The Nasty Reality of Private Equity Financing

The magic of Private Equity financing or how hedge funds work explained by Robert Reich in 8 Easy Steps.

Are critics of private equity against capitalism. They’re not. They’re against a predatory system created and perpetuated by Wall Street solely to pump its own profits. Here’s what private equity is really about: A firm like Mitt Romney's Bain Capital obtains cheap credit and uses it to acquire a company in a "leveraged buyout." "Leverage" refers to the fact that the company being purchased is forced to pay for about 70 percent of its own acquisition, by taking out loans. Private equity firms typically target profitable, slow-growth market leaders. (Private equity firms presently own companies employing one of every 10 U.S. workers, or 10 million people.)

And that's when the fun starts. Once the buyout is completed, the private equity guys start swinging the meat axe, aggressively cutting costs wherever they can – so that the company can start paying off its new debt – by laying off workers and cutting capital costs. This process often boosts operating profit without a significant hit to the business, but only in the short term; in the long run, the austerity approach makes it difficult for companies to stay competitive, not least because money that would otherwise have been invested in expansion or product development – which might increase revenue down the line – is used to pay off the company's debt.

It takes several years before the impacts of this predatory activity – reduced customer service, inferior products – become fully apparent, but by that time the private equity firm has generally resold the business at a profit and moved on. These leveraged buyouts don't only hurt businesses, workers, and the economy generally – they also short-change taxpayers, via a giant loophole in the tax code that enables companies to deduct loan interest from taxes. The provision was originally intended to encourage borrowing to build new factories, not to finance leveraged buyouts. But, according to Notre Dame Professor Brad Badertscher, private equity-owned companies paid a 22 percent tax rate before being bought, and only 10 percent the year after being acquired. That adds up to a savings of $130 billion in taxes since 2000. Rolling Stone Magazine

Update on ATU Local 1700 Negotiations with Greyhound

Fri, 10/19/2012 - 5:37pm

Positive outlook for an agreement that should reverse the downward spiral Greyhound workers suffered during the company’s long slide.

By President Bruce Hamilton

After six days of negotiations, the signs point forward for Greyhound drivers and other employees, reflecting the intercity bus industry’s recent rebound and management’s big plans. When the company and union return to the table in late October, the issues of foremost importance to members will be the ones we’ll be discussing:

- Fair compensation for all the work we do,
- Ending decades of unfairness for regular run drivers,
- Recovering our work that Greyhound shifted to subcontractors.

The company asked to get an early start on negotiations after Local 1700 members loudly protested the use of non-Greyhound drivers on Greyhound Express schedules. Texas drivers picketed outside terminals in Dallas, Houston, Austin and San Antonio, with support rallies in Phoenix and Los Angeles.

Management decided it had bitten off more than it wanted to chew in late May, after Local 1700 members marched from the Dallas station to corporate headquarters. The company offered to negotiate a larger solution to the erosion of work if the union would stop the high-profile picket lines.

This is our opportunity to raise employment and safety standards in the intercity bus industry with a contract that restores the fairness drivers and mechanics deserve. It won’t be easy, and no one ever gets everything they want in bargaining. But we are resolved to close the loopholes the company uses to deny pay claims, to be paid for all the time we spend at work, and to protect our hard-won health benefits.

Greyhound drivers’ fight for fairness and highway safety will go on after a new contract is signed. Some of the biggest issues we face cannot be solved at the bargaining table. For example, we are part of a small minority of U.S. workers who federal law does not guarantee fairness on the job. Exempting over-the-road drivers from the Fair Labor Standards Act allows Greyhound to get away with what is legally prohibited for most other employers: not paying overtime after 40 hours or paying workers for all the time they spend on the job.

Local 1700 members must remain active politically and hold our elected leaders to their word to stand with working people. Next year, ATU will continue to lobby Congress for highway safety reform that tackles the leading cause of fatal bus accidents – driver fatigue – by including us under the FLSA. ATU1700

The monster in the closet: Income inequality

An illustration of a scary problem haunting Canada -- income inequality. This video is part of NUPGE's 'All Together Now' campaign for public services and tax fairness.

B. C. Bus Drivers' Job Action

It is not often these days that you hear folks speak up in favour of Unions and or in support of job actions taken by unionized workers to change or improve the terms and conditions under which they work. So it was a pleasant surprise to come across this article by Shannon Corregan in the Times Colonist supporting workers' job action during the ongoing negotiations between B.C. Transit and the Canadian Auto Workers Local 333. According to Corregan the City of Victoria bus drivers have now completed their third week of driving uniform-free and she thinks it's great way for making sure that every person that gets on the bus knows what the issues are in the contract negotiations.

