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Indiana Limestone bankruptcy leaves labor an open question

By Rick Seltzer, Herald-Times, Bloomington, Ind.
McClatchy-Tribune Information Services

March 09--One question looms large in the wake of Indiana Limestone Co.'s February bankruptcy filing and subsequently announced hopes to reopen under a new corporate structure.

What's going to happen with its union workers?

Unfortunately, there's not much of an answer available right now. Both company leaders and labor leaders said it's not clear how union employees will be affected.

"I have no idea," said Indiana Limestone Co. President Duffe Elkins. "There's going to be an auction, so there's no guarantee. It's not up to the company. It's up to the new company."

Bobby Minton, the secretary-treasurer and business manager of Local 741 of the Laborers International Union of North America, said much the same thing when asked about organized labor's future with Indiana Limestone Co.

"That's the $100,000 question," he said. "It's up in the air."

The Laborers International Union is one of four unions representing employees at Indiana Limestone Co. The others are the International Brotherhood of Carpenters and Joiners of America, the International Association of Machinists and Aerospace Workers and the Journeymen Stonecutters Association of Indiana. Together, they represent 78 employees. That's a little less than half of Indiana Limestone Co.'s 166 workers.

The company filed federally required mass-layoff notices for employees at its Oolitic and Bloomington locations in February, stating it will close its operations, go through bankruptcy and possibly sell its assets. Company leaders blamed the moves on a heavy debt load totaling well over $50 million.

They also said a new buyer is prepared to scoop up the firm's assets and start a new corporation. A company called Indiana Commercial Finance, which owns Indiana Limestone Co.'s debt, is prepared to make the first bid in an anticipated auction.

That raises the question of whether the new buyer will use the sale as a chance to shed union contracts. Such a move isn't unheard of, according to Joseph Varga, an assistant professor of labor studies at Indiana University.

"It's more common to use the threat of bankruptcy as a way of getting concessions," he said. "But it has been done where you make the company more attractive by trying to get rid of the unions through bankruptcy."

Varga has some history with Indiana Limestone Co. -- he advocated for the union side in a two-month strike in late 2011 and early 2012. About 50 millworkers objected to Indiana Limestone Co. proposing contract changes that would have affected seniority rights, sick days, time off, tardy rules and pension liabilities, leading to a strike that eventually went to mediation.

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This week, though, Varga made it clear he doesn't have any inside information on the situation between Indiana Limestone Co. and its unions. He spoke generally about companies up for sale.

"Reducing labor costs is one way of making the company more attractive," he said. "I'm not saying that's what they're doing here."

Weekly pay for union employees amounted to slightly more than a third of the wages Indiana Limestone Co. said it owed when it filed for Chapter 11 bankruptcy protection. The company needed to pay 73 hourly union employees $37,668.74 and one salaried union employee $1,576.92, according to court documents. It needed to pay 39 hourly nonunion employees $34,392.97 and 24 salaried nonunion employees $36,604.40.

A cost comparison between union and nonunion labor isn't that simple, however. Hours worked could be swaying average weekly wages. Wages also don't reflect other benefits such as vacation time, personal time, health insurance and retirement plans.

Costs are only one part of the equation when it comes to labor. There's also skill and training, which Varga argued are particularly important in hazardous lines of work.

"People who work on railroads, they're highly unionized because it's very dangerous work," he said. "I know from talking to guys in the quarries, if you're working with someone who's not trained, you're endangering yourself."

How exactly this all works out could depend on what happens in the bankruptcy and sale processes. If the reorganization is done through an asset sale, a buyer would not have to assume collective bargaining agreements, according to Kenneth Dau-Schmidt, professor of labor and employment law at Indiana University.

Things will be different if the new owner keeps the company as a "going concern" with the same workforce, he said.

"Then they are obligated to deal with the same union," he said. "Under bankruptcy, they have the option to negotiate changes to the collective bargaining agreement."

___

(c)2014 the Herald-Times (Bloomington, Ind.)

Visit the Herald-Times (Bloomington, Ind.) at www.heraldtimesonline.com

Distributed by MCT Information Services

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