Thursday, August 26, 2010
Coca Cola Enterprises' Behavior Undermines Coke's Plans, Will CCE Hurt Coke?
The company’s board of directors has repeatedly predicted that its takeover of the world’s largest Coca-Cola bottler, Coca-Cola Enterprises’ (CCE) North American operations, will occur in the fourth quarter. Coke executive management and its shareholders must adapt to a business model that goes from a high-margin, lower-capital cost venture to a low-margin, labor-intense business in North America. And now CCE [NYSE:CCE] is adding potential risks by sparking a labor dispute that threatens Coke sales in Washington state and may have ramifications throughout the important West Coast market and beyond.
CCE – Hostile Workplace in Washington Leads to Strike
About 500 CCE distribution and production Teamsters across western Washington went on strike on Aug. 23 in response to the company’s intimidation and surveillance of its employees and its refusal to bargain a contract in good faith. The National Labor Relations Board (NLRB) is investigating the company for serious and repeated violations of federal labor law, including “surface bargaining,” employee surveillance and threatening to retaliate against workers for engaging in protected activities.
“The last thing we wanted is a strike, but Coke has left us no alternative,” said Tracey A. Thompson, Secretary-Treasurer of Local 117 in Tukwila and lead negotiator for the Teamster local unions in Washington. “The company’s refusal to bargain in good faith a contract has resulted in hardship for 500 Coke employees and their families and the disruption of its own operations.”
CCE—Mismanaging Health Care
Another major issue is a perplexing plan that increases health care costs significantly for employees. If CCE management has its way, employees’ health care costs will increase by a staggering 800 percent. The attempted premium increase does not stem from an economic need, but from a philosophical belief by CCE management that workers should pay more for health care. Despite the fact that Washington CCE workers’ current health plan is less expensive than recently negotiated plans with employees in California, the company is still willing to provoke a work stoppage that could severely curb product sales in the Northwest.
CCE also wants to eliminate retiree health care. Employees, especially on the extremely demanding distribution side of operations, depend on such coverage. This issue is one of the causes of the work stoppage.
CCE Puts Customer Service at Risk
Next month, CCE plans to shut down its Marysville, Aberdeen and Fife distribution centers and consolidate operations into Bellevue and Tacoma. This will require route drivers to cover long distances to travel both north and south of the Seattle area to make deliveries. In some cases, it may take drivers more than three hours to reach their customers.