Stella D'oro responds to union allegations

by Bakingbusiness Staff
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BRONX, N.Y. — Stella D’oro Biscuit Co., which earlier this month announced plans to close its Bronx bakery operations in October, issued a statement July 22 accusing the Local 50 of the Bakery, Confectionery, Tobacco Workers and Grain Millers of, among other things, spreading misinformation.

The union’s workers were engaged in a lengthy strike before returning to work July 7. Since that time, the union has filed charges with the National Labor Relations Board seeking to block the facility shutdown and demanding Stella D’oro reopen negotiations. The union has said the closing is in retaliation for the stand its workers took last August.

Stella D’oro, meanwhile, said it has undertaken a number of critical strategic actions since being acquired by Brynwood Partners in January 2006, ranging from introducing new products to investing $11 million to purchase modern equipment. Despite those actions, the company said it has continued to lose money, including more than $3 million in operating losses since 2006 primarily due to its uncompetitive labor cost structure.

"Contrary to misleading statements that the company is profitable, just not as profitable as its investors would like, the fact is that the company was and still is losing considerable amounts of money each year," Stella D’oro said.

The company went on to note that its request for wage and benefit concessions is not unreasonable if the facility is to continue to operate in the Bronx. As it currently stands, Stella D’oro said the union’s pay scale "is completely out of sync with the Bronx community and today’s economic reality."

In its statement Stella D’oro also shed some light on what it plans to do if no agreement with the union is reached.

"The union has mistakenly assumed that Stella D’oro’s July 6, 2009, announcement that it is exploring strategic alternatives means that production currently at the Bronx facility will be outsourced," Stella D’oro said. "While this is one of the strategic alternatives available to the company, other strategic alternatives include selling the business as a going concern, selling the business to a buyer with its own manufacturing capabilities, or permanently closing the plant and selling off the company’s assets among others. The company will thoroughly consider and evaluate all potential alternatives, and under any scenario, Stella D’oro will fully comply with all of its obligations to bargain with the union."

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