The Problem: It was September 2004, and hundreds of workers at Snokist Growers were about to walk off the job. The Yakima, Washington, company sells fresh fruit and canned products to grocery stores. In 2001, when CEO Valerie Woerner came onboard, Snokist lost $6.5 million on sales of $100 million. Over the next two years, she engineered a brutal financial turnaround. She cut jobs and overtime pay and stopped paying for health insurance for hourly workers. The moves eliminated $8 million in annual costs, but the cuts led angry cannery employees to seek representation from a union. They demanded higher wages, more benefits, and job security guarantees. Woerner brought in a Texas lawyer whose aggressive style only alienated workers even more. Negotiations broke down in September 2004, and 270 cannery workers went on strike. The walkout lasted eight months. Eventually, the union signed a contract that offered no wage boost and few benefit guarantees. In 2004 and 2005, Snokist Growers lost $5.2 million.
What the Experts Said: Peter Robb, chief negotiator for the Hawaii Employers Council, understood that "change was necessary" but said Woerner exacerbated the problems by not including workers in the process. Steve Bernstein, partner at Atlanta-based law firm Fisher & Phillips, said Woerner had no other options. Thomas Fossey, CFO at C. Mondavi & Sons in Napa Valley, said negotiations should have taken place before the harvest, so the company could have prepared.
What's Happened Since: Revenue is falling, and the company is still losing money -- $12 million over the past four years. "Nobody really won the strike," says Snokist president Jim Davis. In 2007, Snokist did not renew Woerner's contract, though Davis says the move wasn't strike related. The company now has 150 full-time workers, and about two-thirds are in the union. (Woerner could not be reached for comment, and union rep Sherry Scott did not return phone calls.) The union is still working under the contract signed in 2005, though it is being renegotiated.
What's Next: This year, Snokist will close its fresh fruit division. Fresh fruit constituted a third of the business, so Davis expects revenue to drop from $70 million in 2007 to $55 million in 2008. Snokist plans to focus on its canning business -- making ingredients for companies like Sysco (NYSE:SYY), Gerber, and Brach's. In 2008, Snokist also will increase the production of its own items, such as single-serve sorbets.