Ian Frazier of The New Yorker has won the March Sidney Award for his powerful account of the 2008 Stella D’oro biscuit strike. Stella D’oro was a local landmark in the Bronx for more than 60 years, churning out anisette toasts and almond sponges around the clock and perfuming Kingsbridge with the scent of baking cookies. In 2006, the company was sold to Brynwood Capital Partners, a Greenwich-based private equity firm specializing in “orphan brands.” The new management demanded steep wage and benefit cuts and the Stella D’oro workers went out on strike. They stayed out for 10 months.

Ultimately, the workers won the strike when the National Labor Relations Board ordered them back to work under their existing contract. The Board found that Brynwood had bargained in bad faith. Unfortunately, the 134 Stella D’oro workers still lost their jobs when Brynwood sold Stella, at a loss, to an anti-union firm which moved the entire operation to Ohio and didn’t rehire any of the Bronx-based workforce.

Here’s my interview with Frazier about his story. He argues that steep economic inequality between workers and management undermined their ability to understand one another’s motives an achieve a mutually beneficial settlement. The workers refused to accept cuts because they saw themselves as making a last stand for their middle class way of life. If they accepted the cuts, many would have to move to worse neighborhoods, lose their health insurance, and be unable to afford college tuition for their children (which previous generations of Stella D’oro workers had been able to afford). Management regarded the workers as willful and impossible to deal with. Wasn’t any job better than no job at all? The workers countered that Brynwood promised its investors a 28% rate of return. By management’s logic, wasn’t any ROI better than none at all? Evidently not.

Frazier’s story emphasizes the challenges facing unions confronted with private equity owners that have no interest in keeping a business local, or running it over the long term. When Stella D’oro was family-owned, labor and management sorted out their differences quickly. When the going got tough, Brynwood unloaded Stella D’oro and allowed 134 desperately-needed blue collar jobs in the Bronx to be exported to Ohio. The irony is that Brynwood, by its own admission, lost millions of dollars in the process of unloading Stella. So much for the cold, dispassionate logic of capitalism.

[Photo: Lindsay Beyerstein, All Rights Reserved.]