Photo: Bloomberg Photo by Mike Mergen
BETHLEHEM, Pa. – On April 1, hundreds of millions of marshmallow chicks and bunny peeps from Easter baskets will be proclaiming to American children.
They are a pastel symbol of Easter joy, but behind the waxy sweets is a company that is at war with its union employees about rising pension costs – an escalating lawsuit that could soon turn the 10 million Americans' pension plans on its head.
The fight has featured a strike, a bankruptcy associated with twinkies, irreparably broken friendships, obscene t-shirts and a caged peep-mobile. Now all sides are waiting for a decision of the Federal Appeals Tribunal.
The 95-year-old company that makes Peeps, Just Born Quality Confections, wants to discourage new employees from subscribing to the multiple employer pensions they have offered to workers for decades. The retirement plan finances it along with about 200 others companies.
While many other companies that have similar pressures have abandoned pensions in recent years, Just Born wants to block new employees from the plan without paying a $ 60 million fee, which is required by federal law, saying you must do so to stay competitive.
The fee is designed to ensure future pension benefits are covered, and if Just Born escapes, union representatives fear the unprecedented decision would cause thousands of other companies to do the same. This chain reaction could divert workers and money at a time when new employees are seen as crucial to securing sufficient funding for the wave of retired baby boomers – disbursements for millions of vulnerable retirees.
It's a fight that has divided this city coring company making a 28-calorie yellow spongy baby chicken against the union workers it deals with. It has shattered the workforce of mechanics and confectionery makers making 2 billion peeps each year.
The company has suggested that if these changes are not made, its future in Bethlehem could be called into question.
"To stay sustainable We need to further reduce or reduce our costs to invest in our infrastructure, our employees and our brands," said Matt Pye, vice president of Just Born. "Our goal is to produce iconic confectionery brands for generations to come."
For many of the workers making peeps, members of the bakery, patisserie, tobacco workers and grain traders union, this is a line that can not be crossed
"There comes a time when one gets a position "said Alex Fattore, 55, who has worked for Just Born for 37 years and went out during the stunning strike of 2016 that escalated the feud. "You have to take a stand."
The stand came on September 7, 2016. It should be peak peep time as the company accelerates production to prepare for Easter bingeing, which accounts for nearly half of the company's annual revenue ,
Five days earlier, in a union building in nearby Allentown, 272 employees of Just Born met and voted against the company's latest contract proposal. This offer would have directed all new employees into a 401 (k) savings plan that does not provide benefits after retirement and blocks their participation in the pension.
The workers unanimously voted in favor of the strike.
The following Wednesday, Fattore and more than 100 others went out of the sprawling candy factory that also produces the sweets Mike & Ike and Hot Tamales.
They marched up and down the sidewalk shouting "No Justice! No Peeps!" again and again. The strike went around the clock.
Belt One, the marshmallow-moving sidewalk on the first floor, which produces most of the 5.5 million peeps per day, stood still.
Striking workers noticed the Peepmobil, a yellow VW Beetle adorned It had disappeared from the front of the factory with a huge, identical chick's head, to be locked up later in a cage where it could not be damaged.
Many in and around Bethlehem were stunned. Just Born and the union had co-existed since the 1970s without a strike. The company's revenue grew reportedly. In one area where steel work had largely disappeared, the sweets jobs had continued.
Peeps are an iconic brand for Bethlehem and central to their identity. On New Year's Eve they will not drop a crystal ball. They drop a huge yellow peep. The volunteers of the trade unions work together in soup kitchens and local churches.
"It's not exactly like we're against them," said Thomas Hyclak, an economics professor at nearby Lehigh University. "It's not that management is trying to take jobs and move to South Carolina, it's a good society, but the workers are also our friends and neighbors, it's hard for people to take sides."
The strike continued for several weeks. Candy production crashed, workers said, but the company refused to budge. The same family has heard Just Born for three generations, and they complained that staff costs were rising too fast. They had to curb these costs in order to keep the company competitive with others who had moved abroad.
"Many companies are relocating part or all of their operations outside the US to benefit from lower sugar prices outside the US and lower labor costs," Pye said in a statement to the Washington Post. "Just Born has been able to retain all of its manufacturing in the US so far, giving us a competitive disadvantage."
Union members were skeptical. The Candy Industry magazine predicted that Just Born's net sales in 2016 will rise to $ 231 million, compared to $ 222 million in 2014. (19659032) The union tried to keep its ranks, but people started to slip away. Twenty workers crossed the pickets and went back to work. They warned striking friends they would lose their jobs if they did not return immediately. The company even had a job fair, and more than 150 people showed up, attracted by the attractive pay that people without a college could earn.
People panicked. Union officials said Just Born hired 100 new workers, while stricter workers climbed back to their old jobs for fear of losing their careers. Long-time friends threw verbal, vulgar threats as they moved away.
