Stella D'oro to close Bronx bakery following strike

by Eric Schroeder
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BRONX, N.Y. — Stella D’oro Biscuit Co., a manufacturer of cookies, breakfast foods, biscotti and breadsticks, is planning to close its Bronx bakery operations in October. The announcement was made a day before the company extended an offer to the 136 bakery workers who have been on strike since last August to return to work on July 7.

"Since the strike began almost a year ago, the company has been actively evaluating strategic alternatives to its high cost of production in the Bronx facility," Stella D’oro said in a July 6 statement. "In light of the alternatives currently under review, the company feels confident it can close the Bronx bakery operations in approximately 90 days, and still assure a continuing supply of high quality Stella D’oro products (during this transition and for the long term) to its retail partners and distributors that have stood by the company during this difficult period."

The company did not disclose how it intends to supply its products once the bakery closes in October.

The July 7 decision by Stella D’oro to invite workers back followed a June 30 judgment by a National Labor Relations Board administrative law judge ordering the company to reinstate the workers at pay and benefit levels in effect before the strike began. While Stella D’oro called the judge’s decision "completely flawed" and vowed to challenge the recommendation before the full N.L.R.B., the Bakery, Confectionery, Tobacco Wokers and Grain Millers International Union Local 50 representing the striking workers said the decision "vindicates the struggles and sacrifices of our members at Stella D’oro."

According to the B.C.T.G.M. Local 50, the strike was triggered by an illegal refusal to provide information necessary to good faith bargaining by Stella D’oro. The B.C.T.G.M. is in the process of considering its next actions.

Stella D’oro said the decision to close the Bronx bakery was not made in haste or without significant planning.

"What the union leadership has failed to grasp is that any business that cannot operate profitably must seek changes that will enable it to do so," Stella D’oro said. "Where labor costs are a significant component of the cost of goods, as they are in the baking business, a restructuring of labor costs is essential to business recovery. When such a labor cost restructuring cannot be achieved, management must look to other alternatives to maintain the business. By refusing to compromise and insisting on maintaining a high labor cost structure, the union leadership has ensured that the jobs that they were trying to protect would eventually disappear from the Bronx forever."

Stella D’oro, which was established by Joseph Kresevich and his wife, Angela, in 1930, was acquired by private equity firm Brynwood Partners V, LP from Kraft Foods Global, Inc. in January 2006. Since that time, Stella D’oro said Brynwood has made "substantial" investments in the Bronx bakery operations in an effort to return it to profitability.

"Since purchasing the company, the owners have continually supported the company and have funded approximately $6 million of capital to fund working capital, operating losses, and new equipment purchases," Stella D’oro noted. "The company’s expectation was that with the owner’s willingness to continue to invest in the business, together with some negotiated labor concessions, the company could get the Bronx bakery operations back on track to profitability."

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