Briggs and Stratton Union Workers Start Anti-Dues Petition

Rick Barrett  www.jsonline.com   

Nov. 23, 2010

In what has become an increasingly difficult environment for organized labor, some union workers at Briggs and Stratton Corp. are circulating petitions asking for the right to avoid paying union dues.

The petition to remove the union security clause from the contract would not do away with the union, United Steelworkers Local 2-232, but would do away with the requirement that all union-covered workers pay dues.

The unusual action was triggered by a pending dues increase that would link the size of the monthly dues payment to an employee's wages - in some cases more than doubling the dues of the highest-paid workers.

The move comes as unions at Briggs and several other marquee Wisconsin companies - including Mercury Marine Inc., Kohler Co. and Harley-Davidson Inc. - have had to accept contract concessions such as two-tier wage systems that pay new workers less, increased use of temporary workers, layoffs, wage freezes or increased health care costs.

"Union members generally like their unions," said John Heywood, a business professor at the University of Wisconsin-Milwaukee who teaches classes in human resources and labor relations. 

"But they have had to give up a lot. It's not a good environment."

The Briggs petitioners contend that giving employees the option of not paying dues would hold union leaders more accountable, forcing them to work harder for their members.

"All we are looking for is freedom of choice," said Briggs employee Don Metzefeld.

The Steelworkers represent about 350 employees at the Briggs plants in Milwaukee and Menomonee Falls.

The petitioners have asked the National Labor Relations Board for an election that would decide whether employees have the right to not pay union dues and, under law, still get the benefits of the union contract. They need 107 signatures to get an election, and organizers said they have about 70.

Such petitions are rare, according to the National Labor Relations Board, which said there have been only four of them in Wisconsin and the Upper Peninsula of Michigan in the past four years.

Of those four, three resulted in elections, but none resulted in an elimination of the union security clause.

"Our office has been open since June 1964. Over that time, we have had 180 of these petitions. It's not very many," said Erving Gottschalk, National Labor Relations Board regional director.

Triggering the petition drive among the Briggs workers was the upcoming change in the dues structure.

Union members pay dues of about $44 a month, regardless of their annual income.

Under the new system, effective in January, a worker with gross pay of $5,000 a month, working 190 hours, would pay about $76 a month in dues, according to Steelworkers officials.

In contrast, someone earning $2,000 a month, or $24,000 a year, would see a decrease in dues.

"It's based on your ability to pay. We believe the formula is fair to all of our members," said Michael Bolton, Steelworkers District 2 director.

For five years, the new system has been scheduled to be implemented in 2011, Bolton said, adding that the Steelworkers' leadership opposes the petitioners' efforts. "It's for the betterment of all to have a union shop," he said.

Briggs employees recently approved a labor contract that gave them a signing bonus and 2% annual raises for the next three years, but it also increases health care costs and allows the company to bring in temporary workers to supplement production in the generator division at Wauwatosa.

Briggs officials said they were not involved in the union petitions and declined to comment.

At some companies, many people get the benefits of union representation without having to pay for it, Heywood said.

"Ultimately, a union will not be able to do its job if enough people don't pay," he said. A vote to eliminate a union security clause "can be the first move to undermine and replace the union, if enough people go along for a free ride."

But getting rid of the security clause doesn't mean everyone will abandon a union, said Cheryl Maranto, a Marquette University associate professor of management in the College of Business Administration.

"If there's a small, disgruntled group of people who don't want to be part of the union, it would not be a big deal. But if a large number of people choose not to join the union, and not pay the dues, it would definitely have some impact," Maranto said.

The petitioners said their effort differs from a "decertification" election, which tries to remove a union as the collective bargaining representative.

"Even after a successful de-authorization, every employee remains fully covered by the contract, whether or not he or she remains a union member or pays any dues," a Briggs employee noted in an e-mail. "Union officials have to sell the benefits of union membership."

