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Varchild2008 (85.35)

Unions Successfully Destroy Circuit City

Recs

6

November 10, 2008 – Comments (6)

What's the difference between BEST BUY and CIRCUIT CITY?

Easy... 1 is a leader in the consumer electronics retail sector... And the other is a failure.

But, why is that?

Best Buy =  Not Unionized

Circuit City = Unionized.


You can do this pretty much with any sector of the economy.  You select the leader and one of the losers and go to your search engine and see which one is unionized and which one is not.

In perhaps all cases the LOSERS are the companys that have a union.

6 Comments – Post Your Own

#1) On November 10, 2008 at 4:22 PM, russiangambit (29.27) wrote:

Unions have slash and burn mentality, - give us good life now no matter what the cost later. I am all for social justice but unions are something else. There is some satisfaction in unionized companies failing, kind of "I told you so" feeling. However, when you look at the impact of such failures on the economy, it is not good for anyone.

Unions are basically the agents of protectionism. However, protectionism in a  global economy doesn't work . Companies simply move into other non-protected locales.

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#2) On November 10, 2008 at 4:22 PM, devoish (98.52) wrote:

"You can fool some of the people some of the time"... In this case you have 4 recs, but no union...

Without the protection of a union and a collective bargaining contract, the 3,400 workers have few options to fight back.

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#3) On November 10, 2008 at 4:57 PM, devoish (98.52) wrote:

I wanted to make sure I was accurate. 

From Circuit Citys most recent 10K:

At February 29, 2008, the domestic segment had 42,974 hourly and salaried Associates. None of these Associates is subject to a collective bargaining agreement. The company employs additional personnel during peak selling seasons. The company has an hourly pay structure for the domestic segment’s non-management sales force

I did find some union employees outside the USA

International segment retail stores are typically staffed by 5 to 20 Associates, including full-time and part-time commissioned sales Associates and a store manager. At February 29, 2008, the international segment had 2,911 hourly and salaried Associates. Approximately 95 of these Associates, who are engaged in warehousing and distribution operations, are represented by a union. The terms of a three-year collective bargaining agreement ending in April 2009 were ratified with these employees. The company considers its relationship with the union-represented employees to be good.

So 45,790 employees were non-union. 95 employees were union.

The company ended its pension plans in 2005. Costs of the earlier pensions are described in the 10k here:

The rate of return assumption is reviewed annually and adjusted as appropriate. For fiscal 2008, fiscal 2007 and fiscal 2006, our expected rate of return on plan assets was 8.25 percent. The weighted average discount rate used to determine net pension expense was 5.75 percent in 2008, 5.65 percent in 2007 and 5.75 percent in 2006. Net pension expense for our pension plans was $0.1 million in fiscal 2008, $2.4 million in fiscal 2007 and $1.7 million in fiscal 2006. These expenses are included in cost of sales, buying and warehousing and selling, general and administrative expenses on the consolidated statements of operations.

Something else, other than unions, probably went wrong here.

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#4) On November 10, 2008 at 4:59 PM, kdakota630 (29.58) wrote:

Considering that Circuit City filed for chapter 11 today, 3,400 workers "fighting back" wouldn't have meant much, except perhaps filing sooner.

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#5) On November 10, 2008 at 6:07 PM, devoish (98.52) wrote:

Surprisingly though, being non-union did not give them an overwhelming competitive advantage in retail electronics.

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#6) On November 10, 2008 at 9:16 PM, Varchild2008 (85.35) wrote:

Devoish,

You don't apparently know even the HALF of what I have read on AFL-CIO's Circuit City campaign over the years.

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