RESPONDING TO CHANGE IN THE WORKPLACE:
INNOVATIONS IN LABOR-MANAGEMENT-
The Atlantic Baking Group
Labor- Management Committee
United States of America
June 25 – 26, 2001 Mexico City, Mexico
ATLANTIC BAKING GROUP
The Atlantic Baking Group (ABG) Labor-Management Committee (LMC) is a broad-based, ongoing, labor-management partnership program. It works to improve the operations of a large, private-label bakery located in the United States in an urban area of Pittsburgh, Pennsylvania. It utilizes a complex, cooperative partnership between labor, management, and government to pursue the common economic and social goals of the workforce, business, and community. The ABG Labor-Management Committee partnership includes decision makers from a number of different entities:
; The Atlantic Baking Group management team and workforce (ABG)
; The Bakery, Confectionery, Tobacco Workers and Grain Millers Union – Local 12
; The International Union of Operating Engineers – Local 95 (IUOE)
; The Bloomfield-Garfield Community Development Corporation (BGC)
; The Steel Valley Authority (SVA)
Each of these entities is introduced more fully below. In September of 2000, the U.S. Federal Mediation and Conciliation Service (FMCS) awarded the ABG Labor Management Committee a grant to assist it in developing a comprehensive training 1program for the bakery. The FMCS is also working with the ABG Labor Management
Committee to improve the effectiveness of its work by providing training in team-based skills, such as group problem solving, planning, and other areas. In addition, the ABG Labor Management Committee is developing a partnership with the Three Rivers Workforce Investment Board (TRWIB). The TRWIB is a regional, public agency chartered under the provisions of the Workforce Investment Act of 1998, a Federal law to assist unemployed and dislocated workers find jobs. If necessary, the TRWIB, through its Career Link program, can assist individuals obtain the training they need to qualify for job opportunities. The TRWIB is governed by a board of business, political, and labor leaders. The TRWIB and the ABG Labor Management Committee have submitted a grant application to the U.S. Department of Labor for funds to fully implement the training plan under development.
ABG is a start-up business that produces saltine, graham, oyster, animal and other varieties of snack crackers for the highly competitive private label (store brand) market in the United States and Canada. It leases a 450,000 square foot manufacturing facility situated in a low-to-moderate income, inner-city neighborhood from the Regional Industrial Development Corporation of Southwestern Pennsylvania (RIDC). RIDC is a powerful, regional, non-profit, economic development agency that specializes in the rehabilitation of brownfield sites (i.e. sites in disrepair) the construction of flexible
1 Information concerning the FMCS Grants Program is available on the World Wide Web at http://www.fmcs.gov/agency/grants/default.htm.
manufacturing space, and commercial leasing. RIDC obtained the property, plant, and equipment for ABG’s use from Nabisco for $10,000,000 after difficult negotiations following their closure of the facility in October of 1998. The effort to encourage Nabisco to sell the bakery intact rather than liquidate it was supported by the community, workforce, elected representatives, and, ultimately, new investors. In turn, ABG invested $25,000,000 in the renovation and start-up of the bakery. This division of the total capital structure of the transaction between the public and the private sector enabled the company to focus its resources on the business and the public sector to focus its resources on the “bricks-and-mortar” aspects of the operation. This financial
arrangement is increasingly common in the United States, although more typically associated with new construction in publicly owned industrial parks or renovated commercial space in brownfield development areas. It enables the company to focus its financial resources on the business – i.e., the machinery, equipment, skilled employees,
working capital, and strategy needed to be successful in the highly competitive global economy. At the same time, it provides the public sector with a relatively secure investment collateralized by the real estate. When fully operational the bakery will employ approximately 400 workers, many previously employed at the facility, and be able to produce more than $50,000,000 worth of crackers per year. The first sales of private label products began in September of 2000.