In the long run, the change could weaken a union's collective bargaining power, said Kimberly Freeman Brown, executive director of American Rights at Work, a pro-union organization.

"It's a drain on resources," she said. "The next time the union negotiates a contract, it won't be in as strong of a position. Long term, it could cost the workforce a lot more than their union dues on a range of issues, including wages and benefits and having a voice in the workplace."

CSPC, Cub Cadet Recalls Utility Vehicles Due to Risk of Loss of Control

November 23, 2010

The following product safety recall was voluntarily conducted by the firm in cooperation with the CPSC. Consumers should stop using the product immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Name of Product: Cub Cadet Volunteer utility vehicles

Units: About 200

Manufacturer: MTD Consumer Group Inc., of Cleveland, Ohio

Hazard: The front lower ball joint can detach and cause a loss of steering control. This poses a crash hazard for consumers.

Incidents/Injuries: None reported.

Description: This recall involves four-wheel drive Cub Cadet Volunteer gasoline-powered utility vehicle. Model numbers included in the recall are 37BB475H710, 37BC465D710, 37BC466D710, 37BK466D710, 37BK46GD710, 37BM466D710, 37BM467D710 and 37BM46GD710. The serial number range is 1C290Z50001 through 1D280Z50007. Serial numbers included in the recall have a "C" or "D" in the second position and a "0" as the fifth digit. Model and serial numbers are printed on a plate located under the driver's seat. "Cub Cadet" is printed on the hood.

Sold at: Cub Cadet dealers nationwide from April 2010 through September 2010 for between $6,800 and $9,800.

Manufactured in: United States

Remedy: Consumers should immediately stop using the recalled vehicles and contact their local Cub Cadet dealer to schedule a free repair. Cub Cadet is contacting all known consumers.

Consumer Contact: For more information, contact Cub Cadet toll-free at (888) 848-6038 between 8 a.m. and 5 p.m. ET Monday through Friday or visit the firm's website at www.cubcadet.com

Ariens Company To Acquire OPE Distributor Sovde of Rygge, Norway

BRILLION, WI – November 18 -- Ariens Co. said Wednesday it reached an agreement to acquire Norwegian power equipment distributor Sovde of Rygge, Norway.

Terms of the deal were not announced.

Sovde will continue to operate as a distributor between Ariens and independent power equipment dealers in Norway, the company said.

"While it is not part of our long-term strategy to acquire distributorships, the decision was based on a 40-year relationship with the Sovde family who grew the Ariens Sno-Thro brand to become the largest-selling snow thrower brand in Norway," said Dan Ariens, president and CEO.

Ariens also recently acquired British tractor company Countax.

Ariens Co., headquartered in Brillion, is a manufacturer of outdoor power equipment for consumer and professional use.

GIE+EXPO Partnership Extended Through 2014

Nov 17, 2010 -- The sponsoring associations of GIE+EXPO have agreed to extend their partnership contract through 2014. GIE+EXPO is sponsored by the Outdoor Power Equipment Institute (OPEI), the Professional Landcare Network (PLANET), and the Professional Grounds Management Society (PGMS).

The GIE+EXPO began as a combination of two events – the Green Industry Conference and Expo (GIC/GIE) and the International Lawn, Garden & Power Equipment Expo. Hardscape North America co-located at GIE+EXPO 2010 and has signed on to co-locate again in 2011.

"With an ever-growing and changing industry, the combined show just makes sense,” said OPEI president and CEO Bill Harley. “Attendees are exposed to different aspects of the industry that can help grow their businesses and increase profits while exhibitors are put in front of a larger audience."

The 2011 GIE+EXPO is scheduled for October 27-29 at the Kentucky Exposition Center in Louisville.

