Union woes brewing at Coke bottling

NEW YORK (CNNMoney.com) -- Something less sweet and decidedly more bitter than fizzy soft drinks is bubbling at Coca-Cola Enterprises, the biggest bottler of Coca-Cola beverages.

The Teamsters union said it has put Coca-Coca and its bottler "on notice" after Coca-Cola Enterprises announced in February that it would cut 3,500 jobs, or about 5 percent of the company's work force, in a bid to cut costs.

Earlier this month the union, which represents more than 14,000 Coca-Cola and Coca-Cola Enterprises (Charts) workers in the United States and Canada, held a rally in New York's Times Square to protest the job cuts and what it claimed were increasing worker and environmental abuses by Coca-Cola (Charts).

The union said it has joined with Coke and CCE unions worldwide in demanding that the bottling company agree to a global workers' rights plan that would include independent monitoring and oversight.

Atlanta-based Coca-Cola, the world's No. 1 soft drink maker, has about 71,000 workers worldwide. Atlanta-based bottler CCE has about 74,000 employees.

"We want Coca-Cola to stop cutting costs on the backs of workers by slashing employment, pay and pension benefits in order to compensate for poor management and short-sighted planning," Paul Garver, a leader at the International Union of Food Workers, said last week. The union represents about 2,500 workers at Coca-Cola Bottling.

Now the Teamsters union is stepping up its fight. It plans to hold a conference call on Monday with analysts and investors to discuss the escalating problems with Coke and Coca-Cola Enterprises. The union said the dispute "could threaten U.S. operations and international labor relations which could include wide- ranging strikes and accompanying service disruptions."

Teamster contracts covering about 3,500 workers are due to be renegotiated in a number of major markets around the country this year, according to Teamster spokesman David White, who added it was "difficult to say" if there would be a strike this year.

Morningstar analyst Matthew Reilly said he was watching the situation closely. "Since the bottling company has more union representation than Coca-Cola company, this latest union flare-up is a more present danger for CCE rather than Coke," Reilly said.

If there is a strike, Reilly fears it could hurt the bottling division's sales and profits.

"CCE is in a tough spot already," said Reilly, noting its relationship with Coca-Cola is strained. The bottling company is struggling with higher prices for aluminum, which raises the cost of cans, as well as corn syrup, a sweetener in soda.

Moreover, CCE's stock price has stalled, up just 1 percent over the past 12 months, versus a 20 percent increase for shares of Coke.

Industry watchers said CCE doesn't have a choice. It has to look for ways to reduce costs and appease investors. If not, the stock price will suffer some more.

"Anytime you have significant job cuts, there will be repercussions. Sure enough, unions will protest. They want to save jobs and ensure that benefits and salaries for their remaining members are maximized," said Reilly. "But I'm sure CCE's management must have anticipated this. So I'm not too worried that business will come to a standstill because of the union issue."

Officials at Coke and its biggest bottler could not immediately be reached for comment.

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