Job actions such as these are very important and necessary if workers want to be treated fairly. Strikes are a major inconvenience to the public and so far, the bus drivers of Victoria have been doing their best to avoid a strike while publicizing their unhappiness with what CAW says is an unfair situation. The refusal to wear uniforms "is a nonaggressive, non-confrontational way of voicing their dissatisfaction" in Corregan's words. 

And job actions such as these are a way of reminding the bus-going public that the drivers want to be doing their jobs. This is important in a service industry such as transportation where all too often, strikers lose public sympathy simply because strikes are an inconvenience for the rest of us. With the weather set to get a lot worse as winter approaches, losing public support is more of a danger if CAW does decide to strike.

In many cities across the country local municipalities have seen attempts to have transit services declared an essential service in order to prevent strikes from happening, or to place strict limits on the right to strike. And people don't take an interest in the issues involved until their services are cut, and at that point they take a narrow view of the situation focusing solely on the inconvenience the strike has caused them. Corregan makes the following point that;

 "But it's precisely because our transit system is so crucial to so many that we should support our drivers' right to strike if they must. Strikes suck, it's true, but we strike to keep our industries fair and our systems sustainable, so that they can enrich our communities. We need to pay our drivers a proper wage, and give them proper benefits, and listen to them when they have concerns about the integrity of their work - as is the case here, as CAW and B.C. Transit fight over the level of training and qualifications required for drivers to operate our newly commissioned buses."

So when workers engage in job actions, such as not wearing uniforms, "It provides a visual reminder of what's going on, without interrupting service to those who need it. It gives our drivers a form of protest that does not inconvenience the community they serve." And it sends an important message to the public about the larger issues involved and why they need to see beyond the question of their own personal inconvenience that a strike might cause. go to link>>>

Everything You Need to Know About the Economy from a 'South Park' Episode

In their magnum opus, “Margaritaville,” season 13, episode 3, South Park creators Trey Parker and Matt Stone have done us a service, revealing over the course of 22 animated minutes what it might otherwise take several semesters at a decent business school to learn. The episode opens in the small Colorado town of South Park, which is wracked by a sudden and serious economic decline. After a period of collective soul-searching, the locals hit upon the obvious cause of rampant unemployment and plummeting stock values: the Economy is pissed.

The citizens cower upon realizing the truth—the Economy is an angry and vengeful god. Because South Parkers have paid insufficient homage to it, the Economy visits ruination and recession upon them. A character lectures a crowd of rapt listeners, “There are those who will say the Economy has forsaken us. Nay! You have forsaken the Economy. And now you know the Economy’s wrath.”

The solution in South Park, as will be familiar to modern-day Greeks and low-income Americans, is sacrifice. The cartoon version of this goes full throttle: Bible-inspired acts of piety and prostration ensue. Citizens turn their sheets into togas and cease to buy or sell things altogether in an attempt to show deference before the Economy. Read more>>>

Watch South Park Video Season 13 - Episode 1303 - Margaritaville

Direct Democracy and the Barcelona Bus Workers Victory

This is about a successful struggle of bus drivers on Barcelona's transit system between the fall of 2007 and March of 2008. Unlike the transit workers in Madrid, who had two days off each week, bus drivers in Barcelona were forced to work a six-day week. To gain a victory in their fight for two consecutive "rest days", the workers organized regular worker assemblies independent of the union bureaucracy and elected their own rank-and-file committee to coordinate the struggle.

The struggle is also interesting in what it reveals about Spain's collective bargaining system. Under Spanish labor law since the late '70s, enterprises with more than 50 workers in a local area must allow workers to collectively bargain through a committee elected by the workers, the comite de empresa. I'll refer to these as "bargaining councils." Typically unions run slates of candidates and they elect a number of delegates in proportion to their vote. The bargaining councils are not required by law to adhere to a vote of workers in a contract ratification meeting. Although only 17 percent of Spain's workers belong to unions, unions collectively bargain for a vastly larger number of people through the bargaining council system.

People are entitled to 40 hours off with pay per month when elected to the bargaining comittee, and unions that can receive at least 10 percent of the vote throughout Spain receive additional perks. At present the only union federations that receive more than 10 percent of the vote throughout Spain are the General Union of Workers (UGT), a union aligned with the PSOE, Spain's governing social-democratic party, and the Workers Commissions, a union influenced by the Communist Party. Delegates and unions receive subsidies from employers and the government through this system. This makes them independent to some extent of workers supporting their work through union dues.

