Before the march, several speeches were made from the stage. Fists were raised. A bullhorn was used, in spite of the presence of a nearby microphone and podium. Corporate greed was denounced. Workers were extolled. Bucknum sat nearby the stage, smiling sardonically when someone snapped a photo of him. The look on his face was almost pained. There was something about the rally, something about the protest in general, that felt out of step with mainstream American politics. Even in the Obama era, the American way of life had become centered on individual achievement. It was a nation that worshipped its entrepreneurs, its star athletes, and its self-made celebrities. There was something almost . . . unbecoming about a group of people assembling publicly to demand a bigger paycheck. The shouts and cries rose up from the square, echoed off the nearby skyscrapers, and then seemed to fade away. The media coverage was anemic; the attention paid to the rally, minimal.
Perhaps most importantly, the event was held several miles from the warehouse. The marchers paraded down the middle of the streets downtown, but their goal was to attract attention, not to slow production. Ken Harrison heard about the rally from local contacts in Portland. “I live in Atlanta,” he said. “It didn’t do anything to me.”
* * *
The rally didn’t hurt Koch’s bottom line, but it stoked energy among the IBU members. Hammond and Bucknum decided to harness the energy. They scheduled a vote on the contract terms that Ken Harrison was proposing. If the union members voted against it, it might increase the IBU’s leverage by garnering headlines and laying the groundwork for a strike.
The contract vote was held in the big auditorium on the ground floor of the Longshoremen hall. The room was an architectural embodiment of union militancy. Along one wall, a big white banner displayed an old prose poem, “The Scab,” by the novelist and journalist Jack London. It began: “After God had finished the rattlesnake, the toad, and the vampire, he had some awful substance left with which he made a scab.” The poem went on from there, and became even less kind toward workers who might cross a picket line. Along another wall, a sentimental mural depicted the Longshoremen’s glory days, with stoic workers standing strong among the cranes and cargo ships. It was impossible, in that auditorium, not to feel enveloped in the proud history of labor unions. It seems that the Georgia-Pacific workers were intoxicated by the environment when they arrived to vote on the contract.
Still, the vote results surprised everyone. All of the warehouse workers voted on the contract, and all of them voted it down. “The Longshoremen . . . were just blown away by it. They’d never had anything like that,” Hammond recalled. The union workers left the hall exultant. They had shown their resolve to beat the Koch brothers.
The IBU informed Harrison’s team about the news. It planned to return to the negotiating table with new leverage, a new wind at their back. “They were all pretty dang tickled pink, you know,” Franzen recalled. The members were saying, “We’re gonna show them, we’re gonna take it to them. We’re going to do this.”
Then something unexpected happened. Ken Harrison quit meeting with them. As time dragged on and Harrison refused to show up, the union’s fighting spirit began to curdle into something else. Franzen and his colleagues were given the one thing that they needed the least. They were given time to start thinking things over. And Koch Industries knew just how to get them thinking.
* * *
During 2010, Abel Winn put the final touches on his study exploring ways to defeat the holdout. In September he submitted his findings to a peer-reviewed publication called the Journal of Economic Behavior & Organization. Winn had reason to be optimistic that his paper would be selected for publication. His data showed something quite striking.
Early data from the experiment suggested that it might be impossible to beat a holdout. Different strategies could undermine the holdout’s leverage, but the holdout couldn’t be eliminated. There was, however, one strategy that nearly decimated the holdout problem. The data was just astonishing on this point. The best way to destroy a holdout’s position was to make them expendable.
Winn discovered this fact when his experiments divided the virtual landowners into groups and then made it clear that some of them might be cut loose if they bargained too hard. In this scenario, the pipeline company was looking to buy up land on which to build a route, but it could take alternative paths. It wasn’t necessary in this case to get all of the landowners to sell in order to build the pipeline. The company could assemble a path while excluding some landowners.
This strategy created a beautiful dynamic, from the pipeline company’s point of view. It embedded competition between landowners. It made each neighbor’s bargaining power the deepest liability to his or her neighbor’s. Everybody started looking over their shoulders and worrying that they might be undercut if they held out too long for a higher price. “When there’s competition, that completely blew the problem away,” Winn said. “Everybody behaved much better.”
* * *
As it turned out, the IBU workers faced outside competition, and their managers at the warehouse made sure they were constantly reminded of it.
While the labor union waited to meet again with Harrison, the warehouse employees reported to work every day. They also continued to attend regular team meetings with their managers. During these meetings, the managers discussed day-to-day operations, but they also focused on something else: the relentless competition that the facility faced every day. Dennis Trimm, the warehouse manager who helped implement the LMS, said the main message delivered during many of these meetings was simple: “They can replace you tomorrow.”
The employees were shown slideshows illustrating the report cards that Trimm reviewed at least once a month, data showing how the Portland warehouses stacked up against other distribution centers in the Georgia-Pacific network. The Portland warehouses usually ranked near the top, but they had to fight to stay there every day. The other facilities, not coincidentally, were nonunion shops, staffed by outside contractors. The third-party contractors competed against one another to provide cheaper labor to Georgia-Pacific, and they also competed against the IBU. Koch was evaluating, every day, whether or not to replace the IBU team with outsiders.
The fervor from the contract “no vote” began to dissipate. It began to seem like a liability, in fact. The no vote was left to hang in the air as a permanent reminder of the union’s militancy, as evidence that the union was in reality an obstacle to Koch’s efficient operation of the warehouse.
David Franzen’s coworkers began to call his cell phone. The bravery was gone from their voices. They implored him—begged him, almost—to find some sort of settlement with Koch. They wanted the contract to be closed, the deal-making finished. Even if the contract was less than they’d hoped for, they needed to know that a contract was in place. “They were calling me, literally crying on the phone. Guys with families and stuff: ‘We can’t go on strike. We’ll never come back. We’ll never have another job. They warned us,’ ” Franzen said.
The pressure on the IBU intensified dramatically. Hammond and Bucknum were notified that the IBU’s pension fund had been deeply wounded by the financial crisis. The fund had lost about one-third of its value, they were told, and might be considered insolvent. This meant that the federal government might take over the plan and cut retirement benefits dramatically. There was a near panic at this prospect. The retirement payments might be cut in half.