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Will the Star Tribune's pension move spur a strike?

Since its Jan. 15 bankruptcy filing, the Star Tribune has forced five unions to fork over $9 million in annual concessions, plus pension freezes, with nary a labor stoppage. But Sunday's move to terminate drivers' pension contributions could bring the struggling company's first strike.

Though officials of Local 638 would not comment, recently retired driver Rick Sather says he's heard serious talk from half a dozen current drivers.

"They’re telling me what the business agent is saying to them: 'If the company wants to leave the pension plan, we just have to strike," Sather says.

Bankruptcy Judge Robert Drain showed no compunctions about abrogating other deals, and the Strib says more is at stake now. Creditors owed nearly $400 million won't agree to keep the paper alive unless the company escapes a $20 million — and rising — pension liability. A walkout might be the only option unhappy drivers have left.

Of course, union saber-rattling rarely leads to sabre-plunging. Still, a strike could severely complicate the Strib's recovery plan. If fellow Teamster pressmen and mailers honor a picket line, the print side — which still produces the bulk of the company's cash — would effectively shut down.


Should the newsroom join in, there goes your web alternative. The company could try to replace workers, but it would suffer through days, weeks or months of crippling publicity and disruption.

At least, that's the drivers' hope. There are, of course, many reasons why it wouldn't pan out this way. Unions that just swallowed big cuts won't suffer additionally for a holdout. Readers might not care, surfing to other sites until someone caves. And creditors, who've moved their latest drop-deadline to May 26, might just sell the place in pieces.

So why are the drivers entertaining the kamikaze option? It's a tale involving Vegas racketeers and Wall Street financiers as well as 425 Portland's managers.

Jimmy Hoffa's legacy
The Strib argues it is merely asking the drivers to take what everyone else has: job reductions, pay cuts and a pension freeze.

The drivers have agreed to the first two, saving the company $3.92 million a year. (For details, see story's end.) However, on the pensions, drivers are the only ones facing real-dollar cuts — on the order of 60 percent.

A big reason is the Teamsters' epically fraudulent, mismanaged Central States Pension fund.

Jimmy Hoffa made it the Vegas mob's bank; when the feds took over in 1982, trustees turned to Wall Street money managers who promised a stocks-heavy strategy to make up for years of looting. They pocketed huge fees, but after two market crashes this decade, the fund had just 46 percent of what it needs to pay retirees as of Dec. 31, a Strib filing states.

Because Central States' condition is so pitiful, the feds instituted a reorganization plan. Employers such as the Strib must fork over an additional 8 percent per year. In 2008, the Strib says it paid $1.1 million for 123 drivers — compared to $600,000 for 237 unionized workers in six other plans.

Here's the strike-fomenting part: when an employer quits the fund, Central States penalizes the workers. They lose 6 percent of their benefits for every year they retire before 65. Most of the Strib's drivers were hired in their 20s, with plans to retire in their 50s after three decades of hauling papers from docks to depots to boxes and racks.

As recently as 2003, Sather was looking at $3,000 a month in retirement. Subsequent cuts took the 30-year veteran down to $2,200 a month when he finally retired in January. If the Strib's plan succeeds, Central States would pay the 53-year-old a mere $700 monthly.

How much is a disc worth?
Despite several job-related musculo-skeletal surgeries Sather suffered, the 401(k) generation might not have much sympathy for a retiree who's just six years older than Barack Obama. Shoulda known you were in a bum fund. Shoulda put more away. Shoulda worked into your 70s, like we'll have to — or at until you were 55, when you'd have qualified for $2,778 a month. ($1,100 discounted.)

However, an active driver, who didn't want to be named because he did not speak for union leadership, says it comes down to simple fairness. "We have a contract through 2011 — which management just signed in November of 2008. So why did they sign it knowing they were going into bankruptcy, knowing they were going to break it?"

He continues, "We've worked nights, holidays — there's never been a time when the paper has not gone out. Never once, not when we've been hit by tornadoes, snowstorms, floods. We've never received sick pay; you don't work, you don't get paid."

Furthermore, he says, the company is misrepresenting the million-dollar-plus annual pension payment. Over the years, drivers deferred 60 percent of their wage hikes toward their pensions. The maneuver helped cut the Strib's taxes, while helping assure an easy retirement after a disc-busting career.

"Only 40 percent of that is their money," he argues. "The judge should be told that."

Is the Strib safer than Central States?
Management, which would probably argue it all falls to the bottom line, insists it is sympathetic to the workers' plight. Three days before filing to abrogate the contract, if offered to make up 80 percent of the losses for 23 senior or recently retired workers.

Employees such as Sather would be partially paid from the company's "Plan A," netting monthly losses of between $200 and $500. Sather would lose $300, leaving him with $1,900 a month.