At the Barcelona TMB, there are separate bargaining councils for the 2,800 bus system workers and the 2,500 subway system workers. There are currently five unions on the bus system bargaining council. At the time of the December 2005 contract negotiation, there was a large meeting of drivers who voted NO on the proposed 3-year contract because it did not gaurantee two days off per week. However, three unions with a very narrow majority of the 27 delegates on the bargaining council voted to ratify the contract despite worker opposition. Those unions are the UGT, Workers Commissions, and Independent Workers Union (SIT). Thus the delegates of these three unions signed the contract behind the backs of the workers. The largest union of the bus drivers is the Transport and Communications Industrial Union of the General Confederation of Labor (CGT). Although the CGT voted "No" on the contract, it did not have an absolute majority of the delegates and was unable to block it. The fifth union on the bargaining council is an independent, the Association of Urban Transport Drivers of Barcelona (ACTUB). The CGT transport union is also the largest union of workers on the Barcelona subway system.

A similar problem of the bargaining council voting against workers' wishes happened in the contract struggle on the Barcelona subway system in 2003. In that case, TMB management had been demanding a concessionary contract. Like French transportation workers, the Barcelona subway workers were entitled to earlier retirement than other Spanish workers under their contract. Management wanted to lengthen required length of service to the average in Spain. As in the current bus system struggle, subway workers conducted a series of brief strikes. The CGT union on the subway collected signatures from 1,200 workers demanding an assembly to ratify any proposed contract. But the Workers Commissions held a poorly advertised meeting one night with only 60 people present. Since this meeting approved the contract, the Workers Commissions, UGT and two pro-company independent unions voted to approve the contract. Although the CGT are the largest union on the subway system, they are not an absolute majority on the bargaining council and could thus not block the concessionary contract.

The CGT describes itself as a "revolutionary, libertarian" union. The CGT advocates what would be called "social movement unionism" in the USA: ""The CGT is an anarcho-syndicalist organization... which acts in the working world. But not all the problems are just in this area, nor are workers unaware of this fact. Thus, unionists, anti-authoritarians, pacifists, immigrants, ecologists, movements against sexism and the Anti-Globalisation Movement are in the end one movement, one without `professional revolutionaries' in charge and with the consciousness that the transformation will involve all groups." The CGT in recent years has been receiving the votes of about a million workers — about 8 percent of the vote — in bargaining council elections in Spain. Thus the union is still too small to challenge the current dominance in Spain of the UGT and Workers Commissions, which receive around 70 percent of the votes.

The current struggle on the Barcelona bus system began November 2007 when the CGT and ACTUB developed an alliance and agreement on how to proceed. On November 21st, a general assembly of bus drivers was held at one of the bus garages. The bus system was shut down for five hours so that this meeting could take place. At that assembly workers voted to approve the demand for two days off with no cut in pay and elected a Rest Days Committee (comite de descansos) (http://comitedescansos.blogspot.com/) to conduct the struggle. The idea was for the workers to direct the struggle themselves through their general assembly, "independent of the trade unions." The UGT and Workers Commissions boycotted that meeting.

The first two strikes were conducted around Christmas time and in early January. At the time of the December strike, 54 buses driven by scabs were attacked and tires were punctured or rear-view mirrors were broken or windshields splashed with paint. Bus kiosks throughout the city were spraypainted with slogans supporting the bus strike. Meanwhile, the bus workers attempted to gain support from neighborhood groups throughout the city, and stated their support for a group of squatters living on property owned by the TMB.

During the January strike, a group of regional government police (Mossos d'escuadra) began shouting insults at a group of drivers doing peaceful informational picketing, calling them "whore's sons", "subnormals", "pieces of shit." A member of the CGT was assaulted by these cops and then arrested and charged with assaulting the officer. The workers' lawyer described the behavior of the police as "a return to the era of Francoism." In addition, the management of TMB gave suspensions to 25 workers. The longest suspension, six months, was given to Saturnino Mercader, the CGT president of the bargaining council. Again in February during a drivers' march, another member of the CGT was struck in the head by police. The drivers have now made an end to "police and labor repression" another demand of the strike. The participation of 1,800 drivers in a march and mass meeting at Placa Universitat, shows majority support for the strike among the drivers.

At a general assembly on Feb. 12th, about 60 members of the UGT and Workers Commissions attended, and the UGT and Workers Commissions pledged to respect the decision of the drivers. At that assembly the drivers voted to continue with another strike March 3 to March 6. Meanwhile, the SIT, which the CGT describes as a "corporatist" (pro-company) union, was the only union to agree to management's proposal to wait for the next contract negotiations.

The management response to this struggle waffled. At first they said the drivers were already getting two days off. Then they backtracked on that, admitting this was not the case. More recently the head manager of TMB said the workers average only 7 hours 4 minutes per day. But the workers say this is a "lie". They claim that the great majority of drivers work more than seven and a half hours per day.

