As a manager with years of experience in negotiations, you were involved in many different types of conflicts. There was one case where a worker argued he should be allowed to smoke his (legally prescribed) marijuana at his desk. Another time, someone asked you to mediate two executives who were having a strategic disagreementone thought the company should invest in tulip futures, while the other thought pork bellies were the answer. Even with this experience, you have not seen a case like the one going on at a Mott's apple juice factory where you were called in for consultation.

Mott's, a division of Dr. Pepper Snapple Group, employs 305 people at its juice factory in Williamson, N.Y., near Rochester. All 305 employees were on strike for more than three months. They are protesting the fact the company wants to make severe cuts in pay and benefitsa reduction of wages by $1.50 (about $3,000 per year), a pension freeze, a reduction in 401K contributions, and a decrease in the health insurance subsidy.

On the surface, these cuts seem to make some business sense because companies all over the world are struggling. What is so unusual in this case is the Dr. Pepper Snapple Group is more profitable than it ever has been. In the last year, its net income was $550 million, a dramatic improvement from the previous year, when it lost $312 million. Because of this success, employees are accusing the company of greed. Stuart Applebaum, the president of the factory workers' union, says "[Dr. Pepper Snapple doesn't] even show the respect to lie to us. They just came in and said, 'We have no financial need for this, but we just want it anyway because we figure we can get away with it.'"

The company, meanwhile, defends the pay and benefits cut by arguing its current labor costs are considerably higher than other local companies. The average pay at the Mott's plant is $21, whereas other factories and transportation companies in the area pay closer to $14. In a public statement, the company defends the move, saying in part, "As a public company, Dr. Pepper Snapple Group has a fiduciary responsibility to operate in the best interests of all its constituents recognizing a profitable business attracts investment, generates jobs, and builds communities."

You are assigned to a task force with representatives from management and labor who are charged with resolving the crisis. After a review of the files, you realize this is a critical case; if the employees lose, other companies might be motivated to take similar actions and cut labor costs (and increase profits) even when they are not struggling financially.

Questions

1. How could you help steer negotiations between labor and management, so the conflict between them is healthy and productive? Is it even possible?

2. Is the company justified in trying to cut costs even when it has made a huge profit? Are the employees justified in not working to protest what they perceive as unfair cuts?

3. If you were the negotiator, how would you proceed?