Monday, September 24, 2007

In Defense of Starbucks

I have spent the better part of a year now detailing the missteps of management at Starbucks (SBUX) and predicting their current predicament but, I have to come to their defense on this one.

The National Labor Relations Board has accused Starbucks of illegal anti-union activity at a store in Michigan. This is the second charge it has received in the past month and the company is currently on trial in New York on charges of union-busting efforts involving the International Workers of the World. Business Week recently took a look at Starbuck's situation and compared them to Wal-Mart (WMT). Not good for a company that has long ridden the "good corporate citizen of the world" train. Here is the thing, they actually earned that title and deserve it. While I have been a bit vehement in my criticism of their business moves (or lack thereof), Starbucks does treat its workers very well.

Should Starbucks be fighting union activity? Hell yes! Can anyone think of anything positive unions have contributed to their workers since the 1940's other than predictable layoffs, salary cuts and the eventual destruction of the businesses their "workers" are employed by? For proof one need look no further that the US Auto and Airline industries for proof. Both industries, totally unionized and strapped with impossible labor costs are perennially doomed watching one or more of its members battle with bankruptcy. The UAW has seen its ranks decimated and hundreds of thousands of its workers lose their job because they view the employer as the enemy, not a partner. In negotiations they either "win" or "lose". The problem? when they think they "win", they actually lose more long term.

So yes, Starbucks and Wal-Mart ought to fight the unions with every once of corporate soul they have. Not just for shareholders, not for management but for the soon to be unemployed workers they will layoff if the unions find their way into their businesses.

What unions today fail to realize is that management has a fiduciary duty to its shareholders. That means keeping labor costs in line. If the unions do "win" and get in to either location, they will get their salary increases to ridiculous levels, there will just be a whole lot less people getting a check each week. How is that good?

Just ask GM (GM). They will lose about $100 million a day when workers walk out today.... GO UNIONS!!!

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