In March 2008, the management of TMB and local politicians have stated that they could not grant two days off with no loss in pay without either cutting service or raising fares. In response, the drivers' spokespeople point out that workers on the Madrid bus system have two days off and the fare is lower than in Barcelona. The workers point to the large number of very highly paid people at the top at TMB, the hugely generous pensions that managers get, and the lavish public relations expenditures of TMB.

In an interview on Barcelona TV, Assumpta Escarp, presdident of the TMB, and a Barcelona city councilwoman, declared that she'd be happy to negotiate a change in the driver's work week, but that it had to go through the "framework of the contract." But that would put the issue back in control of the same bargaining council who signed a contract workers rejected last time. Meanwhile, the head of the Workers Commissions in Catalonia came out against the strike. According to Saturnino Mercader, the bargaining council president (a member of CGT), the UGT and Workers Commissions "now count for nothing" in this struggle. "The [drivers'] assembly has swept them aside."

On the Wednesday before the last day of the strike, the indendent assembly held a meeting, with about 800 workers present, at the headquarters of the CGT. They voted to continue to strike on Thursdays.

The next day the head bureaucrat of the UGT in Catalonia, Josep Maria Alvarez, and the head bureaucrat of the Workers Commissions in Catalonia, Joan Coscubiela, issued a joint statement of their intention to ask the TMB management to negotiate a solution to the struggle through the official bargaining council, "with or without the sttrikers." In other words, the heads of the UGT and Workers Commission were stating their intention to ignore and bypass the independent assembly and Rest Days Committee. The UGT thus went back on the pledge they made in February to respect the decision of the drivers' assembly.

Meanwhile, the bureaucrats of the TMB and city political leaders stated their unwillingness to negotiate with the independent assembly and Rest Days Committee, and their intent also to negotiate only through contract negotiations via the official bargaining council. It's clear why the UGT and Workers Commissions bureaucracy favored the official bargaining council. At that time, the UGT and Workers Commission control a narrow majority of 14 to 13 on the official bargaining council. This gives them the legal power to impose a solution without any ratification vote of the drivers' assembly. This path also clearly had the support of the Socialist Party political leaders who control the city government.

After their strike in March, the independent assembly of drivers voted to reject management's last proposal, criticized their "dictatorial style of negotiation" and decided on an indefinite strike of the bus system for April 15th. The Rest Days Committee posted on its blog a letter of support signed by a long list of members, local officials, shop committee members of the UGT and Workers Commissions. This put these signers at odds with the leadership of the UGT and Workers Commissions in Catalonia.

Facing national and regional elections and with growing popular sympathy for the drivers, the Socialist Party politicians finally capitulated. They agreed that the workers would receive the two consecutive days off but asked that its implementation be postponed to the new labor contract at the end of 2008. Thus all all the hard work of the CGT members and other bus workers has paid off. After the victory, the Rest Days Committee put on a cultural festival for the people of Barcelona to thank them for their support. Not too many weeks later, elections took place for the official bargaining council. In the new elecctions, the CGT/ACTUB allianced gained a narrow one-vote majority, due to the defection of some members of the independent SIT. (reposted from Libcom.org). go to link

Tom Wetzel's Uncanny Page

What a Little Direct Democracy Can Do

The Quebec Students' Movement (the Maple Spring) played a major part in the defeat of the Liberal government in Quebec by exposing the lack of legitimacy of governing elites. The carnival atmosphere and relentless spirit of the pot banging street protests which developed into the casseroles movement are an inspiration to activists everywhere. The students initiated and sustained over this past summer essentially an unlimited general strike opposing the Liberal Government's attempt to raise tuition fees in the province by 82%. Confronted with severe police repression and the passing of draconian legislation by the provincial government restricting the right of freedom of assembly, the movement succeeded in bringing about the resignation of the Minister of Education, the defeat of the Liberal Government, the repeal of the legislation restricting the right of freedom of assembly together with the tuition hike.

According to a spokesperson for CLASSE, the organizational arm of the student protest movement, what made this possible was years of mobilization around the critique of "austerity measures, and a broken system that places the interests of the rich ahead of those of the majority of the population." But what was different about CLASSE and the student movement in Quebec and a key factor in their success was the reliance on principles of direct democracy as the basis for decision making in their organization. The message that Gabriel Nadeau-Dubois is trying to bring to the broader fight against austerity is that "that the success of Quebec’s student movement is largely attributable to its democratic character..." and that "If students across the country insist on holding real general assemblies, where they are empowered to collectively make decisions on issues that affect their lives, they can build their own movements, which fight for their own priorities."