Honda and Mantis Mini Tillers with Honda Engines Recalled by CSPC

WASHINGTON, D.C. – November 16 -- The U.S. Consumer Product Safety Commission, in cooperation with the firm named below, today announced a voluntary recall of the following consumer product. Consumers should stop using recalled products immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Name of Product: Honda and Mantis Mini Tillers

Units: About 6,150

Manufacturer: American Honda Motor Co., of Torrance, Calif.

Hazard: A rubber grommet that is part of the engine's fuel tank may crack and leak fuel, posing a fire hazard.

Incidents/Injuries: None reported.

Description: The recalled mini tillers have Honda GX25 mini four-stroke engines and their engine serial numbers can be found on the engine near the fuel tank cap. Both brands come in red and black.

Honda Mini Tiller: Model number FG110 with serial numbers GCALT 1696948 to 1700567.
Mantis Mini Tiller: Model numbers 7262 and 7270 with serial numbers GCART-1165215 to 1171495.

Sold at: Honda Power Equipment Dealers, The Home Depot, outdoor power equipment dealers, rental dealers, retailers, mail order and catalog houses nationwide from March 2010 through September 2010 for about $400.

Manufactured: The engines were made in Thailand and assembled in the United States using domestic and globally sourced products.

Remedy: Consumers should immediately stop using any mini tiller with engines in the affected serial number ranges and contact any Honda Power Equipment dealer or Honda Engine dealer (Mantis owners only) to arrange to have the fuel tank assembly replaced free of charge. Registered owners of the recalled mini tillers will be sent a notice by mail.

Consumer Contact: For additional information:

Honda FG110 mini-tiller owners should contact Honda at (888) 888-3139 between 8:30 a.m. and 5 p.m. ET Monday through Friday, or visit the firm's website at www.hondapowerequipment.com

Mantis mini-tiller owners should either contact Mantis Customer Service at (800) 366-6268, visit www.mantis.com or contact Honda at (888) 888-3139 between 8:30 a.m. and 5 p.m. ET Monday through Friday, or visit www.hondapowerequipment.com

Oil Industry Joins Others Attempting to Block E15 Fuel

www.desmoinesregister.com       

Washington, D.C. – November 10 -- The oil industry is joining with food manufacturers, livestock producers and fast-food restaurants in an effort to block an increase in the amount of ethanol that can be added to gasoline.

They say the Environmental Protection Agency doesn't have the authority to permit higher ethanol blends in some vehicles but not in others. The EPA last month agreed to allow cars and trucks that are 2007 and newer to run on gasoline with 15 percent ethanol, a blend known as E15.

The ethanol limit has long been 10 percent for all vehicles with the exception of "flexible fuel" cars and trucks that are manufactured to run on ethanol or gasoline.

"This legal action will give EPA a second chance to get this important decision right," said Scott Faber, vice president for federal affairs at the Grocery Manufacturers Association.

His group was joined by the American Petroleum Institute and a series of livestock and food industry groups, including the National Pork Producers, National Council of Chain Restaurants and the American Meat Institute, in asking a federal appeals court to block the EPA's E15 decision.

Gasoline refiners also may challenge the decision, as well as engine manufacturers and other sectors that have expressed concerns that misuse of E15 would damage motors.

A proposed warning label on E15 gasoline pumps isn't enough to prevent consumers from putting the fuel in cars and equipment for which it is not approved, said Kris Kiser, a spokesman for the Outdoor Power Equipment Institute, whose members make lawn mowers, leaf blowers, garden tractors and other products.

Livestock producers and food groups have long argued that ethanol usage is driving up the cost of producing meat, milk and other products by keeping prices for commodities higher than they otherwise would be.

Their concerns were underscored by Agriculture Department reports Tuesday that sent corn and soybean prices higher on projections of tight crop supplies, growing ethanol production and increased export demand.

"This challenge to the EPA's decision is necessary to reduce the strain that ethanol production from corn has placed on U.S. agriculture," said Scott Vinson, vice president of the National Council of Chain Restaurants.

