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RESPONDING TO CHANGE IN THE WORKPLACE:

INNOVATIONS IN LABOR-MANAGEMENT-GOVERNMENT COOPERATION

The Atlantic Baking Group

Labor- Management Committee

####### 

# United States of America

June 25 -- 26, 2001 Mexico City, Mexico

ATLANTIC BAKING GROUP

LABOR-MANAGEMENT COMMITTEE

# Organizational Summary

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 (BCTGM)

-   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 program for the bakery.[^1] 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 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.

# Partnership Goals

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 advancement; and

-   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 specifically provides for the operation of
a labor-management committee.[^2] 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 management team who participate provide the group with
information about production problems, sales forecasts, new product
development, and other business activities.

# Partnership Strategy

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 

To achieve a high-performance workplace[^3], 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.

# Partnership Evolution

The ABG LMC is a complex, continually evolving, partnership between
government / non-profit community agencies, labor, and management.

## Initial Challenges

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 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.

## Ongoing Challenges

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.

# FMCS Training

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.

### 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 ½-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

-   Simulations

-   Video

-   Facilitation of concept application

-   Workbook reference materials

The mediator will direct that each class of workshop have an equal
number of labor and management participants so that interaction between
the parties is maximized. In most cases, the workshop is conducted
"off-site" and in an informal atmosphere to enhance the learning
process.

The goal of the workshop approach is four-fold:

1.  "Targeted" skill instruction

2.  Labor-Management interaction in a "learning environment"

3.  Uniform delivery of content to employee population

4.  Application of learned concepts into the workplace

As the economies of the world grow ever more interdependent, businesses
and labor organizations must meet the demanding challenges of the
workplace to achieve production efficiencies. The ABG, in collaboration
with the unions representing their workforce, have built a model of
partnership between Labor, Management, the Community, and Government in
an effort to meet these challenges.

The CET program is designed to enhance their accomplishments and provide
requisite skills to an employee population in transition, and the FMCS
is committed to assisting their efforts.

# Conclusion: Impact on Workers, Outcomes, and Lessons Learned

The ABG LMC is an extraordinarily innovative and complex partnership
between labor, management, and the public sector. The group utilizes
nearly all of the available public economic development tools to assist
it in working towards its goals: state-of-the-art labor-management
relations; the development of high-performance workplace practices; and
a powerful private label bakery. The successful resurrection of the
bakery has been a source of great pride to the workforce and community.
However, the tremendous difficulty the start-up company has experienced
in getting "over-the-hump" into a secure marketing position and
productive capability has been stressful and exhausting. One lesson
learned in hindsight, is that the committee needed to be more rather
than less proactive at the earliest stages of the start-up when critical
equipment, installation, and layout decisions were being made. While
generally good decisions were made at every stage of the start-up, a
more intensive committee process would have undoubtedly produced even
better results. And, in a start-up business there is very little margin
for error. Similarly, going forward, with the help of the FMCS and other
agencies, it is critically important that the committee continue to
improve its own decision-making processes and continue to struggle to
implement a comprehensive program of training and education, in order to
create a workplace capable of sustainably embedding in the workforce the
knowledge and skills needed to operate the bakery.

The CET program, by design, will assist in strengthening the skill set
of the committee as it operates in a more team-based environment. Since
the committee has been operating the new bakery, in the start-up phase,
with many of the common principles found in a collaborative partnership,
we expect that the CET program will have a high degree of success.

[^1]: Information concerning the FMCS Grants Program is available on the
    World Wide Web at http://www.fmcs.gov/agency/grants/default.htm.

[^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."

[^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
    http://www.iamaw.org/departments/hpwo/introhpwo.htm.