But Nadeau-Dubois is also insistent that this should not be limited to the student movement, but should also be extended to include all areas of social action - our unions, our workplaces, our communities and neighborhoods. Democracy has to mean a lot more than just marking an X on a ballot once every four years. It means using the principles of direct democracy to build a common front of social movements to block austerity. Read More>>>

United Front Against Austerity

No matter whether Obama or Romney wins the coming presidential election, American working people will face a savage assault on their economic rights starting after the vote. In reality, any demand for more austerity, sacrifice, or cuts in social services on the part of the American people amounts to a demand for genocide. Over 50 million people are in the most extreme poverty, with no job, no unemployment benefits, no welfare system, no health care, and only a meager allotment of food stamps to stay alive. The American middle class is crushed under $1 trillion of student loan debt and $1 trillion of high interest credit card debt. All of this follows a secular decline of almost two thirds in the American standard of living over the last four decades. The urgent need is therefore to establish the principle of class defense against the financiers and their retainers both left and right. But how? The only method that can fill the resulting void is a united front of existing organizations and individuals coming together to cooperate in the fight for an emergency platform of class-based demands. This process must begin in New York City on October 27.Emergency Call

The UFAA assembly is being held in New York City on October 27 from noon to 6 p.m. at 56 Walker Street. The UFAA intends to build on Wisconsin and Occupy – with decisions, demands and action. UFAA Home Page

Lessons from the Chicago Teachers Strike

Here is a sobering analysis of the Chicago Teachers Strike that raises some very good questions. It seems that all sides are claiming a victory here, but from the point of view of the trade union movement what was really achieved? It is critical to keep in mind the crucial background in which the strike took place are the efforts of Mayor Rahm Emanuel and others like him to push the key austerity agenda of the privatization of public services like education and schools (and other public services like transportation via the mechanism of Infrastructure Trusts). Like most things that pass for social policy considerations these days, the purpose of shutting down schools and so-called education reform is not the improvement of education so much as it is an effort to convert public schools into private, charter schools.

The ongoing attack on labor and public sector employees and unions is at its root just this effort to transform public services like education into a center for private investment and profit such as that offered by Charter schools. Just as the privatization of public utilities created and continues to create new markets – creating new sources of profits for businesses and opportunities for the private accumulation of wealth – the privatization of public schools is a bonanza for businesses, while its benefit to most people is questionable at best. In this context the Chicago teachers’ strike must not be seen as an offensive strike. Rather than striking to secure better working conditions and better pay, per se, the Chicago teachers’ strike is a defensive, conservative strike, one in which labor is merely attempting to hold onto not only the wages and benefits that were gained through decades of struggle and which are now under threat, but to their jobs themselves.

Even a cursory look at the contract concessions must yield the conclusion that rather than achieving a victory, or even a stalemate, the contract under consideration represents a loss for labor in the ongoing class war of attrition. And though teachers may be announcing that they’re happy to be returning to work, and Emanuel appears to have won this battle, given the state of the economy and the environment, it may very well be that the next strike won’t be a conservative one like this. Rather, it may be a total, permanent strike. Read More>>>

Occupy your union bureaucracy: An insider's call

Among vast portions of the labour aristocracy, solidarity is replaced with a stasi-like defence of the status quo; loyalty is redefined to mean blind allegiance to the governing officialdom, rather than to the dues paying membership and their constitution; and workplace and union democracy is no longer a goal, but a potentially treasonous nuisance. To enforce these redefined “values” the bureaucracy purges non-conforming ideas and individuals in a swift, coordinated and merciless way. Not the kind of modus operandi folks like me signed up for. Definitely not the kind that is capable, in its current state, of building a better world.

These are just the internal symptoms or mechanisms, if you will, by which the workers' army finds itself today, for the most part, in utter denial of the severity and urgency of the threat to working people, our democracy, and our world. This is how they manage to remain virtually silent against the ever- encroaching corporatist police-state, bankster control of our economies, the violations of our civil liberties, and the intensifying wars of aggression, while desperately clinging to electoral parties that will do little more than further enforce the status quo, hopefully sparing some space or security for the labour bureaucracy that supports the party most.

Sadly, this is not the story of just one union. Over the past 20 years I have been a member, activist, leader, national and international union representative in six private and public sector trade unions and I can solidly say that the sun is about to set on the labour movement unless the people take back their unions, specifically their centralized labour bureaucracies. Occupy them.

Everybody knows that union density and power has been on a steady decline for the past 30 years. Like a fighter past his prime, we spend alot of time remembering and reminding others our past battles and achievements – the eight hour work day, employment insurance, and social security to name a few.

Trade union policy papers endlessly blame this decline on the severity of the neo-liberal attack on the social welfare state, unions and workers' rights and encourage ways to address this by supporting progressive politicians, organizing the unorganized and encouraging young workers to “get involved”.

