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Crystal: Union's cost estimate of lockout too high

FARGO -- American Crystal Sugar Co. officials deny new union claims that a labor lockout has more than doubled processing costs for beets harvested in 2011.

American Crystal Sugar
American Crystal Sugar Co. logo

FARGO -- American Crystal Sugar Co. officials deny new union claims that a labor lockout has more than doubled processing costs for beets harvested in 2011.

Company officials acknowledge costs have increased, but say its farmer-owners already know about the costs, and say the company is seeing its replacement hires as a possible permanent work force.

The Minnesota-AFL CIO recently published a news release saying American Crystal's bottom line "suffers due to ongoing lockout," adding the company is "burying numbers to hide real costs." Some 1,300 workers in the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) were locked out of their jobs on Aug. 1 last year when they voted down a contract proposal by the company. BCTGM is affiliated with the AFL-CIO.

American Crystal is a farmer-owned cooperative, with five beet processing plants in Moorhead, East Grand Forks and Crookston in Minnesota and Drayton and Hillsboro in North Dakota.

"A review of the six months ended Feb. 29, 2012, compared to the same period last year, revealed relatively constant company revenues," the Minnesota AFL-CIO said. "However, other more important categories saw major changes. Production costs shot up 200 percent. Company proceeds before taxes dropped 23 percent and payments to shareholders fell 24 percent."

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Brian Ingulsrud, vice president of administration for American Crystal, said he is "not going to try to analyze all of those numbers" in the union release, except to say that the cost increase is "significantly less than the 200 percent" cited in the union news release. "That's not in the ballpark," he said.

He acknowledged company costs have gone up, but declined to name a figure. "Unfortunately, this lockout has cost our union employees a lot as well, in terms of lost wages and the benefits they could have had," he said. He added that costs are "coming down significantly" as the company is moving deeper into the processing campaign. "They are getting to be cheaper and cheaper as time goes on."

Comparing co-ops

In its release, the union compared the $59 per ton projected price for Crystal's 2011 beet crop to the $72.72 per ton that is projected for the same season by Minn-Dak Farmers Cooperative of Wahpeton, N.D. The two co-ops are separate, but common marketing companies sell their sugar and byproducts.

Crystal paid a record-high $73.02 per ton for the 2010 crop, and $52.87 the previous year, Ingulsrud acknowledged.

Ingulsrud pointed out that company management had meetings in April with shareholders and there was "good discussion about what the cost of the lockout has been." He said comments from shareholders indicated they are backing the company's position.

He declined to confirm that the extra costs from the lockout account for the majority of the difference between the Minn-Dak and Crystal payments. "I'll say the lockout has had a significant impact," he said.

Crystal is nearly finished processing some 9 million tons of beets, compared with 11 million tons the previous year.

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Ingulsrud said the smaller crop also lowers the payout because the costs are spread over a smaller volume.

The union compared Crystal's production costs to Minn-Dak, where they say production costs dropped by 5 percent, where proceeds before taxes rose 14 percent and payments to shareholders rose 9 percent. David Roche, president and CEO of Minn-Dak, declined to comment on the union release. According to separate reports, Minn-Dak had a short processing campaign that ended in mid-March because of a small crop.

Withheld figures

The Minnesota AFL-CIO union said Crystal has withheld in its official reports how much it has paid for its "inability to produce enough saleable sugar."

David Rham a union spokesman from the Hillsboro factory, said the figures make it "clear as day" that if Crystal's executives' goal is to make money for shareholders, they would end the lockout and reach "a fair contract with the workers who helped make the company a success."

No talks between Crystal and the BCTGM locals are scheduled for the Red River Valley factories.

Ingulsrud said that the end of the beet slicing season is weeks away. He said there have been some challenges but that "overall, I think they've done a terrific job," he said. He said the company has a 50-50 split between local workers and those hired by Strom Engineering of Minnetonka, Minn.

"Sometime during the next processing season we expect it'll be 100 percent local," he said. Crystal has a target of hiring 1,000 employees. "We are hiring people with the intention that they could be our long-term work force," Ingulsrud said. He said there were 7,000 applicants and that the company has hired 800 workers.

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