Union effort at Reynolds more about job security, benefits than pay

Concerns about job security and employee and retiree benefits appear to be at the heart of the latest attempt to form a union at R.J. Reynolds Tobacco Co.

A joint petition was filed Sept. 12 with the National Labor Relations Board by the International Association of Machinists and Aerospace Workers and the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union.

A secret-ballot vote will take place Oct. 20-21 at Reynolds' Tobaccoville and Whitaker Park plants. According to Reynolds, about 1,320 production and maintenance employees are eligible to vote.

One potential twist in the latest effort is that a significant number of Reynolds production employees have been union members for another tobacco company.

John Price, an international representative for the bakery union, said 400 production workers transferred to Reynolds from the unionized Brown & Williamson Tobacco Corp. plant in Macon, Ga., as part of Reynolds' $2.6 billion purchase in 2004. He said about 200 remain in the production workforce.

"As opposed to the 2005 and 2006 votes, where these former B&W workers may have been leery of making waves with their new employer, they likely feel more secure in their jobs and willing to vote for the unions," Price said.

In contrast to heated wars of words between Reynolds and the unions in March 2005 and May 2006, the current organizing effort has been relatively quiet. The company won both elections by a significant margin.

The company has conducted employee meetings and resurrected its www.reynoldspride.com website to promote its anti-union message. It could not be determined whether employees have developed a pro-union website.

Price said at least half of the eligible employees support the current attempt. For the unions to win, they need to receive a majority of the votes cast, not a majority of eligible voters.

"In my conversations with the workers, they expressed concerns about drastic changes going on at Reynolds, including 23 people being terminated unfairly without cause and jobs being outsourced to contract workers," Price said.

"They say they want to do all they can to preserve their full-time jobs while they can."

Since December 2009, 445 manufacturing employees have accepted voluntary-departure offers from Reynolds.

The company's primary reasons for the downsizing were the continuing decline in demand for cigarettes nationwide and higher efficiency gains from consolidating production at its Whitaker Park operations into Tobaccoville.

The severance package in both voluntary-departure offers was two weeks of pay for every year of service, with a minimum of 13 weeks of pay regardless of years of service, and a maximum of 78 weeks, along with benefits and outplacement help.

Reynolds spokeswoman Maura Payne said Wednesday that 23 employees were fired last spring "for violating company policies" that she declined to discuss.

"Management conducted an extremely detailed investigation, and the matter was serious enough to cause individuals to be terminated rather than disciplined," Payne said. She said being a union member would not make an employee exempt from disciplinary actions.

Payne said the number of contract workers at Reynolds varies over time.

"Right now, we have about 300 contract workers, about 125 of whom were in place before the job eliminations in the last two years," Payne said. "Also, more than 100 current employees were promoted into roles vacated by those who voluntarily left.

"No hourly employees in Winston-Salem have had their job eliminated involuntarily in more than 20 years. Using natural attrition and strategic outsourcing reduces the need for involuntary job eliminations and helps us remain cost-competitive."

Price said many of the union supporters are older, putting more of their focus on the company's pension plan and retiree health and other benefits.

He said Reynolds chooses to keep production salaries at or near the rate paid to union workers at Lorillard Inc. and Philip Morris USA to make unions less enticing to employees. Payne said the average salary and bonus is $70,195 for eligible employees.

"The employees are grateful for the job they have and the pay they make," Price said. "They just want to have a contract in which they have a say about their livelihood."

Payne said Reynolds' pension funds had $4.93 billion in assets on Dec. 31, which she said represented 90 percent of the funding obligation. "In the last two years alone, the company contributed more than $1.1 billion to the pension funds," she said.

She said Reynolds retirees have had to pay more for their insurance premiums since 2007 to reflect higher overall health-insurance costs. She said the company also created its MedSave program in which the company matches 50 cents for every dollar an employee puts in for medical expenses in retirement.