labor Department intervened," Barber said.

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