The ABG Labor Management Committee (LMC) is a new committee mutually
established through contract negotiations between ABG, the Bakery, Confectionery, Tobacco Workers and Grain Millers Union – Local 12 (BCTGM, and the International
Union of Operating Engineers (IUOE). The BCTGM represents the production workers and the IUOE represents the plant and equipment maintenance workers. The LMC includes members of the workforce elected from each distinct area of operations, the local presidents of the BCTGM and IUOE, the business manager of the IUOE, and decision-makers from ABG’s management team. At the mutual request of both management and labor, the Steel Valley Authority (SVA) provides a consultant to serve as the Chair of the meetings. Similarly, the Bloomfield-Garfield Community Development Cooperation (BGC) also provides a consultant to serve as the Community Relations facilitator. Each of these latter organizations are public economic development agencies that played a decisive role in securing the bakery from Nabisco. Public economic development agencies are funded by taxes and grants from charitable foundations to provide assistance to growing, new, and failing businesses as well as their host communities in rural and metropolitan areas across the United States.
The Steel Valley Authority (SVA) was founded in the mid-1980s to proactively address the decline of the steel industry in the Pittsburgh metropolitan region and the associated economic turmoil of communities in the Monongahela River basin. The Bloomfield-Garfield Community Development Cooperation (BGC) is a local community development corporation, which works with the neighborhoods adjoining ABG on social and economic development projects. The SVA is well known for its progressive leadership on and its delivery of workforce modernization training in the region. It is funded by the Dislocated
Worker Unit of Pennsylvania’s Department of Labor and Industry to work on the
prevention of manufacturing plant closures throughout the state. The BGC is an active Community Development Corporation (CDC) with extensive experience in assisting local
businesses to participate in community affairs. It is funded by the City of Pittsburgh to work on community development and relations issues.
The BCTGM’s contract with ABG provides for a Labor-Management Committee (LMC) to
meet regularly to “discuss ways to improve product quality, production efficiency,
customer service, business, moral, and the general environment and culture of the company.” The ABG LMC has unanimously agreed that its general goal is to work toward the ideal of a high-performance workplace that:
; Can successfully compete for capital in the global economy.
; Generates profit by providing customers with a high-quality, low-cost product on
a timely basis.
; Features a shallow management hierarchy with extensive responsibility entrusted
to the hourly workforce.
; Supports all workers with good wages, job security, profit sharing, and a
culturally progressive environment.
The current focus of the work of the ABG LMC is to develop and implement a comprehensive program of training and education in order to eliminate problems that reduce the competitiveness of the bakery by enhancing the involvement of workers in making decisions that affect their working lives. The FMCS grant enabled the ABG LMC to hire a Training Coordinator to develop a training program that is intended to modernize the social and technical skills of all employees. Achieving these goals and objectives will, in turn, enable:
; the business to prosper and grow;
; the government to yield a return on its investment in the property, plant, and
equipment as well as the human capital provided to ABG;
; the community to secure jobs with good wages, benefits, and opportunities for
; the development of a model for other public interventions in the marketplace.
Thus, the goals of the partnership begin with successfully competing for capital and managing production in the workplace, and extend to the business, community, and government.
Partnership Structure and Roles
The ABG LMC provides a forum for the consideration of business problems in production, as well as related marketing, financial, regulatory, political, and cultural issues. The labor contracts retain the standard management rights clause, but 2specifically provides for the operation of a labor-management committee. In so far as it
is practical, reasonable and appropriate, the ABG LMC works together as a team to discuss, approve, and implement ideas to improve the operation of the bakery. Successful team interaction is critical because it sets the tone and direction for purposeful and cooperative interaction throughout the bakery on a daily basis at all levels of the organization. The ABG LMC approves actions democratically, requiring a majority vote, while striving for consensus. The group deals very selectively with purely contractual issues to avoid abrogating the formal collective bargaining process. It does not handle formal grievances or review decisions to hire, fire, or discipline individual employees. The group meets on a monthly basis with its full membership and on an as-needed basis during the interim.
