Richard L. Knowlton used to be widely admired here as the quintessential local boy who made good.
Son of a union meatpacker, Knowlton worked since high school for George A. Hormel & Co., working his way up from the malodorous chores of hog rendering to be $339,000-a-year chief executive of the Fortune 500 company that transforms 2 million hogs a year into ham and Spam.
But now, the anger aimed at the company and Knowlton runs so deep that "Wanted" posters bearing his caricature have appeared in his home town in northern Minnesota, along with "Cram Your Spam" picket signs. Knowlton and his executives are reluctant to venture into parts of their plant because of loud boos and catcalls from many of the 1,750 unionized workers.
In this company town of 23,000, three thousand people gathered last week for a boisterous rally at Austin High School, where Knowlton starred on the 1950 football team, to declare a war, of sorts, on Hormel -- because Dick Knowlton has cut everybody's pay by 23 percent.
The battle began Oct. 8 when Hormel, despite consistent profits of $25 million or more a year, imposed a cut in hourly wages from $10.69 to $8.25, amounting to a loss of nearly $100 in the weekly paychecks of members of Local P-9 of the United Food and Commercial Workers union (UFCW).
Wage cuts have become common in the nation's older, heavily unionized industries, and especially in meatpacking, a business hit by slumping consumer demand, aggressive nonunion competitors, bankruptcies and strikes.
Thousands of unionists at meatpacking giants such as Swift and Armour have lost their jobs through layoffs or firings.
Unionized companies have shut down, reorganized and reopened as lower-wage, nonunion shops. The majority of the nation's 100,000 remaining union meatpackers has taken pay cuts, but not at Hormel -- until now.
Hormel, which paid the highest wages and had the second-highest profit in the industry, contends that it must cut pay because its major competitors had slashed wages from the industry standard of $10.69 an hour to as low as $5.50. If Hormel does not follow suit, it says, its "fragile" 2 percent profit margin may quickly turn into a loss. The local union disagrees.
An aggressive local union in the populist tradition that spawned Minnesota's Democratic-Farmer-Labor Party is launching a grass-roots counterattack, an unusual "corporate campaign" aimed not only at the company but at the First Bank System of Minneapolis, Hormel's major financial backer.
"We have researched this company inside and out, and there is no reason for concessions," said James Guyette, a third-generation Hormel meatcutter who heads the local union. He noted that Knowlton had been quoted in business publications as saying the company plans to spend as much as $100 million in acquisitions at the same time it wants wage concessions.
"Hormel has new plants all over the country at a time when the rest of the industry is going belly-up. They're in a position to take over this industry," Guyette said. ". . . We say this is greed, not need."
His hard line has led some local people to dub Guyette, 35, "the Lech Walesa of Austin," a comparison with the Polish labor leader that Guyette said has been meant as both compliment and criticism.
Knowlton calls the union's strategy "suicidal," saying that resisting wage concessions will lead eventually to loss of jobs.
"We understood how much this hurts our people . . . . We don't want to do this," Knowlton said, but he added that the alternative to wage cuts likely would be slippage in Hormel's strong position in a highly competitive industry.
"I think the slogan here should be, 'The job you save may be your own,' " he said.
The union escalated the battle and stirred up the industry by bringing in Ray Rogers, a New York labor consultant highly regarded in labor circles because he was a key strategist in the successful 1980 textile-union drive to organize J.P. Stevens Co., the southern manufacturer that resisted unionization for decades.
Rogers, 40, a former VISTA volunteer in Appalachia who now runs a company called Corporate Campaign Inc., is a labor evangelist in dungarees who preaches worker power at a time when most unions are in retreat.
He outlined his strategy at Austin High in October and again last week to cheering crowds in an atmosphere resembling a school pep rally.
Saying that unions often employ shortsighted strategies and make concessions too easily, Rogers exhorted: "You can create a moment in history, so people can turn to Austin and say, 'That's where they turned back the onslaught against the labor movement.' "
"It was like we won the state basketball tournament," union member and city Alderman Robert Dahlback said after a Rogers rally.
The corporate campaign, a strategy used by a growing number of unions, is based on the belief that conventional strikes are usually a losing proposition but that economic, political and moral pressure can make life miserable enough for corporate officials and their bankers to force labor-policy changes. The tactics include picketing at publicity-shy bank branches, withdrawing bank deposits and pension funds and peacefully disrupting stockholders' meetings.