Some in the ethanol industry are unhappy with the EPA, too, both because it limited E15 to the newest vehicles and because of the orange warning label that the EPA has proposed for service-station pumps. The agency is waiting on research to be completed before expanding approval to include vehicles made since 2001.

Tom Buis, CEO of the ethanol trade group Growth Energy, said opponents of his industry were trying legal means to slow the growth of biofuel production because they have been "unable to dispute the overwhelming science in favor of E15."

The EPA said its E15 decision was "based on strict adherence to the Clean Air Act and grounded firmly in science. The agency relied on numerous rounds of rigorous testing on 19 car models and, at every step, worked in close consultation with automakers and fuel suppliers."

As Global Economy Shifts, Companies Rethink, Retool

www.online.wsj.com       

WASHINGTON—November 7 -- When leaders of the world's largest economies gather for a summit in Seoul this Thursday, their mantra will be "global rebalancing."

The idea is to change the world economy so that it relies less on American consumers and more on shoppers in China, Germany and other countries with big trade surpluses. The aim is to build a firmer foundation for global growth and avoid financial instability.

But it's far easier for politicians to talk about rebalancing than to achieve it. Over the weekend, Germany's finance minister Wolfgang Schäuble lashed out at the U.S., telling a German publication, "There are many reasons for America's problems—German export surpluses aren't one of them."

While government policies—exchange rates, interest rates, taxes, trade barriers—play a role, rebalancing depends critically on decisions made in corporate boardrooms.

CEOs are scanning the globe constantly, trying to discern whether American consumers are truly becoming thriftier, whether Chinese economic strength is sustainable and whether Europe is destined for slow growth. At the most practical level, rebalancing hinges on their success in selling more goods in lower-consuming nations such as China and Germany.

"They are central to rebalancing," says University of Chicago economist Raghuram Rajan, a leading theorist of rebalancing. "They are the agents carrying it out."

A look at three companies—Briggs and Stratton Corp., a 102-year-old U.S. lawn-mower manufacturer; German luxury car maker BMW AG; and Gap Inc., the iconic U.S. apparel retailer—shows why rebalancing is bound to be slower, more complicated and riskier than finance ministers and their economic advisers suggest.

"How do you convince people to change behavior?" asks Friedrich Eichiner, BMW's chief financial officer. "It's very difficult."

The Group-of-20 nations pledged last fall in Pittsburgh to rebalance growth, but so far there is scant evidence of fundamental change. Rather than shift to domestic consumption, China and Germany are reporting big gains in exports through August, though their trade surpluses are roughly comparable to 2009's recession-year trough. The U.S. trade deficit, meanwhile, is up 40% from last year.

For companies, the global math is daunting. The U.S. consumer is such a large portion of the global economy that freer-spending consumers elsewhere won't easily make up any shortfall. Each percentage-point reduction in the annual savings rate in Germany and China—two countries with particularly big surpluses that have pledged to boost spending—would increase consumer spending by a total of just $42 billion.

By contrast, each percentage-point increase in the U.S. household savings rate reduces spending by $100 billion, estimates McKinsey Global Institute, the think tank of the consultancy. U.S. consumers now save 6% of their after-tax income, compared to just 1% in 2005.

Each of the three companies finds rebalancing tricky, illustrating the scope of the challenge.

For Briggs and Stratton, shifting business to China is hard because the Chinese buy few of the items it makes for Americans. Germany, meanwhile, is a small market for U.S.-style lawn mowers.

For the Gap, expanding in the competitive German market and in the fast-expanding Chinese market simultaneously requires different strategies and relentless trial and error.

For BMW, the challenge is maintaining balance: Its cars are such a hit in China that the German company's executives fear they are vulnerable to government interference or a bursting of a China bubble.

The Limits of Culture

Briggs and Stratton is looking to China, Germany, India and anywhere the grass grows to make up for lost U.S. lawn-mower sales. "It drives me crazy when I see people [overseas] on their hands and knees cutting grass" without power mowers, says the company's chief executive, Todd Teske.

