Warren Buffett, the ninth-richest person on the planet, says it’s not up to him to settle a strike by 450 steelworkers at a company he owns.
Sen. Bernie Sanders wrote a letter to the Berkshire Hathaway CEO, requesting that he intervene in a United Steelworkers union strike at the Special Metals plant in Huntington, West Virginia. They’ve been on strike for three months. Special Metals is a unit of Precision Castparts, which is owned by Buffett’s Berkshire.
“At a time when this company and Berkshire Hathaway (BRKA) are both doing very well, there is no reason why workers employed by you should be worrying about whether they will be able to feed their children or have health care,” Sanders wrote. “There is no reason why the standard of living of these hard working Americans should decline. I know that you and Berkshire Hathaway (BRKA) can do better than that,”
His letter said employees were offered a contract with no pay raise the first year, only a $2,000 signing bonus, and then pay increases of 1% the second year and 2% a year the following three years. It said the company wants to raise the cost of health coverage for workers from $275 a month to $1,000. And it reduced vacation time they have already accrued.
Sanders called the offer “outrageous and insulting.”
But Buffett responded with a letter quoting Berkshire’s annual financial filing with the Securities and Exchange Commission, which tells investors that the management of its different companies is left up to the executives at each subsidiary – not Berkshire itself (or Buffett).
“Our companies deal individually with their own labor and personnel decisions (except for the selection of the CEO),” he said in his response to Sanders, which was released by Sanders’ office. “I’m passing along your letter to the CEO of Precision Castparts, but making no recommendations to him as to any action. He is responsible for his business.”
Unlike many other of the nation’s richest people, Buffett has positioned himself as someone concerned workers and income inequality. He has called for higher taxes on the rich and pledged to give away most of his fortune, which now stands at just over $100 billion according to a real time billionaire tracker by Forbes. Buffett doesn’t have the anti-union reputation of many other billionaires, such as Amazon (AMZN) founder Jeff Bezos or Tesla (TSLA) CEO Elon Musk, who have both battled with union organizing efforts.
Buffett’s letter to Sanders cites several examples of unionized subsidiaries of his company, incuding NetJets and See’s Candy. And Sanders letter plays on an appeal to Buffett to live up to his expressed concerns about income inequality.
“Mr. Buffett: You have spoken out eloquently on the crisis our country now faces in terms of growing income and wealth inequality. You have correctly pointed out that, while working families struggle, the top one percent is doing extremely well,” Sanders wrote.
The Special Metals strike
Special Metals makes nickel alloy metals essential to space crafts and airplanes. Berkshire purchased Precision Castparts in 2016 for $37.2 billion. Berkshire reported that Precision Castparts reported revenue of $1.6 billion in the third quarter, and that its third quarter profit was up $217 million from the third quarter of 2020, although it did not state how much its profit in the quarter came to. Berkshire reported that its overall income of $10.3 billion in the quarter and $50.1 billion in the first nine months of the year.
A video posted on the United Steelworkers union web site quoted strikers as saying that Special Metals has continued to operate, though it doesn’t say whether it is using temporary workers, permanent replacement workers or salaried staff to man the factory.
“If I were a customer out there, I wouldn’t want something I know a bunch of scabs produced, because they don’t know what’s going on,” said union member Steve Brumfield in the union video.
The number of strikes have been increasing in recent months as unions and rank and file members have been unwilling to accept the concession contracts they sometimes accepted in the past, especially in light of a record number of job openings in the labor market, and the difficulty many employers are having finding skilled workers to fill job openings.
The communications department for Precision Castparts issued a statement saying its “desire is to achieve a respectful and productive relationship with our employees, and we have ultimately achieved that goal in previous contract negotiations over many years.” It said it has and “will continue to bargain in good faith” with the union. It did not answer questions about the reported offer to the union or how it has been able to operate, and plans to keep operating, if the strike continues.