While these external forces are formidable, they do not answer the question of what role the union bureaucracy or officialdom itself plays in facilitating this orderly march backwards of the very people they are charged with the responsibility to represent and whose interests they are compelled to advance. Wasn’t it Canadian Labour Congress President Bob White who said: “You don’t need a union to help you march backwards”?

The alternative is to Occupy our labour bureaucracies. There are many good leaders and fighters besieged within its web, as well as battalions of researchers and lawyers who for too long have had their work substituted for real struggle. Resurrect this standing army of the working-class by holding its leaders accountable. The good ones will applaud and welcome you. The ones that have got to go will organize against you. Steer the troops away from its tragic path towards a future independent of the agenda of the elites, of their electoral parties, open to all types of ideas of alternative economies and sustainable ways of living, committed to direct democracy and the working class values of community, mutual support and protection.

There is no need to organize a formal opposition. Just speak the truth, do right by your principles, represent your membership with all you've got, and you will find yourself surrounded, as though by magic, with many powerful opponents inside and outside the union. It is in this way that you will discover your allies, as well.

Wherever possible, unleash the power and creativity of the membership and reach out to the public with the basic assumption that everyone is a potential ally. We are, after all, the 99%. Solidarity is a living thing. If you don't occupy it, it dies and so will our hope for a better world. Read More>>>

Motor Coach laying off 190 from Winnipeg plant

Bus manufacturer Motor Coach Industries is laying off 190 employees from its Winnipeg plant. A Motor Coach spokesperson confirmed the layoffs to CBC News late Thursday, citing decreasing customer demand. Glenn Tomchak, the local president with the International Association of Machinists and Aerospace Workers, said the company notified workers of the layoffs on Thursday afternoon. "We were called into a meeting at 1:30 today and informed that there's going to be some layoffs … right after Christmas," Tomchak said. Many of the laid-off workers had recently been hired just months ago, as Motor Coach ramped up production during the summer. Motor Coach Industries, based in Illinois, is considered to be the largest intercity coach-maker in North America, with plants in Winnipeg and Pembina, North Dakota. go to link>>>

ATU 57th International Convention

Amalgamated Transit Union Convention Delegates & Guests:

The 57th International Convention will be held at Hilton San Diego Bay front San Diego, CA August 25-30, 2013 More information will be available soon on www.atu.org.

From the July/August 2012 issue of InTransit p. 31 go to link.

Contract Talks Continue For ATU Local 1700

Wed, 09/26/2012 - 7:34am

A new bargaining session is underway as the Union pushes its Fairness on the Job Agenda. The Union’s Executive Board sits down with the Company again today, Wednesday, September 26, 2012, in contract talks. The Board met Tuesday to give further consideration to the many ideas and suggestions members have put forward and to plan for this bargaining session. Then we met briefly with the Company after they arrived late Tuesday afternoon.

Not surprisingly, the Company complained that the Union is demanding too much. Local 1700 officers are confident that all Local 1700 members are ready to back us up in showing the company that is not the case. We have a long way to go to achieve the respect and the fairness on the job that Greyhound employees deserve.

Greyhound drivers are part of a very small minority of workers in the United States that are not guaranteed fairness on the job under federal law. The exemption of over-the-road drivers from provisions of the Fair Labor Standards Act allows Greyhound to get away with what is legally prohibited for most other employers: avoiding paying overtime after 40 hours and avoiding paying workers for all time spent on the job. This astonishingly unfair practice needs to be corrected now. Local 1700 members are on the front line of battle in this extremely important fight for basic fairness.

Watch for further updates as negotiations progress. go to Local 1700 Web Site>>>

West Coast Saga Splits FirstGroup Investors

FirstGroup’s biggest investors are split over how the debt-laden transport company should move forward after the collapse of its winning bid to run the West Coast main line. The company’s victory in August had alleviated concerns over FirstGroup’s stressed balance sheet and flat-to-falling cash flows this year. But the government’s decision to cancel the award has put the group under renewed pressure. Analysts put the company’s 2013 net debt at three times earnings – below the level at which it would breach banking covenants but above a targeted multiple of 2.5. Brewin Dolphin’s preferred solution is a dividend cut rather than a rights issue – which it believes would need to be done at a fairly significant discount – or a disposal of one of FirstGroup’s bus divisions. FirstGroup’s board has promised a dividend this year that is 7 per cent higher than last year’s payout. After falling profitability at its US school bus and UK bus divisions, however, and the West Coast cancellation, the company might have to pay that with debt. Barclays analysts on Monday estimated that shares in FirstGroup were already factoring in a £500m rights issue. They added: “Additional earnings weakness through the year would push management to more aggressively de-lever, in our view: by lowering its dividend (which we now assume) and/or raising equity.” go to link>>>

