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Adam Baxter Company/Local 190 Debrief and Endnotes

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Harvard Business School 9-396-326 Rev. February 18, 1998 Adam Baxter Company/Local 190 Debrief and Endnotes These negotiation exercises are based on management-labor relations at Hormel Foods Corporation’s main plant in Austin, Minnesota. The local union was Local P-9 of the United Food and Commercial Workers (UFCW) Union. The simulations are intended to portray events that occurred at Hormel, rather than to reflect precise details in Hormel’s history. The company and union were intentionally disguised, with the aim of preventing possible bias in role-playing the exercises. The 1978 negotiation role-play presents a fairly accurate portrayal of management/labor relations at Hormel in 1978. The building of the new plant and the …show more content…

The harmonious relationship between management and the workers at Hormel was exemplified in the “Working Agreement,” an ongoing contract securing jobs, profit sharing, wage increases, and worker autonomy. The company was nationally reputed to be a great place to work. The only previous strike had ended peacefully in 1933. Changes at Hormel In the 1970s, inflation skyrocketed and wage increases became harder to justify. To keep up with the competition from non-labor meatpackers, Hormel had decided to build a new facility and was considering building outside of Austin. As a concession for building the new plant in Austin, after the 1978 negotiations labor allowed the plant to operate at higher levels of production and allowed management to determine work methods. Then, in 1979, Local P-9 and other AFL/CIO member unions were engulfed by the UFCW Union of more than a million members. Thus, Local P-9 and its 1,700 members lost voice and influence in their parent union. By 1984, Hormel’s competitors had cut base rate wages to close to $8.00/hour, while Hormel continued paying base rate wages of $10.69/hour. Management argued that the “escalator clause,” which had been implemented in the 1978 contract to keep Hormel’s wages in line with inflation, meant that wages also could be lowered. They asserted that the “escalator” clause allowed Hormel to set these

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