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Corporate America Sends a Labor Day Message

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by Walter Brasch

For most Americans, the only significance of Labor Day is that it concludes a three day weekend.

For Kirk Artley, it means he has about six weeks left of employment.

On Aug. 24, RR Donnelley, a Chicago-based megacorporation that claims to be "the world's premier full-service provider of print and related services," told Artley and the other 283 workers at the Bloomsburg, Pa., plant that "economic conditions" forced the closing of the book printing facility. The workers said they would take significant pay cuts if that would save the plant. RR Donnelley rejected the offer.

Most of the workers live in Columbia County, a small rural county of about 65,000, with unemployment about 8 percent, slightly less than the national rate. Adding 284 persons would significantly increase that rate.

Under the termination agreement, the workers, both management and labor, wouldn't have priority rights to bid for jobs at any other plant. "We were told we could apply for open jobs just like anyone else," says Artley, a bindery technician and president of Local 732C of the Graphic Communications Conference, a Teamsters division. Apparently, there was no way to integrate a couple of hundred workers into a corporation that employs about 58,000. What the corporation that had about $10 billion income last year did agree to do, after negotiations with the union, was award severance of one week pay for every year of service, and to pay for half the health insurance for up to nine months, depending upon length of service.

The corporation told the workers the Bloomsburg plant was no longer profitable. They claimed there was no way the Bloomsburg plant, with its eight rotary offset web presses and five bindery lines, could be competitive in an industry that was moving to digital books. They said other plants would absorb the work. If the company had even contemplated changing the nature of production at Bloomsburg to deal with a changing industry, and re-training the workers, that was never made known to those still employed. Every day, the workers did their jobs, put up with Management, and then went home.

By federal law, there has to be a 60-day notice to the workers. But there is no law to require corporations to tell them the truth.

Contrary to corporate statements and a popular belief that print books are doomed by the emergence and significant increase in publication and sales of digital books, there is still a consumer interest in print. Overall, about 2.57 billion books were sold in 2010, a 4.1 percent increase since 2008, according to data compiled by the Association of American Publishers (AAP). Net sales revenue last year was $27.94 billion, a 5.6 percent increase from two years earlier. The AAP reports there were 603 million copies of trade hardcover books published last year, a 5.8 percent increase from two years earlier, with net sales revenue up about 0.9 percent. For trade softcover books, sales were about one billion copies, up 2.0 percent from 2008, with net sales revenue of about $5.27 billion, according to the AAP. The only significant decrease was mass market paperbacks (sometimes known as the supermarket or rack paperbacks). In 2010, net unit sales were 319 million, a decrease of 16.8 percent from 2008; net revenue was $1.28 billion in 2010, down 13.8 percent from two years earlier, according to the AAP. The Bloomsburg plant printed Harlequin romances and some other mass market paperbacks, but they were a small part of the overall production.

RR Donnelley itself, with assets of about $9 billion, is profitable, although its stock has had wide fluctuations in 2011. Its net sales for 2010 were $10.02 billion, up from $9.86 billion the year before. For the first half of 2011, Donnelley had net sales of $3.86 billion, up about 5.7 percent from $3.65 billion a year earlier. Its second quarter net sales were $2.62 billion, an 8.6 percent increase from a year earlier. The company CEO, Thomas J. Quinlan III, earns about $2.6 million in total compensation, with a five-year combined compensation of about $13.6 million, according to Forbes. In contrast, hourly workers in the Bloomsburg plant received an average of 2 percent pay raises each year.

"Just last month, the company told us we were profitable, that it had no plans to close us down," says Artley, "and now they say we aren't profitable?"

No well-run corporation makes a decision in less than a month to close a 370,000 square foot plant, with an estimated market value of about $8.4 million. But, that is what the corporation wants the workers to believe. The union did get Donnelley to agree it would not shut down the plant and then re-open it and resume printing books. There was no corporate agreement that it wouldn't "re-tool," and establish other printing or digital services. And there was definitely no agreement to retrain or rehire any worker. Based upon past practices, RRD Donnelley is more likely to try to sell the empty building and land.

A clue to what the corporation was going to do may have been disclosed in October 2010 when it trumpeted that it had developed the ProteusJet, high-speed ink jet printers, and was shipping one a month to various plants. The printers were designed to handle short run and one copy at a time print-on-demand publishing. None of those printers were scheduled to be delivered to Bloomsburg.

Bloomsburg still produced several long-run publications for major publishers, including the Idiot's Guide and Twilight series, as well as several fiction best-sellers. But, it was developing a specialty as a short-run printer (generally 1,000--3,000 copies of a title), with a three-day turn-around. In the current book industry, shorter runs with faster turn-around times are becoming more of an industry standard, especially with the rise of more small independent regional publishers. Yet, Donnelley was closing a plant that could have been part of a major expansion to meet the new publishing platforms. "That's one of the things that baffled us," says Artley.

At its peak, the Bloomsburg plant was averaging about seven million books a month; that number dropped to about two million a month, and then picked up to five million in August. Although Donnelley kept reaffirming that the change to digital technology, combined with a decreasing economy, were the problems, there are other truths it didn't tell the workers.

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www.walterbrasch.com

Walter Brasch is an award-winning journalist and professor of journalism emeritus. His current books are Before the First Snow: Stories from the Revolution , America's Unpatriotic Acts: The Federal Government's Violation of Constitutional (more...)
 
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