The local union's campaign, scheduled to begin in earnest after Christmas, has not been endorsed by the 1.3 million-member UFCW, the Washington-based international union that has settled for pay cuts to $9 an hour at eight other Hormel plants.
The local union is targeting First Bank because it has provided a $75 million line of credit to Hormel, holds much of the company's stock and is represented on Hormel's board of directors.
The bank is vulnerable, Rogers said, to a "well-deployed campaign force" to pressure bankers to pressure Hormel.
A campaign headquarters has been set up at the Austin Labor Center downtown, with pins in maps showing First Bank's 152 branches in six states. Slick advertisements and impassioned letters to Midwestern union members and bank stockholders have been printed for the opening salvo in an effort estimated to cost more than $300,000.
First Bank, the country's 17th-largest bank holding company with more than $20 billion in assets, said in a statement: "It is unfair for any party to attempt to penalize us in a matter that is solely between a company and its union. We cannot allow outside pressures to influence our customer relationships or decisions."
Anger runs particularly high among Austin's hog-butchers and their families, because many feel betrayed.
The union signed a long-term contract in 1978 that contained concessions, including elimination of longstanding incentive bonuses that had fattened paychecks for decades and helped make Austin a city of solidly middle-class homeowners.
To induce Hormel to build its much-heralded new plant here, the union had agreed to a 20 percent increase in production quotas that, thanks largely to Hormel's state-of-the-art hog-processing technology, means killing 750 hogs an hour. Employes also agreed to an unusual payroll deduction plan in which workers paid an average of $12,000 each into a fund that amounted to a multimillion-dollar low-interest loan to help the company build a plant here after Hormel said it might move.
"Everybody thought their wages were secure in that contract," said Mayor Tom H. Kough, who is a Hormel engineer and union member. "Guys went out and borrowed from banks, bought homes and new cars, and sent their kids to parochial school based on a $10.69 wage. Now, boom! You're making $8.25."
The mayor, who played on the 1950 Austin High football team with Knowlton, said he telephoned the Hormel boss when the cuts were announced, telling him: "Dick, whether or not this is legal, what you're doing is wrong. It creates bad blood to take a man and chop him down like that."
The pay cuts were made possible, legally, by a so-called "me-too" contract clause that said wages would be adjusted to keep Hormel in line with its five major unionized competitors.
The UFCW always assumed that the clause ensured steady raises, until the bankruptcies and concessions began in 1980 and Hormel invoked the clause to reduce wages.
The union contested the cuts, but an arbitrator ruled that Hormel could cut pay to $8.25 if the same move was made by Hormel's chief rival, the Oscar Mayer division of General Foods. Mayer and Hormel both proceeded, but the cuts are being contested in further arbitration cases.
The massive ruins of the partially demolished old Hormel plant loom over the sleek new $100 million automated plant in which Hormel-designed machines and robots perform marvels such as canning 440 Spams a minute or boning 1,600 pork shoulders an hour, tasks that once required hundreds of workers.
In 1933, the old plant was the site of the first recorded sit-down strike in America, but labor peace has generally prevailed since, with a company and a city sharing prosperity.
"We have tried so hard to do what's right for our people," Knowlton said, his voice cracking with emotion during an interview at his office, which is decorated with bronze, wooden and ceramic hogs.
Hormel, he said, is the industry leader, with $250 million invested in new plants, while other companies failed to modernize or deserted their home towns and built elsewhere.
"Look at the Omahas and the Sioux Cities. Nobody builds new plants in their cities . . . . They leave." Knowlton said. "The strange paradox is that [after rebuilding in Austin] we're still being kicked. I think it's unfair."
But to employes such as Robert Johnson, 37, who has worked at Hormel 18 years and has a wife and two children to support, the unfairness lies in the drastic pay cut. Johnson earned $600 a week in 1981 between salary and incentive bonuses. Now he expects to average $450.
"When they built that new plant, they told us we would never make less money than we did then. And we geared our lives to that," Johnson said, "Now they have us working 20 percent faster and they're paying us 20 percent less. Somebody has to stop this somewhere."