As if there weren't already enough reasons to boycott coca-cola, there is now another one. According to a Seattle news broadcast this morning, coca-cola is closing 3 plants in Washington (Aberdeen, Bellingham, and Marysville) despite having negotiated with striking workers. These plants will close permanently on September 17th, 2010. Not all of the employees will be laid off, as some will be offered different jobs at nearby plants.... I wonder if the new jobs will still be unionized positions.
The main issue in the strike was the company's attempt to raise insurance premiums for workers. Far from a small increase, workers insurance rate would increase as much as 800% and retirees would no longer be able to buy in to the health care program. Coca-cola cancelled the striking workers' benefits, leaving them without any health care and forcing them to return to work prior to bargaining, which left them in a tough position at the bargaining table. The strikers then filed a class action lawsuit and unfair labour practices against the company for cancelling benefits.
Coca-cola had revenues of $31 billion in 2009. I find it difficult to believe that they could not afford to maintain previous benefit levels or keep these three plants open. The Bellingham plant has been open since 1905.
A company spokeman cited a new tax as a reason for closing plants. This tax will cost them a total of 2 cents per can (that will likely be passed on to consumers).
EXCELLENT analysis. Thanks for writing this!
ReplyDeleteIt's probably also worth noting that most firms are building cash on their balance sheets right now - cash that they should be using for investing in new plants, trucks, and so on that would create jobs. You know, things that wouldn't cause the jobless claims to be going up by thousands each week? Things that would cause CNBC to stop flipping out over a double dip?
Sometimes I shrug at the market. Then I turn around and beg it for a finance job and suck it up, haha.
Thanks for the compliment, I appreciate it, especially because I am not very well versed in finance AT ALL... I'm not sure I understand the specifics of investing, but what you say makes perfect sense to me. I do understand union issues, and how big corporations (like coke and walmart) want to close down shops with strong unions to take away the power of unions across the world. And I do understand that a 2 cent tax on a can of coke is not going to break the company, even if they don't close 3 plants.
ReplyDeleteYou're better versed than you're giving yourself credit for. This is exactly true, and it's just one example of the MANY firms that are doing something similar.
ReplyDeleteBut it's okay because Republicans will blame Obama before they blame big business.
Rage-inducing!
ReplyDeleteThis action by Coke is an anti-human rights action, but of course no one would call it out as such. Instead, those who chose to make the cuts will probably be rewarded!
See this article: CEOs who cut jobs got paid more, study says
PrettyAmiable, but it is Obama's fault for creating this 2-cent tax... we all know that socialism never works! I don't know how we got to a place where people actually believe that.
ReplyDeleteAnd yes, theczech, I'm sure the people who came up with the idea of closing these 3 plants and the excuse to do so will be rewarded with a bonus or promotion using some of the money that they've saved. I try to wrap my head around the sum of money that they get, but I simply cannot. I also cannot fathom how people are generally ok with it; how they think that CEOs earned it... increasingly, at least, people are angry with banks and CEOs, which is good, but then this anger is still generally misplaced. I would continue, but I see this turning into a rant.