Union Kills More Jobs

What a shame.

Company officials said the long-time Racine construction supply company at 1720 Taylor Ave. will close Dec. 20, just five months short of its century mark in business.

A funding shortfall in a Teamsters national pension fund, affecting just two employees, was the tipping point, Brannum President and minority owner Dale Anderson said Monday.

However, he said the forecast for Brannum was already cloudy because of how the local building products industry was affecting the firm.

Ironically, business has been up since August, said company General Manager John Burgess — who is also a grandson of company founder James Brannum.

[...]

But in the end, he said the small company, which has just two union employees, was torpedoed by the same issue that spawned a six-week August-September garbage haulers strike in this area.

That issue is the vastly underfunded Teamsters Central States Pension Fund which was placed under federal government oversight in 2005. The fund’s appointed special counsel, Frank McGarr, reported on Aug. 1 this year that the fund is on critical, or “red zone,” status, the most-endangered classification.

By federal law, when a union pension is underfunded, that liability is split among all employers of those collective bargaining groups. If a company closes or a union local leaves the union, the company must pay that liability, Teamsters Local 43 Secretary-Treasurer Jerry Jacobs confirmed.

[...]

Dale Anderson said Brannum’s latest “withdrawal liability” to the Teamsters pension fund, based on its total liability last Dec. 31, was about $197,000. That would be his cost if Brannum closed this year. “That itself is a lot for a small company like us to handle,” he said.

“But if we went into ‘09 by just one minute,” Anderson continued, the withdrawal obligation would be set by the Teamsters fund shortfall on Dec. 31, 2008. That’s where this year’s horrific stock market would raid the Brannum owners’ pockets, because market losses have deflated pension funds nationwide.

By waiting, Anderson estimated, Brannum’s withdrawal cost could jump to somewhere between $300,000 and $400,000.

Even if the two Brannum employees wanted to get out of the Teamsters, Anderson said, his lawyer tells him there would be no way for the local to decertify this year.

Hat tip Charlie Sykes.

1. If they weren’t in bad financial shape to begin with, this wouldn’t even be an issue.  From a long-term standpoint, the stock market will almost certainly recover, at which point their withdrawal liability to the union would likely be reduced to the same levels as before.  Remember, if they don’t close shop and withdraw, their obligation is zero.

   I’m not defending the union, necessarily.  I think the employer is, however, scapegoating the union.  Maybe the union was the straw that broke the camel’s back, but if there weren’t a whole hell of a lot of straws on its back already, this wouldn’t matter.

   The union isn’t responsible for a company not being able to cope with an economic downturn or not having a profitable business model.  It’s no different than the Big 3.  Sure, labor costs are always an issue, but if Detroit made products that people actually wanted, it’d be much less of an issue, wouldn’t it?  Maybe this business should step up and accept its share of the blame for the failure, too.

   Posted by Recess Supervisor on November 26, 2008 at 2217 hrs




2. If you follow the link, you will see that the company has actually been having a good year and the competitive landscape was improving.  The actual and potential cost was just too much to bear. 

   Margins in some industries don’t tolerate much risk to push a company out of business.

   Posted by Owen on November 26, 2008 at 2223 hrs




3. The article also shows that the feds didn’t fulfill their obligation.  Could it have been due to Bush’s tax cuts and playing cowboy around the globe? 

   That is the same reason MKE Co. is in such a deep sh*tpile.  Walker willfully failed to meet his obligations so that he could do some political grandstanding, and now the taxpayers get to pay for cleaning up his crap.

   You’re just seeing the same unintended consequences on a national level now.

   Posted by capper on November 26, 2008 at 2254 hrs




4. http://www.youtube.com/watch?v=J_RqBodG-kg

   Posted by Owen on November 26, 2008 at 2255 hrs




5. good lord capper… wtf did you put in the peace pipe tonight???

   Posted by on November 26, 2008 at 2307 hrs




6. I wonder how many conservatives will think like capper after a few years of Obama in office? I’ll net bou could count them on one thumb.

   Posted by on November 26, 2008 at 2341 hrs




7. Whoops.  “net bou” should read bet you.
   Where’s my glasses!

   Posted by on November 26, 2008 at 2343 hrs




8. Owen:
   The guy who actually runs the place says business has been weak since last year and the future was already cloudy. That would suggest other major issues were at play here.

   I don’t see anyone saying they’ve had a “good year.” One guy—not the one running the place—says business has improved since August. That’s a long way from a “good year.”

   And you say the competitive landscape is “improving”—I guess that’s one way to characterize the environment when a rival closes. If Stock Lumber’s accounts were so “nice,” how come its North Carolina-based parent decided to shutter it?

   Indy suppliers like these have been vanishing for years. Recessions are brutal on businesses like this. I can’t imagine banks are champing at the bit to lend to independent lumber yards. I don’t see a great deal of homebuilding taking place in the year ahead. Or are you planning to open a supplier catering to small to medium home builders in southern Wisconsin?

   But if you want to blame it on the union, I suppose that’s your prerogative.

   Happy Thanksgiving,
   Brew City Brawler

   Posted by Brew City Brawler on November 26, 2008 at 2348 hrs




9. Leave it to Capper to make this about Walker. You are so predictable. The reason Milwaukee county is in such a deep “sh*tpile” is because your buddies on the board have cost this county hundreds of millions of dollars for pension and sickleave benefits. Get your head out of your ass. The liability was there BEFORE Walker, he’s working with what he has been handed and the county will be dealing with this issue for years to come.

   Posted by on November 27, 2008 at 0953 hrs




10. So, not everyone agrees the union caused the demise of this company. Does anyone really believe the union had anything to do with keeping it vital? What value did the union bring to the company?

    Blaming Scott Walker about the state of MilCO is as crazy as blaming the police for showing up at a crime scene after a crime was committed. The real crime at MilCO is that the pillaging went on for as long as it did. The unions there were accomplices and co conspirators.

    Posted by on November 27, 2008 at 1056 hrs




11. Apparently the Mob never repaid Central States for the money they took to Las Vegas.

    ...which, of course, is all Bushitler’s fault, too.

    Let’s not kid around here.  The Mob ran both Central States AND Las Vegas for years--one of the mob affiliates lived in Brookfield and ran a “real estate” company.  The Teamsters have no one to blame but themselves, if you take the long-range view.

    Now let’s figure out how Scott Walker was involved!

    Posted by dad29 on November 27, 2008 at 1111 hrs




12. $197,000 for 2 employee’s pensions?  My goodness that’s outrageous.  And another $300,000-400,000 this year?  That’s in addition to their pay, health care, taxes and other benefits. 
    And do you think the employees will ever see that amount of money in their pensions?  Of course not.
    Unions are great in killing jobs.  The lefties complain about Wal Mart killing jobs, which of course is false, but unions have killed more jobs for the working people of the country.
    Hopefully, the owners will close this shop and then open another business.

    Posted by on November 28, 2008 at 1512 hrs




13. Post 11 is correct, the Teamsters Central States Pension Fund has been sucked dry for years by the Mafia mob.  It goes back to Frank Ballistrari days and continues.  The Teamsters and its fund have screwed member drivers for years out of pensions with bogus seniority rules and pension lapse clauses.  The dues and pension money comes in and vanishes to the mob guys and their union boss stooges.

    Posted by on December 01, 2008 at 0004 hrs




14. This is ridiculous $197,000 for 2 employee’s pensions? Who they are? Saviors of the planet?

    Posted by Fairings for Yamaha on December 03, 2008 at 1837 hrs