The roles of the participants in the ABG LMC, while continuing to evolve, are nonetheless straightforward. Each member is responsible for bringing to the meetings the concerns and ideas of the workforce from their functional area. The Chair is
responsible for developing the group’s agenda, conducting meetings, monitoring operations, providing third-party analysis of situations, and insuring that the group is in contact with the appropriate public sources of support. The Community Relations
Facilitator is responsible for assisting with the recruitment of new hires locally, developing political support for group initiatives, and insuring that the views of the local community are addressed. The BCTGM President is responsible for working with
members on issues of general interest such as training in addition to issues of interest to the workforce as a whole, such as the means of labor scheduling and patterns of routine decision-making. The IUOE’s President and Business Manager represent their
members of the workforce as well as the IUOE’s Training Fund, which provides a
series of craft-related training programs for its members that are funded through a company benefit contribution of a nickel per hour. Through an innovative partnership intended to support an aggressive program of workforce training and education at ABG, the BCTGM’s members also contribute a nickel per hour to the IUOE Training Fund. The IUOE, in turn, is expanding the curriculum of classes it offers to meet the needs of the BCTGM to the best of their ability. For example, the IUOE sponsored the development of a class on forklift safety and operation for all employees and they are modifying its course offerings on the duties, responsibilities, and skills required for lead workers. This innovative arrangement goes a long way toward responding to the standard criticism of organized labor that it needs to take more responsibility for insuring its members have the necessary skills to do the job. The members of ABG’s
2 Article 26 of the BCTGM contract with ABG, for example, provides for the operation of the labor-management committee but also includes the following standard language of the management rights clause: “The management of the company, the direction of its workforce, the schedules and quantities of production and the methods, processes and means of manufacturing are prerogatives of the Management.”
management team who participate provide the group with information about production problems, sales forecasts, new product development, and other business activities.
In pursuit of the organization’s high performance workplace goals enumerated above the
ABG LMC partnership is pursuing several strategies. These strategies fall into one of two areas: 1) competing for capital and 2) achieving a high-performance workplace.
Competing for Capital
To compete for capital in the global economy, the group is pursuing four strategies. First,
the group agreed to lower the overall cost of labor by 25% through contract concessions in comparison to the wages and benefits provided by Nabisco. Second, the group
contributes an additional $1 per hour for every hour worked towards the lease payment made to RIDC. (RIDC is a non-profit, publicly chartered economic development agency that owns and manages industrial parks throughout the region.) Third, the group
assisted the RIDC in obtaining the loans it needed to purchase the real estate. The IUOE, for example, attracted the interest of the ERECT Fund, which is a union pension fund managed on behalf of the regional building trades unions that finances local economic development projects. As a covenant of this loan, hourly-work at the bakery must be performed by unionized employees. Similarly, the group worked with state and local elected representatives, administrators, and funding agencies in support of RIDC’s other loan requests. The use of public funding to acquire the real estate not only opened the availability of financial resources from private investors to start-up the business, but also provided long-term, low interest loan terms. This enables RIDC to lease the property to ABG at a greatly reduced cost. These first three strategies of competing for capital are financial in character, consider the business in terms of costs, and attempt to provide for attractive returns on investment or ROI. The fourth strategy of competing for
capital, identified below as achieving a high-performance workplace, similarly aims at producing an attractive ROI, but does so by considering all of the employees of the business as assets to be developed rather than as costs to be controlled or otherwise minimized.
Achieving a High-Performance Workplace
3To achieve a high-performance workplace, the ABG LMC is pursuing four strategies.
