Marketplace of Ideas Blog

The email arrived at 2:12 Sunday morning.

Mercury Marine on Sunday confirmed that the contract proposal formally rejected by union members Aug. 23 expired at midnight Friday, Aug. 29, without acceptance by the International Association of Machinists and Aerospace Workers (IAM).

The IAM conducted a last-minute vote on the original proposal terms and conditions but did not complete the process to a definitive conclusion prior to the expiration of the proposal.

As a result, Mercury said it will continue to operate the Fond du Lac facility under the terms and conditions of the existing contract, which expires in 2012. Manufacturing workers in Fond du Lac are represented by the IAM, Local chapter 1947. As previously announced, the company will now begin the transition planning process to its Stillwater, Okla., facility.

Thus ended (despite what you may read) one of the more unusual, yet infuriating, weeks in the history of Wisconsin business, between Local 1947’s unexplainable “overwhelming” vote against modifying their union contract last Sunday morning, and the contract’s expiration Saturday at midnight. The ball is now rolling for Mercury to move its outboard manufacturing operations from Fond du Lac to Stillwater, leaving behind “zero to 200” manufacturing jobs.

The laudable work of people like Fond du Lac County Executive Allen Buechel, Fond du Lac City Manager Tom Herre, state Sen. Randy Hopper (R–Fond du Lac), officials of the Fond du Lac County Economic Development Corp., three Local 1947 workers who collected petitions for a revote, and others to undo the union’s overwhelmingly colossal misjudgement came to naught.

As for the 800-employee corporate headquarters, that reportedly will be decided within the next week, with an announcement from Mercury around Labor Day. There are some instances of corporate headquarters being far from their main manufacturing facilities (for instance, Kimberly–Clark Corp.), but K–C is a bigger company than Mercury Marine.

Now that I think about it, there is an explanation why approximately 700 union members voted against contract revisions: The union didn’t believe Mercury was serious. Now that we’ve all found out that Mercury was indeed serious, we’re all going to feel the effects of Mercury's departure for Oklahoma, including increased unemployment across the state, decreasing charitable contributions, and increased use of public-sector and nonprofit social services agencies.

The quote that best typifies the week for Local 1947 members came from Dennis O'Malley, a 37-year Mercury employee: “I think after a little bit of a rethought, I think there are a lot of people now who would rather have a job at a lower wage than no job at all.”

Too bad that rethought didn’t occur before Aug. 23. Where exactly was Mercury unclear about what it would do without the contract concessions?

Back in June, when the company said it might consolidate its manufacturing in Oklahoma? Or when Mercury repeated that message a month later? Or Tuesday afternoon's meeting with Mercury management?

What was the union’s response during all this? Well, they asked Gov. James Doyle, rarely a friend of Wisconsin business, to intervene. (That worked well, didn’t it?) The union’s business representative said the union was “prepared to meet with Mercury Marine, as we have for years, and discuss the best way to preserve jobs, promote this company's products, and protect the economic interest of this community.”

The best way to “preserve jobs” and “protect the economic interest of this community” would have been to vote for the contract changes. A job, after all, at less pay is better than no job at all. (Except, apparently, if you’re a Mercury union member and believe that it's better to be unemployed on your feet than employed on your knees. Or something like that. Perhaps that’s an explanation of why Local 1947’s Web site still announced Sunday night, with union pride, that “Local Lodge 1947 of The International Association of Machinists and Aerospace Workers has overwhelmingly voted to reject the ‘final contract modification proposal’ of Mercury Marine.”)

To those who were convinced that Mercury was going to pull out of Wisconsin anyway: Why would Mercury have not just announced they were leaving? Why did Mercury give the union a contract offer? Why did Fond du Lac County Executive Al Buechel say that Mercury was prepared to move its Oklahoma manufacturing to Wisconsin? Why was Mercury negotiating with the state and Fond du Lac County on a package to grow manufacturing in Fond du Lac?

This may be a seminal moment in the history of organized labor in Wisconsin. This state is unfortunately dominated by public-employee unions during the political process, and private-sector unions have a long history in this state as well, thanks to the fact that this is essentially a closed-shop state. (Workers in union facilities can choose to not be members, but they get to pay union dues regardless.)

And how have unions done in the past year or so? Thomas Industries chose to move 280 jobs from Sheboygan to Monroe, La., instead of moving 80 jobs from Monroe to Sheboygan. General Motors closed its Janesville assembly plant. (Ironically, the United Auto Workers employees in Janesville were known for being accommodating, unlike the majority of the IAM employees at Mercury.) NewPage closed its mills in Niagara and Kimberly. Chrysler won’t be reopening its Kenosha engine plant.

Mercury’s manufacturing pullout is going to weaken the state’s economic recovery. (That’s what happens when one business affects 11,000 jobs.) If voters think our economy isn’t recovering by November 2010, that will hurt the political party most identified with organized labor, and that will help the political party that occasionally proposes making Wisconsin a right-to-work state.

Regardless of politics, though, the first thing to do is to do what can be done to at least keep Mercury’s corporate headquarters. (Unfortunately, this appears to include a sales tax increase for those of us who live in Fond du Lac County.) I sincerely hope I’m not writing a column called “After Mercury” in a week, but I can’t say I’m optimistic.

Whether or not that works, the next thing is to work on replacing however many Mercury jobs will leave. That is going to be difficult to say the least, given the economy and our state’s business climate problems. (And if our elected officials aren’t convinced now to cut taxes and enact other pro-business legislation, they will never be convinced. I would be happy to see an upward bump in unemployment among those who, shall we say, work in Madison after Nov. 2, 2010.)

Businesses obviously can’t operate without employees. Employee costs are the single biggest expense of nearly every company, which means that employers can’t afford to pay employees salaries and benefits that revenues can’t cover. (Readers of Marketplace know that, but apparently not everyone in Northeast Wisconsin knows that.)

Northeast Wisconsin still has great work ethic (for instance: the people at KFIZ and WFDL who were covering this story deep into Saturday night), and our quality of life is hard to beat (at least until this non-summer of ours). But economic reality, including the expenses that go into production or providing of services (including worker costs and, yes, taxes and the cost of meeting regulations) trumps intangibles, particularly in bad economic times.