Reports from the Economic Front

a blog by Marty Hart-Landsberg

Public Power Serving The Public Interest

An interesting battle is brewing in Taunton, Massachusetts.  There, the city council—in response to a strong push by the United Electrical, Radio and Machine Workers union—appears on the verge of using eminent domain to take over a factory that the owners would rather close than sell to its workers. 

The factory, which employs 100 workers, is owned by Easterline Technologies, a major aerospace and defense contractor.  Easterline has been doing quite well lately, posting profits of nearly $120 million last year and paying its CEO more than $6 million.  Unfortunately for the Taunton workers, although their plant has been profitable, Easterline has decided to move its production to non-union operations in Mexico and California. 

Yves Smith of the blog Naked Capitalism describes what happened next:

Here’s where it gets ugly. Esterline had given the union, the United Electrical, Radio and Machine Workers union, the right of first refusal to buy the facility and operate it itself. But the company decided to renege on the deal when the union had to insist that the company obey Massachusetts law and pay for three months of medical care after employees were let go. Esterline started dealing in bad faith, and said it would cut the already-agreed-upon severance package by $143,000. That’s not kosher; it’s called “regressive bargaining” and the unions have filed charges with the National Labor Relations Board.

Esterline has now turned punitive. Its latest position is that it needs to compensate for these additional severance costs (since when is complying with the law an add on?) and has scheduled an auction for the plant’s equipment. The union went to the Taunton town council and have secured a preliminary commitment for it to use its eminent domain powers under the Fifth Amendment, which permits governments to take control of private property for public purpose (the council is waiting for the results of a legal analysis before it takes a formal vote). Huffington Post reported that the town solicitor presented his preliminary findings, and the council voted unanimously to call on Esterline to postpone the auction while he completes his research.

Gee—using public power to defend the public interest—what an interesting idea.  Wonder if it might catch on elsewhere? 

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