How The Usw Hit Marc Rich Where It HurtsMaria Mallory and Michael Schroeder
When 1,700 unionized steelworkers were replaced permanently at Ravenswood Aluminum Corp. in 1990, it seemed like yet another sign of organized labor's relentless decline. The union's battle appeared all the more lopsided after it discovered that the Ravenswood (W. Va.) aluminum producer was controlled by Marc Rich, the billionaire fugitive whose commodities-trading empire spans 40 countries.
But in an unprecedented global campaign that's likely to be emulated by other labor groups, the United Steelworkers enlisted foreign unions to force Rich's hand. The final straw came when East European unions disrupted Rich's expansion efforts in Czechoslovakia, Romania, and Russia. Soon after, on Apr. 20, a top Rich employee who owns most of Ravenswood's stock kicked out the aluminum producer's chairman and replaced him with another Rich associate. The company then agreed to restart contract talks with the union. Crows USW Vice-President George F. Becker: "We used the power of the union to force them to the bargaining table."
As for Rich, he did not return calls to his office in Zug, Switzerland, where he has been hiding since he fled the U.S. nine years ago, ahead of a 65-count federal indictment for criminal tax evasion.
NEEDLEWORK. How did a declining union such as the USW force Rich to cry uncle? Once the union identified privately held Marc Rich & Co. as the behind-the-scenes investor of Ravenswood, it aimed a spotlight on Rich. First, the union sent delegations to eight European countries where Rich deals in everything from aluminum and magnesium to oil, often in contracts involving government agencies. The delegations, which included locked-out employees, cast Rich as a scoundrel responsible for the suffering of American workers. Unionists handed out "Wanted: Marc Rich" flyers at the London Metal Exchange and got prolabor politicians in the European Parliament to needle Rich.
The turning point seems to have come after the USW's success in Eastern Europe and Russia, says Joseph B. Uehlein, an AFL-CIO official who was a prime architect of the campaign. After Rich bid for the Slovak State Aluminum Co. last year, Czech unions pressured the government to reject the offer. In Bucharest, Romania, unionists challenged Rich's recently acquired stake in the Athenee Palace Hotel and got thousands to boo his name at a political rally in February after making him an issue. The USW campaign prompted officials in Russia to question his oil-trading practices there when he recently tried to expand them. "An international picket line was created around the Rich operation," explains Marcello Malentacchi, general secretary of the Bonn-based International Metalworkers Federation. "It was embarrassing for him."
These moves seem finally to have convinced Rich that the USW would keep up the pressure. On Apr. 11, Willy R. Strothotte, a top Rich associate in Zug who controlled 48% of Ravenswood, seized the 20% stake held by another investor, Charles E. Bradley of Connecticut. In 1990, Bradley had pledged his shares as collateral against a $12 million personal loan he got from a Strothotte-owned company. Although Bradley fell behind on his payments last year, Strothotte waited until now to move.
This gave him voting control over Ravenswood Chairman and Chief Executive R. Emmett Boyle, who owned 27% of Ravenswood. Strothotte then replaced Boyle and Bradley with two fellow Rich associates. One of them, Craig A. Davis, became chairman. Strothotte, Boyle, and Bradley didn't return phone calls seeking comment. But in a letter, Boyle accused Strothotte of "permitting the notorious fugitive from justice, Marc Rich, and his associates to seize control of Ravenswood by packing its Board of Directors with Rich cronies."
DEFAULT. The new board will find it difficult to fix the mess at Ravenswood. Because Boyle refused to settle with the union, the USW also targeted the company directly. The union persuaded Anheuser-Busch, Miller Brewing, and Stroh Brewery not to buy Ravenswood's aluminum sheet used in cans. Revenues at the company skidded to $491 million in 1991, from $701 million in 1989. The once profitable company last year defaulted on $71 million in debt, and banks cut off its revolving credit line. Ravenswood's auditors concluded that there was "substantial doubt about the company's ability to continue as a going concern."
This could make the USW's victory a Pyrrhic one for the strikers. Even if Ravenswood can somehow bring them back--difficult, since it has legal obligations not to fire the 1,000 replacements Boyle hired--the plant could be financially strapped for years.
However, other aluminum makers may not repeat Boyle's tactics soon. The USW has shown how unions can pressure multinationals by securing help from their still-strong fellow unionists abroad. Indeed, the United Auto Workers, which just faced threats of permanent replacements from Caterpillar Inc., has begun a similar campaign. If U.S. unions can follow the USW's lead, they may have hit on a fearsome weapon.