The union's worst nightmare came true – its members were shattering.
"If they break the union, do these people realize that they could lose everything?" said Gordon Grow, a mechanic who spent 41 years with Just Born, but retired after the strike for refusing to work with people he said were crossing the pickets.
Striking workers over 50 years old lost money and knew their health benefits would run out in October. The strike had begun with unity, but now they wondered about the final. Jobs in Lehigh Valley that pay between $ 15 and $ 25 an hour for people without university degrees are hard to find.
So the union agreed to end the strike after four weeks. The damage between the company and its workforce has been resolved. Many people who dealt with Band One would not look each other in the eye.
It only got worse.
Union officials drew up a list of all those who crossed the picket line with the word "scab" on their whiteboard. a working epithet for someone who breaks solidarity – written about it. It was demolished less than two hours later.
Fattore wore a Calvin T-shirt, a comic character urinating on the word "scab." He was reprimanded by management
The image of Calvin is still standing on the window of a union member's truck, a daily reminder that the enemy of the strike is still hovering – and that the problems affecting him Initially driven to remain unresolved
The pension, which is administered by a group of labor officials and executives from the 200 participating companies, has sued the company, claiming that it has improperly attempted to hire new employees to retire without the To pay the withdrawal fee. The company has sued the union demanding "monetary damages," claiming that the strike is illegal.
Companies, union leaders and retirees are watching closely, as the employer's pension, which is dependent on several Peeps employees, is just under 1,300.
In total, 10 million active and retired workers participate in pension payments to several employers, such as the Pension Benefit Guaranty Corporation , These pensions allow workers to move from one job to another within the same pension and to take their old-age pension with them.
Many of these pensions for multiple employers are on their way to running out of money. If the pension is out of money, retirees may get only a small percentage of the money they've earned in decades of work.
To make matters worse, when one of the companies that contribute to the multi-employer plan shakes, the other companies are on the hook to pay even more to stabilize the fund.
Just Born's union employees participate in the Bakery and Confectionery Union and the Industrial International Pension Fund, which were filled with cash several years ago even after the cash cash payment crisis. At one point, it had so much money that it paid its retirees 13 monthly checks every year.
The company and the boarding house seemed healthy, but when the catastrophe came, it seemed far beyond their control.
Hostess Brands, manufacturer of Twinkies and Ding Dongs accounted for 24 percent of all contributions to the multi-employer pension. In 2011, the company stopped providing contributions and in 2012 began bankruptcy, which was impacted by weaker demand, fiercer competition and high levels of debt. Federal courts allowed escaping without paying $ 1 billion in obligations to the pension fund.
The Pension Fund immediately became one of the healthiest in the country and one of the most vulnerable.
The boarding house was now in a category known as the "red zone", which means that if changes are not made, it will likely become insolvent and beneficiaries could only get pennies on the dollar when they move into Retire. Some other pensions are even in worse shape.
"The crisis is looming," said Kenneth Feinberg, who worked in the Ministry of Finance until last year and was tasked with reviewing rescue proposals from plans by several employers.  In February, as part of a new budget law, Congress created a commission to try to stabilize the pension funds. In the meantime, many existing companies like Just Born are on the hook to pay higher premiums. The peeps-making company says, without hard numbers, that it pays 39 percent more in pension contributions than what it negotiated under its recent union contract.
These are the posts that tried to back down when it tried to change sides to redirect new employees into a 401 (k) plan. A federal judge said last year that the company could not do this, but it appealed to that decision. The company and its union, like many other companies, await the decision of the Appeals Tribunal.
"We like to say Just Born is the cutest place in our community," said Ross Born, co-chief executive of the company and a grandson of its founder, in a 2016 "review year " Video. "We use more sweeteners than anywhere else and we have the cutest people who really care about our cult brands."
The sugar-sweet praise concealed how tense relationships had developed with Just Born's union staff. The board had already sued Just Born, and now the company, the boarding house and the union are involved in legal proceedings. All pages are frozen as a federal appeals court decides whether Just Born can ban new employees from the pension while avoiding the $ 60 million fee.
"You've gotten rid of the fund in a circular fashion that I do not think anyone has ever done," said Judge of US District Court James Wynn Just Born's lawyer in January, without saying if he would allow it.
Since the strike, the company and its workforce are under contract. The union says there are only 326 workers in the production floor in Just Born, 400 of them at the time of the strike. And only 250 are in the union.
Just Born's Pye said the company has no plans to sell itself or move abroad. The company is just trying to manage the costs of the future. Union officials said they believe the company and its workforce have changed forever.
"Will everyone see things the way they did before?" said Hank McKay, president of the union chapter "Local 6," which also includes the Bethlehem workforce. "I do not think so."