But the company's products are so tightly woven into the fabric of U.S. suburbia—what's more American than mowing the grass on a Saturday afternoon?—that Briggs and Stratton faces steep cultural hurdles to expand abroad. The emerging Chinese middle class live in apartments, not single family homes, so few need lawn mowers. German homeowners have smaller lawns, on average, than Americans, and don't need the powerful gas-driven mowers that are Briggs and Stratton's specialty.

The lesson: It's hard for many companies to quickly shift sales overseas because foreign consumers have very different tastes and needs.

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When the real-estate market burst, so did Briggs and Stratton's U.S. sales. Earnings fell short of consensus estimates in 12 of 14 quarters between March 2005 and June 2008, according to FactSet Research Systems, a market research firm.

Briggs and Stratton has scaled back its hopes for U.S. growth. It figures the market for its lawn mower and other small engines will be just shy of 8 million engines this year compared to estimates of more than 11 million before the recession.

To cope, the company has slashed expenses, cutting its global work force to 7,000 by eliminating 2,500 U.S. jobs since 2005 and shifting output from unionized Wisconsin to southern college towns, where it could hire students as part-time, nonunion workers.

In theory, big growth could come from the lawns of Europe and the developing world, but American-style mowers aren't the rage overseas. While about one fourth of Briggs and Stratton's $2 billion in revenue now come from abroad, those sales have barely budged since 2006.

China does beckon—but not for lawn mowers. Briggs and Stratton has set its sights on the agricultural market, banking on Beijing spending heavily to mechanize farms as part of the next step in China's development. The American company has reworked engines that it produces in its Chonqqing factory, so they could be used in rice harvesters and planters.

Although Briggs and Stratton has a city-based network of dealers in China to sell generators and mowers, it needs a new set of rural distributors. The task is so daunting, Briggs and Stratton is looking for a Chinese partner that knows the rural market and also has an in with the government. Farmers who buy machinery endorsed by the government can receive subsidies of as much as 90% of equipment costs.

"The Chinese market won't move the needle one iota in the next two years," from current sales of less than $75 million, says Mr. Teske. "In three to five years, it could be a big business."

Two Markets, Two Strategies

The Gap tried to expand to Germany once before, but it failed and shut its 10 stores there in 2004. Now it's set to re-enter, only this time via the Internet instead of with bricks-and-mortar stores, hoping to save money.

The lesson: rebalancing is risky and expensive because of entrenched competition in many sectors, so many companies move cautiously.

"Where do we find growth?" says Art Peck, the company's executive vice president. "We need to monetize our brands across economies and geographies." That's because in the U.S. sales have dropped by about 15% since the recession and, Mr. Peck says, American consumers remain "twitchy."

To help compensate, the Gap is embarking on a two-speed overseas strategy. It is going slow in Germany and other European countries, where it is improving its website so European shoppers can order in their own language and pay in their own currency. Relying on technology, the Gap figures, limits its financial risk in a slow-growth, high-competition market.

It makes sense to "gauge consumer interest" before investing more heavily in stores in Europe, where it long has had more than 100 outlets in Britain, France and Ireland, says Mr. Peck, a slim 54-year-old executive vice president, who dresses for work in Gap jeans and sports shirts.

Retailers have a notoriously difficult time succeeding overseas because they must learn to deal with different tastes, regulations and market quirks. They have a special role in global rebalancing, inducing consumers overseas to spend more through special deals and glitzy marketing.

Germany, one of the big hopes for rebalancers, is an especially tough market. Not only is it chock full of established competitors, but German consumers also aren't given to splurges.

In Munich, Uta Juergens, a 43-year-old bookstore employee, and her 20-year-old daughter, Sabrina, stopped to chat outside an HandM department store, one of the Gap's big rivals. Mrs. Juergens doesn't own a credit card. Her daughter has one she limits strictly for Internet purchases.

