A tool to analyze our employers (the pickle story)
13/Feb/2007 12:41
To be a
strategic union leader, you have to understand your
employer’s environment. This is true whether you
represent workers at a hospital or at a steel plant.
If you know what other forces are bearing down on
your employer, you can identify your respective
strengths and vulnerabilities. In this leadership
program, we’ve been offered a tool to do this type of
industry analysis. To see how it works, we looked at
how the Farm Labor Organizing Committee
(FLOC) used it to analyze the
competitive environment of the pickle industry in
order to devise a strategy for raising the working
conditions of cucumber pickers in North Carolina.
It’s hard to
conceive of a more challenging organizing environment
than that confronting FLOC in North Carolina’s
pickling cucumber fields. The labour force is made
up of migrant workers. Union density in the state
is very low. Labour laws and employment standards
are very weak.
The pickling cucumber growers sell almost all of their produce to pickle packers and processors. The contracts with these processor buyers specify what production and agricultural practices farmers are to follow, and what price will be given for the produce. After processing, pickled cucumbers end up in retail supermarkets and the foodservice sector (an increasingly important player in the industry with more and more food being consumed away from home).
One of the big changes in the industry in recent years is consolidation. The number of growers has dropped as small farms go our of business or are bought out by large farms. The pickle-processing sector is dominated by a handful of big firms as a result of mergers and acquisitions. At the same time, the domestic pickle industry is facing growing competition from cheap imports of both fresh cucumbers and processed pickles. In response to this consolidation, the growers have come together into a growers’ association to strengthen their leverage in contract negotiations with the processors.
The tool our class was given to analyze an industry’s situation says there are five factors that impact on competitive position:
- The bargaining power of suppliers
- The threats of new entrants into the industry
- The threat of substitute products (or services)
- The rivalry between players
- The bargaining power of buyers
Applying this model to the situation of North Carolina’s cucumber growers, we identified that:
1. Their main suppliers are workers who have very little bargaining power.
2. The growers face no threats from substitute products because pickles can’t be made without cucumbers.
3. Rivalry between farmers is not a big problem now that they have come together to form a growers’ association and negotiate the price of product together.
The big threats for growers come from (a) new entrants into the industry in the form of imports, and (b) the growing bargaining power of their consolidated buyers (the processors) who, in turn, are under pressure from the consolidation of their food retail and service sector customers. The processors have responded to this environment by changing the way they do business with the growers. In the past they contracted with growers by the acre, not by the output, which transfers all growing risks to the growers. As well, the consolidated processors have exercised enormous pressure on growers to keep prices low. The growers, in turn, have squeezed the workers demanding more for less.
What can a union do for workers facing this kind of pressure? Even if it succeeds in signing-up the workers, how will it bargain better working conditions when the growers have so little control over the prices of the produce?
FLOC’s strategic solution (after analyzing the industry) was to go after the processors. After years of persistent campaigning, threatening and organizing consumer boycotts, FLOC was able to bring some of the big processors to the bargaining table, alongside the growers’ association, and negotiate tripartite agreements that set out terms for both cucumber prices and workers’ wages. This arrangement gets the growers a higher price for the produce from the processors but ensures that the money gets passed onto the farm workers rather than stay in the hands of the growers. Now FLOC’s challenge is to bring all processors under similar contracts so that the organized sector doesn’t get penalized in the market because it provides higher wages and prices.
This FLOC case is a great example of a union increasing its strategic leverage by adapting both its organizing and bargaining strategy to address the specific circumstances of a specific industry. It is also a great example of a union organizing successfully despite what many would write-off as a hopeless situation.
Of course, the story isn’t over. The cucumber pickling industry continues to change. In recent years there have been many mergers and acquisitions of retail supermarkets and foodservice operators (the final buyers of pickles). A few massive merchandise retailers emerging as major players. These big corporate players, like Wal-Mart, will do everything they can to undermine agreements like those negotiated by FLOC. Wal-Mart, unlike the smaller pickle processing companies, likely will not be swayed by consumer pressure alone. This new threat in the industry is likely keeping FLOC leaders awake at night. The good news is that the union has shown itself to be strategic, creative, well organized, very alert and always thinking.
The pickling cucumber growers sell almost all of their produce to pickle packers and processors. The contracts with these processor buyers specify what production and agricultural practices farmers are to follow, and what price will be given for the produce. After processing, pickled cucumbers end up in retail supermarkets and the foodservice sector (an increasingly important player in the industry with more and more food being consumed away from home).
One of the big changes in the industry in recent years is consolidation. The number of growers has dropped as small farms go our of business or are bought out by large farms. The pickle-processing sector is dominated by a handful of big firms as a result of mergers and acquisitions. At the same time, the domestic pickle industry is facing growing competition from cheap imports of both fresh cucumbers and processed pickles. In response to this consolidation, the growers have come together into a growers’ association to strengthen their leverage in contract negotiations with the processors.
The tool our class was given to analyze an industry’s situation says there are five factors that impact on competitive position:
- The bargaining power of suppliers
- The threats of new entrants into the industry
- The threat of substitute products (or services)
- The rivalry between players
- The bargaining power of buyers
Applying this model to the situation of North Carolina’s cucumber growers, we identified that:
1. Their main suppliers are workers who have very little bargaining power.
2. The growers face no threats from substitute products because pickles can’t be made without cucumbers.
3. Rivalry between farmers is not a big problem now that they have come together to form a growers’ association and negotiate the price of product together.
The big threats for growers come from (a) new entrants into the industry in the form of imports, and (b) the growing bargaining power of their consolidated buyers (the processors) who, in turn, are under pressure from the consolidation of their food retail and service sector customers. The processors have responded to this environment by changing the way they do business with the growers. In the past they contracted with growers by the acre, not by the output, which transfers all growing risks to the growers. As well, the consolidated processors have exercised enormous pressure on growers to keep prices low. The growers, in turn, have squeezed the workers demanding more for less.
What can a union do for workers facing this kind of pressure? Even if it succeeds in signing-up the workers, how will it bargain better working conditions when the growers have so little control over the prices of the produce?
FLOC’s strategic solution (after analyzing the industry) was to go after the processors. After years of persistent campaigning, threatening and organizing consumer boycotts, FLOC was able to bring some of the big processors to the bargaining table, alongside the growers’ association, and negotiate tripartite agreements that set out terms for both cucumber prices and workers’ wages. This arrangement gets the growers a higher price for the produce from the processors but ensures that the money gets passed onto the farm workers rather than stay in the hands of the growers. Now FLOC’s challenge is to bring all processors under similar contracts so that the organized sector doesn’t get penalized in the market because it provides higher wages and prices.
This FLOC case is a great example of a union increasing its strategic leverage by adapting both its organizing and bargaining strategy to address the specific circumstances of a specific industry. It is also a great example of a union organizing successfully despite what many would write-off as a hopeless situation.
Of course, the story isn’t over. The cucumber pickling industry continues to change. In recent years there have been many mergers and acquisitions of retail supermarkets and foodservice operators (the final buyers of pickles). A few massive merchandise retailers emerging as major players. These big corporate players, like Wal-Mart, will do everything they can to undermine agreements like those negotiated by FLOC. Wal-Mart, unlike the smaller pickle processing companies, likely will not be swayed by consumer pressure alone. This new threat in the industry is likely keeping FLOC leaders awake at night. The good news is that the union has shown itself to be strategic, creative, well organized, very alert and always thinking.
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