Award of West Coast Rail to FirstGroup Cancelled

The government’s rail franchising policy has been thrown into disarray after the award of a new contract to run the West Coast mainline rail franchise was cancelled because of “technical flaws” in the bidding process. This is a partial victory for incumbent Virgin Trains, which had mounted a legal challenge to the decision to award the contract to rival FirstGroup and will also come as a blow to FirstGroup where investors had welcomed the new franchise as a strong revenue generator. Shares in the company fell by as much as 20 per cent in early trading. Patrick McLoughlin, the recently appointed transport secretary, said he was talking to Virgin Rail about the possibility of continuing to run the line after December 9 having previously indicated it would nationalise the line. The only certainty, the DfT said, was that “it won’t be FirstGroup”. go to link>>>

FirstGroup Finances in a Pickle

For Tim O’Toole, chief executive of FirstGroup, two of the three defining episodes of his two-year tenure have seen this committed rail man struggling with problems in the bus business. In March last year, Mr O’Toole sent FirstGroup’s shares tumbling when he warned that falling margins in the US school bus division would dent group profits. A year later, he did it again, this time citing the UK bus arm: passengers had retreated in the face of price rises and route cuts, he said; the resulting fall in profitability is expected to wipe 14 per cent off 2013 earnings. He sought to reassure investors that the company was dealing with the problems, despite the recession making it harder to find buyers for the bus operations it has identified as non-performing. Investors will be keen to hear this week how the sell-off is going. The company is aiming to raise £100m by disposing of businesses that produce £130m in revenues annually – a challenging feat in the current environment, argue analysts.

When the company in August was selected as preferred bidder to run the West Coast main line over the next 15 years, it promised to add at least an extra £800m in annual revenues – a steady stream of cash that should help the board stick to its promise of paying big dividend this year in spite of the problems in the bus business. But the controversy surrounding the West Coast franchise– with runner-up Virgin Rail challenging it in court – is not the only reason the win has failed to calm nerves entirely. “The continuing dividend paying policy looks a bit odd,” says Peter Hyde, an analyst at Liberum Capital. Another City analyst, who asked not to be named, agreed: “Paying a dividend by selling off assets on the cheap is a bad idea in my book.” go to link>>>

Passengers Have to Sit on Floor

A Greyhound spokeswoman said it’s against company policy to overcrowd buses and that asking passengers to sit in aisles “would be unheard of” for the bus line. According to the Federal Motor Carrier Safety Administration, every passenger on a bus must have unobstructed access to exits. The company’s website says seating on Greyhound is “first-come, first-served” and that buying a ticket in advance doesn't guarantee a seat. The website says Greyhound sometimes adds extra buses to routes during peak travel times. “That’s something we would never allow,” the spokeswoman said about passengers’ sitting on aisle floors. go to link>>>

More On Former ATU Int. Pres. Heintzman

Ron Heintzman should be a familiar name if you have been following what has been going on at the ATU international since the last Convention. You will recall that was the election that saw current international president Larry Hanley defeat Heintzman who had served as international president following the resignation of former president Warren George, and was backed by George as a successor. In that election Hanley pledged to focus ATU’s attention on organizing and political activism. Heintzman ran as part of a three-person slate that included Oscar Owens. Owens won re-election as international secretary-treasurer. Heintzman was president of ATU Local 757 from 1988 until 2002, when he was appointed international vice president and relocated to Washington, D.C. Following his defeat he returned to his Oregon local (go to link). In a recent election for president of ATU Local 757 four months ago Heintzman emerged as the runner up to ATU Local 757 President Bruce Hansen. Heintzman has initiated an election challenge and a series of live votes taking place this week across Oregon and Washington will determine whether his recent vote-by-mail election loss will be overturned and trigger a rematch. go to link

