Sara Lee turning off ovens in Iowa town

Baker follows through on its threat to unions after much-resented silence

The heartland

July 09, 1999|By KNIGHT RIDDER/TRIBUNE

More than two months ago, Sara Lee Corp. called in the unions at its bakery in the northeast Iowa town of New Hampton and told them it would close the plant unless the unions came up with "something" to make it change its mind.

The threat drew nationwide attention, mostly for the way Sara Lee handled it.

New Hampton had raised the money to lure Sara Lee to town in 1971. Two years ago, the town and the state government came up with another $1 million package to persuade Sara Lee to stay. At the time, the company indicated that it would be around for at least five more years.

The town felt abused, especially because no Sara Lee executive bothered to call community leaders to tell them what was going on. Kept in the dark, New Hampton could only hope for a reprieve.

But yesterday, Sara Lee lowered the boom. At a 6 a.m. meeting with the union leaders, company executives said the bakery, New Hampton's biggest employer, will close Dec. 31 and its 625 employees will be without jobs.

The unions, which have been working with a Chicago consultant to find a buyer for the bakery, said they still hope another company will take over the plant and preserve at least some of the jobs.

"I think we're going to be successful," said Mary Rosonke, business manager for the New Hampton local of the Bakery, Confectionery and Tobacco Workers union. "We've got two good prospects."

"We'd consider any viable offer," said Sara Lee spokeswoman Janice Hayes Kyser.

David Pfleger, the Chicago consultant, said the announcement "didn't change very much. I talked Tuesday with Jack Shewmaker [the Sara Lee Bakery senior vice president overseeing the shutdown], and he said the announcement was coming, but they'd still consider any offers that other parties might make."

"At this point, we don't have anybody saying that they'll put cash on the table," Pfleger said. "There comes a point where it's no longer practical [to keep seeking a buyer], but this week isn't it."

Sara Lee, which has been cutting back manufacturing operations to focus on marketing, said it plans to move most of its New Hampton operations to its nonunion bakery in Tarboro, N.C., with some production also going to Traverse City, Mich.

"We explored several alternatives to the closure of the facility, and extended our deadline to consider still others," Shewmaker's announcement said, "but none could match the financial and strategic advantages of consolidating our operation in other existing Sara Lee plants."

Shewmaker repeated publicly what he had told the unions privately, that "the bakery industry is a mature business in a very competitive marketplace."

Union officials say that is a code phrase for Sara Lee's failure to sell the croissants, Bavarian pastries and cheesecakes that they make.

At the first meeting with the unions on April 29, Sara Lee said it would announce the closing within 30 days unless the unions found something that could keep it open, Rosonke said.

That deadline was extended, first for a week, then for another month, under political pressure, including an approach from Sen. Charles E. Grassley, an Iowa Republican, to Sara Lee Chairman John H. Bryan.

For the two months after the threat to close the plant, Sara Lee executives never called or wrote to New Hampton officials, a slight that the town resented. Herman Meyer, the town's economic development director, said he received a call "from corporate" within two hours after yesterday's announcement, and he and other community leaders are meeting with Sara Lee executives.

"We have a right to that," Meyer said. "We want to sell that building."

Sara Lee and the unions have negotiated a severance package, but Rosonke said "it's more of a stay pay than a severance pay."

She explained that employees will be paid the equivalent of up to 1,000 hours of work, but only if they stay until Dec. 31, which hampers their ability to take any new jobs that may open up.

"Sara Lee is hoping to keep the people until the end," Rosonke said. "Is this good for people? No."

The $1 million package that New Hampton and the state gave Sara Lee two years ago included $800,000 in forgivable loans.

Kyser, the spokeswoman, said Sara Lee knows these loans now must be paid back, with 6 percent interest.

"We have every intention of fulfilling our obligations," she said.

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