First, as part of contract negotiations the group negotiated a basis for the labor-management committee process itself. As noted above, the teamwork established in the ABG LMC serves as a role-model for the daily interactions that take place throughout the bakery. Second, the group is seeking to develop the use of unionized, lead workers in front-line supervisory and training roles for several reasons. It is believed that experienced, well-trained lead workers can provide the necessary production oversight more cost-effectively than traditional management schemes, which emphasize management command and control of the workplace. Lead workers also provide the group with a better organizational balance between management and labor. Third, the
group has identified a critical long-term aspect of operations – training to modernize the
social and technical skills of the workforce – as a sustained focus of inquiry. This
enables the group to reach out to groups such as the FMCS and TRWIB in a logical, consistent, and integrated approach by coordinating and controlling group activities and program initiatives. It also enables the group to control and shape the use of private and public consultants around the training issue to ensure they are serving the needs of the bakery as closely as possible. Fourth, the group is maintaining continuity and integration with the government/public service sector by creating ongoing roles for the SVA and BGC in the daily life of the group. This helps insure the group’s discussions do not become isolated from the broader community and that trusted yet objective third parties are available to consider and help resolve internal disputes. The SVA and BGC serve the group, however, only through the continuing mutual request of management and labor that they do so. By working in this way through the ABG LMC, the public/government can assist the business without taking any formal ownership of it or any liability for the success or failure of the business.
The ABG LMC is a complex, continually evolving, partnership between government / non-profit community agencies, labor, and management.
The initial basis for the involvement of the government grew out of the community and workforce’s efforts to avert the shutdown and permanent closure of the facility by Nabisco. Throughout this year-long process, the workforce had to act cohesively as a group through a committee to lobby, obtain critical information, create and approve strategies, and take actions to ensure the deal happened. Then, once the deal was concluded, ABG and the workforce had to confront the nearly insurmountable task of installing 4 new packaging lines of equipment in a year’s time. During this chaotic initial ramp-up period, the formal routine of the labor-management committee process itself
3 For more information on a High Performance Workplace as a term of art, please see the website of the International Association of Machinists & Aerospace Workers at
was difficult to institute for several reasons. First, as the plant was undergoing extensive renovation very few routine production tasks were being performed and very few production workers were employed, which was the traditional purview of the LMC at the bakery. Second, as per the management rights clause, the decision-making for the design and planning of the business’ operations, while done in informal consultation with the workforce, was ultimately judged to be management’s sole responsibility. As a result, the formal processes of the LMC spelled out in the BCTGM’s contract for the production workers were not implemented. Third, as a consequence of not engaging the discipline of the LMC process more aggressively, the procurement and installation of equipment was besieged with unexpected problems that drained all available management and labor resources while requiring constant and rapid scheduling adjustments such that the slower and more deliberate management processes characteristic of an LMC were difficult to deploy properly.
At this stage, the ABG LMC is confronted with considerable ongoing challenges. First,
despite every effort by this complex partnership, the company continues to struggle in the marketplace to obtain sufficient sales volume for the bakery. The competition has taken advantage of every opportunity and resource at its disposal to keep ABG out of the marketplace. Difficulties in bringing the new equipment on-line in a timely fashion, for example, gave competitors time to develop new strategies to compete against ABG and caused prospective customers to lose confidence in the viability of the bakery. Second, despite a strong commitment by all parties to the ideal of a high-performance workplace, in practice, it has proven difficult to work out the patterns of communication, responsibility, and expertise needed to actually achieve this goal. The legacy of heavily managed, command-and-control oriented organizational practices are subtly pervasive and take time to address. Moreover, it is especially challenging to implement organizational improvements while bringing hundreds of new, less-skilled workers into the business. Third, the workforce has to master the operation of new equipment in many areas of the bakery as well as the production of new products. Fourth, the ABG
LMC itself has to continue to improve the way it conducts group meetings and assists in the operation of the bakery. Fifth, the equipment and production systems that are
actually deployed in the bakery are in some critical respects not state-of-the-art and do not lend themselves well to supporting state-of-the-art high performance workplace strategies by providing the capability for superior business performance on a man-hours per unit of output basis.