Ron Hientzman Former ATU Int. Pres. in the News

What is going on in ATU Local 757, former ATU International President Ron Hientzman's old Local? You will recall that Hientzman served as president of the local from 1988 to 2002 when he was appointed international vice president and relocated to Washington. In the September 2010 International Convention in Orlando, Larry Hanely was elected over Hientzman to the position of international president of the Amalgamated Transit Union (ATU). Since then Hientzman has returned to his Oregon Local and ran for president of Local 757 in an election held four months ago. In that election Hientzman lost to Bruce Hansen, a longtime TriMet bus driver and past union officer. Heintzman is an ally of outgoing two-term president Jon Hunt, so Hansen’s victory puts a new, largely untested face at the front of the union as it heads into an escalating battle with TriMet management over retiree benefits. Heintzman, who as recently as 2010 served as president of ATU’s international union, had been endorsed by much of the union’s establishment: its retiree chapter, most TriMet executive board members and by the executive boards of the union’s units with Lane Transit, CHERRIOTS and C-Tran. Portland Afoot interviewed Hansen about his candidacy last month. He called for the end of what he called “a dictatorship” within the union by the Hunt-Heintzman faction. Asked what else he would change in the union, Hansen said: “Understanding the membership’s needs by regular property visits, getting out there, understanding what they’re going through, why our buses are dirty, why we don’t have enough buses in service.” Hansen also promised that his presidency would take a $20,000 pay cut, a significant sum for a union that burned through several hundred thousands of dollars from its cash reserves last year. In 2011, federal records show, Hunt took home $108,434 in salary and another $22,105 in disbursements for official business. Al Margulies, a retired operator who supported Hansen and blogs about union issues, said Hansen was “part of the network,” but expected him to use power differently than Hunt or Heintzman had. “This control has been in the hands of these people for quite a long time,” Margulies said. “I hope he’s going to open up things and stop keeping everything so secret. They operate like TriMet, really.” go to link>>>

Bus Driver Acts in Self-Defense is Suspended

Veteran driver, Artis Hughes, has a great reputation in the 22-years he’s been on the job and is a family man that loves to come to work. He was suspended after punching an unruly passenger in a viral video seen worldwide. Amalgamated Transit Union president of Local 2689 William Nix, Sr. says Hughes, 59, acted “human” in defending himself, adding, ” We’re not gonna say the driver is just supposed to go and attack someone. If someone is violating their space and attacking them, what do you want them to do.” On September 18th passenger, Shidea Lane, 25, refused to pay the fare at a stop in Beachwood. Nix says Lane got physical when Hughes threatened to put her off his bus. The transit union president is now calling on the RTA, Cleveland council members and state leaders to draft legislation that would ultimately protect bus and rapid drivers against unruly passengers. “They gotta go home safe and whole, like they came to work,” Nix says, “They shouldn’t have to come losing an eyelid, eye or limb or die because they’re trying to do their job.” go to link>>>

Bus Drivers Pickett Dallas Bus Station

Greyhound bus drivers picketed Dallas’ downtown bus station this morning, protesting the company’s use of replacement drivers. “Greyhound drivers with decades of seniority have lost their runs,” according to a release from the Local 1700 Amalgamated Transit Union. “The company has left us no choice but to escalate our fight back.” Read More>>>.

What Happened to Greyhound US Drivers' Pension Plan

One business that is having trouble funding its pensions is Greyhound Lines, the bus company, which has gone through years of labor strife and bankruptcy. Several years ago, it quietly managed to get permission from Congress to stop putting more money into its drivers' pension fund. In essence, the Greyhound provision lets the company act as if its pension plan is fully funded, when in fact it is not. Greyhound, meanwhile, is seeking to expand its own break and to make it permanent, because the original exemption is set to expire in 2010. Now, as in 1997, Greyhound says special treatment is necessary because its plan covers an unusually old group of workers, whose life expectancies are shorter than national norms for all pension participants. Workers who won't live long enough to cash many pension checks don't require very big pension contributions. Read More>>>

U.S. market a bright spot for UK transport operators

UK's bus industry has come under pressure as austerity measures have forced the government and local councils to reduce subsidies to bus operators. FirstGroup issued a profit warning at the end of March that triggered a spate of broker downgrades and wiped a third off FirstGroup's shares. The U.S. market has been a bright spot for UK transport operators. National Express reported a 5 percent increase in North America revenue last month while FirstGroup said its U.S. school bus and Greyhound operations continued to perform well. Read More>>>

First Group in Trouble - Weak Balance Sheet Unsustainable Dividend,

A profit warning at the end of last month has shattered the confidence of many investors. With lots of debt, a weak UK bus division and the prospect of losing some or all of its rail franchises, the market seems to have made its mind up: FirstGroup’s juicy dividend is not sustainable. FirstGroup’s main problem can be summed up in one word: debt. After taking on loads of debt by buying those American bus companies during 2007 and 2008, the company was left with a weak balance sheet. Things have not improved since. The company has not generated enough surplus cash flow to pay down debt to sensible levels. Unless FirstGroup can retain a large chunk of its current rail profits, a big dividend cut is probably on the cards. And this might be very hard to achieve. Two of its rail franchises – First Great Western and First Capital Connect – expire in 2013. Competition for these franchises is tough, with lots of foreign interest. It is unlikely that current profit levels can be maintained even if its franchises are retained. Given that a lot of FirstGroup’s problems seem to be self-inflicted, it raises the question whether another management team could do a better job. The company has some good assets that could see the company broken up and sold off. Read More>>>