"When I don't have money, I can't spend it," Sabrina says approvingly. Neither show much interest in the Gap when they hear it will only be available online because they like to try on clothes before buying them, they say.

Wary of expanding more in Germany, the Gap is pushing hard in China, where it is opening four new stores in Shanghai and Beijing starting this week.

The Gap realizes it is facing plenty of competition already in China, including its global rivals HandM and Zara. It hopes to differentiate itself by offering an "Asian fit," with fewer curves, and undercut competitors on price on some items. Many Western retailers simply translate their U.S. or European prices into yuan, or mark them up further, turning jeans and blouses into luxury purchases for consumers who earn far less than their Western counterparts.

But even if the Gap and other retailers are a hit, it is unclear it will make much difference in the idea of turning China into a consumption-led economy.

A study by University of British Columbia economist Keith Head and two others of the impact of four Western retailers in China—Walmart of the U.S., Carrefour of France, Metro of Germany and Tesco of the U.K.—suggests that the stores actually increased Chinese exports. The retailers are such demanding buyers that their Chinese suppliers become more productive and better able to compete internationally.

Too Much of a Good Thing

For BMW, rebalancing is occurring more rapidly than it expected. But the car maker's top executives aren't celebrating: They worry about becoming too dependent on China.

The lesson: Fearing arbitrary government actions, companies are wary of relying too much on China.

Since the beginning of the year, BMW sales in China have nearly doubled to 114,000 vehicles, making it BMW's third-largest market. Meanwhile sales in the two larger markets, U.S. and Germany, have increased just 5% to a total of about 330,000 cars after falling sharply from pre-recession levels. That is precisely the kind of pattern that rebalancers have been hoping for.

China is now BMW's largest market for its largest and most profitable sedans. Bernstein Research estimates that 50% of BMW's operating profits come from China; BMW says that the profit number is a "lower two digit number."

"It's kind of a windfall," says Mr. Eichiner, BMW's 55-year-old CFO, in his Munich office. "But our strategy isn't to rely on that development. If you do, you lose your focus in the U.S. and Europe."

Overall, consumer spending makes up just 40% of China's gross domestic product, compared to 70% in the U.S. and 56% in Germany, and Chinese households save more than 25% of their disposable income.

The country's affluent class, though, spends freely, making luxury-goods makers big winners. Chinese who earn more than $100,000 are four times more likely than Americans with the same income to buy luxury cars, according to Bernstein Research.

Wealthy Chinese also hunt for high-end fashion, bags, shoes, perfume and other department store items. Chinese purchases of those items will grow 30% this year, to about $13 billion, according to the consulting firm Bain and Co., which says China will become the world's third-largest market for luxury goods, behind the U.S. and Japan, in the middle of the decade.

BMW's senior management says 100% growth is unsustainable, but how much should BMW plan on—20%? 30%? If it overestimates, the company fears getting hammered in a bust.

Even more daunting is the political risk of doing business in an autocratic government whose policies can change suddenly. Mr. Eichiner says he is especially concerned Beijing may want to give domestic small-car producers a boost by crippling imports of BMWs and other larger vehicles through fuel-efficiency regulations or taxes.

So, BMW is downshifting. While it makes one big sedan especially for the Chinese market, it isn't ramping up production enough to fill all its Chinese orders. It wants to make sure it has sufficient supply for the U.S. and Germany.

The company is also counting on the U.S. to rebound more quickly than doom-and-gloomers think, making rebalancing less necessary than the leaders gathered in Seoul believe. It is even reconsidering its decision to cancel a new large SUV, which was meant mainly for U.S. buyers.

"I don't think the U.S. savings rate is sustainable at a level of 6% or 7%," says Mr. Eichiner. Once Americans feel confident again, they'll spend, he says. "It's how Americans are coined."