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The Honolulu Advertiser
Posted on: Friday, June 4, 2010

Union contracts must be fair to both sides

By Keith Vieira

On the eve of negotiations for a new contract between Unite Here Local 5 and several major hotel companies, including my own, I was greatly disappointed by Eric Gill's article in The Advertiser ("Cerberus, Goldman Sachs, meet Local 5," May 16).

It's hard to be optimistic that the forthcoming negotiations, which begin July 1, will truly be marked by "bargaining in good faith," when one of the parties sets the tone writing about "corporate greed" and "profits at the expense of workers."

I intend neither to reciprocate in the name-calling nor to bargain in the news media, but I would like to address a few thoughts both to the general public which is no doubt hoping for a fair agreement that will help the visitor industry, the engine of our state's limping economy, rather than further damage it and to the employees of my company, Starwood Hotels and Resorts. (I do not speak for any of the other companies that will also be negotiating with Local 5.)

I think it's important to understand some fundamentals about companies, profits and greed.

Let's start with companies. A company is nothing more than a group of people created to do a job too big or too expensive for a single person to do alone. For example, a single craftsman can produce a fine piece of pottery. But it takes a company to produce thousands of matching sets of dishes, cups and bowls because these require not only many more workers but also much greater capital resources for all the supplies and equipment needed. Companies, in other words, are groups of people working collaboratively and organized in a way that allows them to attract the investment they need to do the job.

That is also the difference between a couple running a bed and breakfast in their home and a company running one or more hotels, which requires lots of employees and capital.

What about profits? Just as people can't be expected to work without pay, companies can't function without the incentive of profits. Profits are just as legitimate as seeking to earn the highest salary you can find. Without profit, why should companies bother to assemble a work force and risk money to invest in the resources they need? Without profits, there would be no companies. And without companies, for most people there would be no work.

That's why profit is not a dirty word. That's why labor pioneer Samuel Gompers (the founder of the American Federation of Labor) said, "The worst crime against working people is a company which fails to operate at a profit."

Finally, let's think about greed. I think that greed can simply be defined as a lack of balance. A company needs to pay its employees fairly. It also needs to pay its investors fairly. Its earnings need to be large enough to do both.

At Starwood we recognize that employees are our greatest asset. That is not just a "throwaway line." It is reality. By definition, no company can exist without employees. That is why we reward and honor our employees' hard work. That is why we want to negotiate a fair contract. Some perspective:

First, even though we've experienced a 34 percent reduction in revenue in the past two years back to levels of five or six years ago and even though profits are down even further, at Starwood's Waikīkī-managed resorts, we've worked hard to avoid layoffs of our unionized employees and have held cuts to these employees at 2 percent during this difficult economic time. However, we did cut management staff by 18 percent to reduce costs.

Second, despite that steep drop in profits, since June 2008 our unionized employees received the 11 percent increase in total compensation negotiated in more prosperous times.

Third, even though government employees, teachers, and many other unionized workers in Hawai'i pay a portion of their medical insurance coverage, ours receive it completely free. Uniforms and laundry, and meals while working, are also free. In fact, for an average 10-year union employee, our benefit costs are more than 65 percent of their wages!

We certainly understand what goes into a fair contract. It must reward our employees' hard work, but it must also reward our investors. It must be balanced, which means no one gets it all. Balance means finding a mutually rewarding agreement through good-faith bargaining.

To quote Mr. Gill, "It's as simple as that."