The big problem: The deal only covers 15 of 103 active members; you'd hate to be the poor sucker with 24 years of experience, who'd suffer the full whacking. And there are a lot more of those guys in Local 638 than guys like Sather.

But the Strib says even counting on Central States money in the first place is a mistake. The fund's finances are so lousy it's in what pension experts call the "red zone" — and, as the Strib's situation epitomizes, is in a death spiral with little chance of escape.

The Strib isn't the first Central States employer to go bankrupt. In just 11 months (December '07 to November '08), the fund went from 140,400 active employees to 88,231.

A big chunk of that came when Teamsters boss James Hoffa allowed UPS to flee: to save jobs, the shipper made a one-time $6 billion payment. Meanwhile, another mega-trucker,YRC, just asked TARP for $1 billion to fund its Central States costs, the Strib filing notes.

As each employer fails or escapes, the situations worsen for the survivors. Individually, bankruptcy judges and union bosses are making rational decisions; collectively, it only hastens the collapse.

In the Strib's case, the $20 million-plus withdrawal liability becomes an unsecured claim, meaning Central States would get at most a couple of hundred grand.

The dynamic pushes Central States beneficiaries nearer the lap of the Pension Benefit Guarantee Corp. (PBGC), which liquidates lousy funds and pays pensioners dimes on the dollar.

As I've noted before, the PBGC is funded by pension premiums — but a failure of Central States' magnitude, amid the general economic collapse, could produce the next taxpayer bailout. The Strib's shucking could be borne not just by Teamsters, but us.

One of the curious things about the Strib's bankruptcy so far is the PBGC's silence — it has the right to intervene in the case, though Judge Drain has the ultimate decision-making power. Perhaps the Strib's latest move will be the spur.

Whose crap is better?
In any event, the Strib says Plan A — which is 83.5 percent funded — is a far safer bet for drivers who've worked the longest. Even though company would assume an additional $4.5 million liability on a $70 million-$80 million asset base, it currently has more assets overall than liabilities.

At least one knowledgeable observer with labor ties agrees: "It's like the Teamsters are saying, 'We may have a piece of crap, but it's our crap.'"

Sather, who no longer has a vote on the matter, has a different view. "We struck in '63 to get into Central States. I'm a true-blue Teamster and I'll stay with the Teamster plan before I roll over for any kind of company plan."

Even though laws limit even a struggling employer's ability to unilaterally raid its pension fund, Sather cites recent history for his skepticism. "These owners have only been here for the last two years, and they've wrecked the company. I'm supposed to believe they won't wreck the pension plan, too?"

* * *

Other contract provisions (agreed to in principle):

♦ Guaranteed jobs cut from 90 to 55 through June 30, 2011.

♦ Foreman pay: Cut from $30.60/hr to $25. Based on a 38-hour workweek, annual pay reduced from $60,500 to $49,400.

♦ Full-time driver pay: Cut from $27.19/hr to $20.20, or from $53,727 a year to $39,915.

♦ New full-time drivers, if any: $17.35/hr in the first year, rising to $20.20 in three years.

♦ Unlimited part-timers if needed, making $13/hr, down from $15.

♦ Closing five of 13 depots; leases dropped in bankruptcy.

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Comments (2)

"There's never been a time when the paper has not gone out. Never once, not when we've been hit by tornadoes, snowstorms, floods."

Credit where due for heat, snow nor dark of night not keeping the Teamsters from their appointed rounds, we did have a period during my employment whan the papers were not delivered: During the 27-or 28-day (memory fails) strike in fall 1980. My kids were a toddler and a baby and our family had no income during that period, but I was proud of the solidarity we showed in the face of management demands that we give back the Newspaper Guild's contractual share of revenue from resale of our work to an embryonic online enterprise. Ed Asner had agreed to visit Minneapolis for a rally and variety show supporting the unions, but the local Teamsters decided unilaterally that we'd been on strike long enough. Without their support we didn't have a chance, so we settled for what we'd been offered before we walked out. I felt kinda betrayed. Net loss to my family was all our savings, but a bonus was getting acquainted, during the strike, with Lou Grant himself. About a decade later, I helped the local chapter of Teamsters for a Democratic Union with local publicity for what turned out to be Ron Carey's successful overthrow of the crooked Hoffa regime -- but it didn't last. Jimmy Hoffa Jr. is now in charge, and I feel no inclination to support that union but feel supportive and sympathetic toward the hard-working members now at the mercy of the courts and their tainted Central States Pension Fund.

One reason (big) that the federal pensions fund is short of money is that the government allowed too many mega-corporations who were falling into bankruptcy to use those funds to help them recover. The fund was actually NOT to be used except in cases where a company went out of business in order to protect workers from loss of their pensions.

Corporations win again.