Sour economy casts shadow over Disney union talks
07-29-10
Orlando Sentinel

Against the worst economic backdrop since the Great Depression, Walt Disney World and the coalition of unions that represent half of the giant resort's 58,000 workers have begun negotiating a new employment contract.

The talks, which began last month and will continue at least until September, hold significant implications for Central Florida. The next contract between Disney World and the Service Trades Council will influence the spending power of approximately 20,000 full-time workers and the profitability of the region's largest employer at a time of faltering consumer confidence and 11.4 percent state unemployment.

The economic uncertainty is certain to loom over the discussions. The current three-year contract expires Oct. 2.

"It doesn't make things easier," said Harris Raynor, president of the Service Trades Council, an umbrella group for six Disney unions representing everyone from housekeepers and stagehands to costumed characters and monorail pilots. The Service Trades Council also represents roughly 10,000 part-time workers at Disney, though those employees are governed by a separate labor contract.

"I don't think anybody has seen an economy like this," Raynor added.

Steve Eisenhardt, vice president of labor relations for Walt Disney Parks and Resorts, said it will be vital that both sides be pragmatic.

"I think the important thing in any labor negotiations, in good times and in difficult economic times, it's really a matter of being reasonable and realistic with each other," Eisenhardt said.

Negotiations kicked off last month when Disney and union leaders exchanged preliminary offers on "non-economic" issues. Disney, for instance, has proposed eliminating pensions for new employees and increasing the cap on hours worked by part-time employees, college students and international-program workers — for whom Disney does not have to pay pricey full-time benefits — to 40 percent of all hours worked at the resort, up from a current limit of 35 percent.

Union leaders countered with proposals such as increasing guaranteed hours for full-time employees from 32 a week to 40 a week and restricting the hiring of international workers on certain temporary visas.

The two sides won't begin discussing the big-ticket financial issues — wages and health insurance — until late August. Disney currently pays anywhere from $7.45 an hour for a beginning laundry helper or themed doorman to $23.19 an hour for a veteran entertainment tech rigger.

Pension fight

Many of the proposals, such as Disney's bid to replace pensions for new hires with 401(k) retirement-savings accounts, are not new. But the weak economy could change how aggressively they are pursued — and opposed.

The latest talk of doing away with pensions, for instance, follows months of warnings from Walt Disney Co. executives to investors that ballooning retirement costs will be a substantial drag on corporate earnings this year. The company projects pension and post-retirement medical costs will rise by $270 million during the fiscal year ending this fall.

About half of that pension increase will be incurred in Disney's theme-park division, which is home to more than90,000 of the Burbank, Calif., company's 144,000 worldwide employees. That's equivalent to roughly 10 percent of the $1.4 billion operating profit rung up at Walt Disney Parks and Resorts during the company's last fiscal year.

"I'm tired of saying it, you're probably tired of hearing it, [but] we have a big pension burden in that business," Disney Co. Chief Financial Officer Jay Rasulo told analysts at a conference in New York last month.

At the same time, union leaders say their members are more wary than ever of 401(k)s, after the precipitous drop in the U.S. stock market that followed the collapse of the housing market. From the stock market's peak in October 2007 to its trough in March 2009, 401(k) plans lost approximately $1.6 trillion in value, according to the Center for Retirement Research at Boston College.

A 401(k) is "good for somebody making enough to save. But when you make between $8 and $15 per hour, there's not a whole lot to save," said Ed Chambers, president of United Food and Commercial Workers Local 1625, which represents merchandise and banquet workers, as well as florists.

Though Disney has sought to eliminate pensions during previous contract negotiations, it has typically limited its efforts to the broad "main table" negotiations with the overall council. This summer, however, Disney managers have been bringing up pension changes even in smaller bargaining sessions with individual worker groups.

Union leaders liken it to a "divide-and-conquer" negotiating approach. Disney says it wants to ensure as many employees as possible hear and understand the company's pitch.

Such overarching issues aren't expected to be resolved until the two sides return to main negotiations. In the interim, smaller groups are negotiating individual "side-letter" agreements detailing everything from the amount of time character actors get to change into costume to wage premiums for the janitors who clean giant icons such as Epcot's Spaceship Earth by rappelling down the side of the giant sphere.

There are mixed signals so far. Some groups, such as the merchandise and banquet employees, have already struck agreements.

"My members have been very realistic about this economy in Central Florida, and so many of them are just really happy we have our jobs," said Julee Jerkovich, secretary-treasurer for United Food and Commercial Workers.

Others are more combative.

"I think a bad economy is reason to push an employer even harder," said Eric Clinton, president of Unite Here! Local 362, whose members include attraction workers, custodians and ticket sellers, among others. "I don't believe that employers compensate for a good economy. So I don't believe in a bad economy we should compensate for that."

Negotiations appear particularly contentious between Disney and its bus drivers. Representatives for drivers accuse the resort of ignoring proposals they say would improve safety, such as ensuring mandatory breaks are spread over the course of a day and adopting set, rather than variable, start times for shifts.

"Every single safety-related proposal we've put out on the table,the company has no interest in," said Walt Howard, a business agent for Teamsters Local 385, which represents drivers, along with costumed characters, parking-lot attendants and others.

Raynor said it is still too early to predict how the negotiations will ultimately unfold, though he said the side-letter talks have so far been progressing " a little more slowly than I'd hoped." The real test will come in late August when the sides return to the main issues — and to wages.

Disney's Eisenhardt said the company intends to offer its workers pay increases. Union leaders say they want to ensure that any such raises aren't erased by higher health-insurance premiums.

Jason Garcia can be reached at jrgarcia@orlandosentinel.com or 407-420-5414.

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