American Crystal Sugar Company shareholders met Thursday in Fargo as a lockout of union workers enters its fifth month.
Company officials say shareholders remain committed to cutting labor costs, despite record revenues from last years crop.
The record-setting sugar beet crop in 2010 brought $1.5 billion in revenue and about $800 million in profits for American Crystal and its 2800 farmer shareholders.
This year's crop likely won't be as profitable, partly because adverse weather cut yields, and because of costs of hiring temporary workers to replace locked out union employees at five factories.
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But American Crystal President David Berg said shareholders agree the pain of a union lockout is worth the long term benefit of reduced labor expense.
"We could give wonderful raises and unlimited healthcare benefits, bankrupt the company, and who benefits from that," Berg said. "We've taken a long term view, the growers support it."
Most of those growers aren't talking. Shareholders declined to comment or ignored reporters questions during breaks in the annual meeting sessions. The tension from the labor dispute was evident. Security was unusually tight with teams of guards watching the doors. At one point, guards refused reporters access to a public session.
Berg said American Crystal is reaping the benefits of an unusual three-year run of high sugar prices on the world market. He said the price is due for a crash. The company also faces the possibility Congress will eliminate or revise the federal sugar program which props up domestic sugar prices through import quotas.
"This is an opportunity for an extended time into the future, probably five years, when we manage the labor cost component of what we do. And it's a $90 or $100 million annual bill," Berg said. "We need to do it now. We can't wait for the sugar price to collapse in a couple of years and then go back to the union and say 'Gee, we really wish we'd revised the health benefit three years ago when the contract was up. We need to do it now."
Union leaders don't buy that argument. Union President John Riskey said workers contribute to the company's profits by producing sugar at a competitive price.
"The company is profitable and when a company is profitable they should share that with their employees — their hard working employees. Why use that money to lock us out." Riskey said.
The lockout hurts the company's bottom line and causes financial pain for locked out workers and factory communities, Riskey said.
North Dakota Democratic State Senator Tim Mathern said he's seen an increase in human service costs as a result of the lockout. Especially in North Dakota, he said, where locked out workers don't get unemployment benefits, many are turning to public assistance.
"You know, it's interesting, the cost of the lockout gets transferred from the company to the general taxpayers," Mathern said. "As long as this lockout continues, it increases the cost of general government. That's another unfortunate thing about this."
Mathern urged the two sides to resolve their contract dispute.
Union officials said they are working with a federal mediator to restart contract talks. American Crystal's president is confident the dispute will be settled, however, no new contract talks are scheduled.