The US Federal Mediation and Conciliation Service (FMCS) is an independent agency of the United States Government, created by law in 1947, to provide neutral mediation assistance to employers and their unionized employees in the areas of contract
negotiations and dispute resolution. It is neither a regulatory nor an enforcement agency, but rather provides services to the nation’s Labor-Management community.
One of the foundations in the mission of the FMCS is to promote the development of sound and stable labor-management relations in the workplace. Further, it is the belief of the FMCS that this end is achieved more effectively through assistance to the parties in fostering, establishing, and maintaining constructive joint processes, thereby creating the opportunity for improved organizational efficiency and employment security.
For employers and unions committed to, or exploring, improved labor-management relations, FMCS provides a variety of education and training services to help break down barriers and build better working relationships which benefit the employer and employees alike.
The FMCS has directed an increasing amount of each mediator’s time and energies in delivering Preventive Mediation training (PM) services to the Labor-Management community helping them define, and/or redefine, their relationship revolving around collaborative partnerships in the form of worksite Labor Management Committees (LMC).
A. FMCS’ Facilitation of Labor Management Committees
A LMC, simply defined, is a structured forum of Labor and Management representatives in the workplace. The forum is used primarily as an opportunity to advance discussion on a variety of issues and matters that have potential impact on employees and business conditions.
For the Union, a LMC can offer a channel of communication to top management as well as providing an opportunity to express employee complaints that lie outside of the normal grievance procedure or contract negotiations arenas. The LMC can also offer the union an opportunity for input on operational problems and management plans that affect employees (i.e. work schedules, job assignments, work conditions). Lastly, a LMC can offer recognition, by management, of the union as a viable organization with a constructive role as a partner.
For Management, a LMC can offer a forum to review operational problems, quality problems, product development and other related matters that demonstrate the relationship of the employees’ role in the success or failure of the business. The LMC can open a communication channel with the union without becoming bogged down in grievances. The LMC can also provide management with an opportunity to be responsive to constructive suggestions and allow for employee input to improve the workplace thereby creating a more participative work environment.
The ABG, BCTGM and IUOE have recognized the advantages of establishing a participative work environment that will position them favorably in an increasingly competitive global market.
However, experience has shown that businesses and labor organizations wishing to transition from a more traditional autocratic hierarchal structure of supervision to one of empowering employees in operational decision-making, often face the hurdle of providing employees with the requisite skills in team-based performance.
As such, the FMCS has proposed to assist the ABG LMC with their transition to a participative, high-performance production model by first assessing their committee’s skills in the areas of group processes, joint problem-solving, and decision-making. This evaluation and analysis will be conducted in the form of a written “Needs Assessment Questionnaire” (see Appendix) administered to the ABG LMC members.
B. FMCS’ Delivery of Committee Effectiveness Training
The assessment is a series of 32 questions designed to identify critical areas of specific needs within the committee, enabling the mediator to structure a tailored training workshop entitled: “Committee Effectiveness Training” (CET). The CET program is a compendium of exercises focused on eight individual instruction modules. The modules address team-based skills including:
1. Effective Planning
2. Effective Meetings
3. Group Problem Solving
4. Consensus Decision Making
5. Effective Communications
6. Understanding Self and Others
7. Interpersonal Skills
8. Group Dynamics & Shared Leadership
Following an analysis of the assessment results, the mediator will construct a ?-day to 2-day training workshop based on the modules targeted. The workshop will then be delivered to groups of 20-24 participants beginning with the ABG LMC. Upon completion of training for the LMC, the program can be cascaded down into the remaining workforce in similar fashion. This will ensure that the entire employee population is operating from the same skill set.
A team of at least two mediators will teach the workshop which is formatted using a variety of adult learning theories of instruction including:
; Selected topic lectures
; One/one interactive exercises
; Small group dynamics
; Team oriented exercises
; Role plays
; Facilitation of concept application
; Workbook reference materials