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Warren Buffett Rejects Bernie Sanders’ Plea To Intervene In Berkshire Company’s Labor Dispute

Courtesy of ZeroHedge View original post here.

Warren Buffett may feel inclined to pen the occasional NYT editorial professing his earnest desire to pay more taxes to the federal government. But when it comes to the businesses he controls, the billionaire checks his progressive politic at the door.

Despite pleas from Bernie Sanders, arguably the most popular Democratic politician (although he's technically an Independent) in the country, Buffett has decided not to personally involve himself in a labor dispute at Precision Castparts, the aerospace manufacturing giant that Berkshire purchased in its "biggest deal ever" back in 2015.

A group of 450 steelworkers at Special Metals in Hungtington West Virginia, a subsidiary of Precision Castparts, has been engaged in a bitter strike for nearly 100 days as the workers demand a better contract.

"I am personally requesting that you intervene in the negotiations between Steelworkers Local 40 and Precision Castparts to make sure that the workers are treated with dignity and respect and receive a fair contract that rewards the hard work and sacrifices they have made," Sanders wrote in the letter dated Dec. 28.

Sanders expressed his demand that Buffett intervene and settle the matter in that favorite medium of politicians – the open letter, which can be read in full below:

As I'm sure you know, 450 steelworkers at Special Metals in Huntington, West Virginia, a subsidiary of Precision Castparts which Berkshire Hathaway owns, have been engaged in a bitter strike for almost 100 days.

These skilled employees produce critically important materials for space crafts, airplanes, and submarines. They do their work with great pride and diligence, and many of them have been employed at the company for years.

Despite their hard work and loyalty, the company has offered them a 5-year contract that is outrageous and insulting. At a time when inflation is over 6% and when Precision Castports made $1.5 billion in profits last year, the latest offer from your management team is for a zero pay increase this year.

Instead, the company would simply provide a $2,000 signing bonus. Further, the workers would get a totally inadequate 1 percent wage increase next year, and a tiny 2 percent increase for the following three years. This amounts to a very significant cut in real pay when accounting for current inflation. To add insult to injury, the company also wants to make major cuts in employee health care. It would almost quadruple the cost of health care for these workers, taking a current monthly premium from $275 up to approximately $1,000.

The contract offer would force these workers into high-deductible plans that aren’t worth the paper they’re written on. The company also wants to cut back on the vacation time that employees have accrued. Mr. Buffett: You have spoken out eloquently on the crisis our country now faces in terms of growing income and wealth inequality. You have correctly pointed out that, while working families struggle, the top one percent is doing extremely well.

Over the years, under your leadership, Berkshire Hathaway has been phenomenally successful. Berkshire reported a record $6.5 billion in operating income last quarter, an 18 percent increase from the same quarter one year ago. It now sits on nearly $150 billion in cash. Further, it is no secret that you are one of the richest people in the world, with wealth of over $108 billion.

Today, I am personally requesting that you intervene in the negotiations between Steelworkers Local 40 and Precision Castparts to make sure that the workers are treated with dignity and respect and receive a fair contract that rewards the hard work and sacrifices they have made. At a time when this company and Berkshire Hathaway are both doing very well, there is no reason why workers employed by you should be United States Senate worrying about whether they will be able to feed their children or have health care. There is no reason why the standard of living of these hard working Americans should decline. I know that you and Berkshire Hathaway can do better than that. I would appreciate the opportunity to speak with you about this matter as soon as possible.

While Sanders' prose is certainly moving, peppered with references to "hard working", "loyal" Americans who are desperately struggling to keep their standard of living from declining, Buffett is apparently unmoved.

Buffett responded in kind, sending a letter of his own to Sanders, which has been published for all to read. Buffett insisted that Berkshire has long been run according to a unique code that makes it essentially indifferent to unions. "Some of our companies have as many as a dozen unions; others have none," Buffett wrote.

That's not to say Berkshire hasn't been pro-union, as Buffett picks a few of his favorite examples of Berkshire-owned companies with strong union presence.

Here's Buffett's brief response…

Berkshire Hathaway is organized and has been run for some decades with an operating structure that is far different than any large business in the United States. I'm enclosing our oft-repeated Part I, Item 1 of the 100-page+ 10-K Berkshire files with the SEC. This introduction emphasizes our unique operating structure, one that has long been recognized by our shareholders, the investment world and the communities in which our subsidiaries operate.

Our companies deal individually with their own labor and personnel decisions (except for the selection of the CEO). We have never purchased or sold a company because of its union or non-union status. Some of our companies have as many as a dozen unions; others have none.

I'm passing along your letter to the CEO of Precision Castparts but making no recommendation to him as to any action. He is responsible for his business.

Among the many extensively unionized companies Berkshire owns has been the Buffalo News, which we have owned for about 40 years. You can check with Senator Schumer  as to the behavior with respect to unions of this former subsidiary or with Senator Brown about Ohio-based NetJets, where Berkshire's industry leading subsidiary has long been among the most unionized companies within its industry.

Our ownership of California-based See's Candy extends over 50 years. The company has employed many union workers over the entire period and Senator Feinstein can give you an opinion as to its performance.

Buffett added that he would "pass along" Bernie's criticisms to the CEO of PC. But as for a personal intervention, we imagine the 91-year-old Buffett has better things to do with his time.

And just for reference, here's Berkshire's 2020 Annual Report, which Buffett references in his response:

2020ar on Scribd


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