Mar 6, 2024 - Business

Unions are flexing new muscles in deals, boardrooms and proxy battles

Illustration of "Uh-Oh" engraved on a C-suite name plate.

Illustration: Shoshana Gordon/Axios

Unions are wielding influence far from the picket line, flexing their muscles in various ways across a range of industries.

Why it matters: Labor has more leverage over companies these days thanks to relatively high public approval, a tight labor market, and election-year politics.

State of play: The United Steelworkers are loudly objecting to the $15 billion acquisition of U.S. Steel by Japan-based Nippon Steel.

  • A labor coalition attempted to get their slate of directors onto the Starbucks board of directors.
  • Rail worker unions are defending the CEO of Norfolk Southern against an activist investor's campaign to oust him, the WSJ reports.

Zoom in: The steelworkers have the Biden administration's ear. Last month, the union put out a statement saying that they had assurances from the White House that "Joe Biden has our backs."

  • United Steelworkers are also pushing lawmakers on this. Members of Congress across both parties have already spoken out against the deal, and the union said Tuesday that it's encouraging others to do the same.
  • Because the steel deal involves a foreign company, it's set to be reviewed for national security risks. It's a murky process that hinges on the Biden administration's support, Bloomberg reports. And the union's opposition is complicating the process.
  • "[I]t's hard to overstate just how rare it is for a union to hold this much power during a deal review," according to the Bloomberg report.
  • The union is set to meet with Nippon later this month as the Japanese company courts its approval.

Over at Starbucks, the group trying to reshape the board, a coalition of unions called the Strategic Organizing Center, officially dropped its effort Tuesday, noting that progress has been made: Starbucks and the union recently agreed to commence contract negotiations.

  • (An influential adviser group also advised shareholders to vote for Starbucks' nominees.)

Between the lines: The labor groups started the boardroom fight, in part, because the Starbucks union had been unable to get the company to the negotiating table — and is still without a contract after more than two years of willing union elections.

  • "The union was struggling to find various ways to put pressure on Starbucks because they don't have traditional pure and simple bargaining power," says Harry Katz, a professor of collective bargaining at Cornell's ILR School.

Zoom out: The Starbucks proxy battle has other boardrooms worried.

  • "In the past few months, the majority of our meetings — on the topic of just corporate preparedness — have included a discussion about Starbucks," Jim Rossman, global head of shareholder advisory at Barclays, told Axios. "It's an extraordinary wake-up call for corporate boards in America."

The big picture: We're in a presidential election year and both Biden and Trump are courting union voters  labor's sway is peaking.

Reality check: Unions have long tried to use their influence in dealmaking and other corporate endeavors with varying degrees of success. While labor certainly has more leverage now, we're not witnessing a sea change.

  • Overall, unions still represent a tiny share of the U.S. workforce and though recent wins are notable, their power is still muted compared with their 20th century heyday.
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