Express Scripts to close a second Pennsylvania facility

Union officials are weighing options as they consider how to respond to Wednesday's news that Express Scripts Inc. will shut down its second facility in Bensalem on Feb. 1, putting about 500 union pharmacists, warehouse staff, and customer-service employees out of work.

The mail-order pharmacy, with headquarters in St. Louis, informed employees at a series of meetings held in a large conference room at its Street Road facility.

The company plans to close its Marshall Road plant Dec. 16, idling 350 employees.

"On December 16, we'll have the right to strike," said Stephanie Haynes, chief negotiator for the union, Service Employees International Union Healthcare Pennsylvania.

The two plants employ about 1,000.

"This is not the outcome we desired," company spokesman Larry Zarin said. "The economic model that we try to maintain is to bring down health-care costs. This particular location was the anomaly to that model."

Zarin said labor costs were higher at the Bensalem plants than at any of the company's other facilities. Express Scripts, which employs 14,000 in 14 U.S. facilities, reported $24.7 billion in revenue and $827.6 million in profit in 2009. It bought the two Bensalem plants in 1998.

To save their jobs, employees and the union had embarked on an ambitious publicity campaign aimed at investors, customers, politicians, the labor movement, and the local community.

The union released a 25-page report with 135 footnotes this week that detailed lawsuits and investigations into the company's business practices. Mailed to investors and customers, the report advises them to ask if the closure of the Bensalem facility leaves Express Scripts with sufficient capacity to process orders as its business expands.

"This raises the stakes dramatically," said Philip Dine, author of the 2008 book State of the Unions.

"Both the aggressiveness and the thoroughness of this report, as well as the strong and accusatory wording, are rather unusual," he said.

"Even if this approach persuaded Express Scripts to change its plans, it could hurt the company in a way that would affect the workers and the union," he said.

"While this . . . could potentially backfire, it looks like SEIU feels it has nothing to lose in this instance, and may also be sending a warning to other companies that it means business," he said.

SEIU also enlisted the help of area politicians, among them U.S. Rep. Patrick Murphy, the Democrat who represents Bensalem. He wrote a letter to an Express Scripts customer, the U.S. Defense Department, asking it to look into the company's ability to process prescriptions.

In 2009, Express Scripts had considered adding jobs, investing in technology, and expanding at the former Jones New York apparel company headquarters in nearby Bristol Township.

But, company spokesman Thom Gross said, the company was unable to reach an agreement with the union.

"We did give them $3.5 million in concessions, but they declined them," Haynes said.

The union's current contract expires Dec. 15.

Both sides have been bargaining since May, but in October the company told the union that it would close first Marshall Lane, then Street Road, if there were not sufficient concessions, the union said.

Concessionary bargaining is a common trend in today's economy, said management lawyer James A. Matthews 3d, who is chairman of the employment practice of Fox Rothschild L.L.P., a Philadelphia law firm.

"You are seeing unions much more willing to engage in concessionary bargaining today," he said. "It's a question of who has power in a negotiation. There are times when unions have more power and there are times when management has more power. This is one of those times."

SEIU's Haynes said Express Scripts sought $8.8 million in annual cuts, and the union responded with more than $8 million, including giving up pensions, paying more for health care, and accepting wage cuts and freezes.

The company sought more in its final offer, which was voted down overwhelmingly Nov. 23 and 24.

"I don't want Philadelphia Inquirer readers to think the union closed the plant over $800,000," Haynes said. "$800,000 wouldn't have kept this plant open. I think they perceive that having a unionized workforce prevents them from maximizing profits," she said. "We disagree."

She said that only a handful of issues remained and that she had expected to return to bargaining Tuesday. Instead, she said, the company canceled negotiations, later telling her to prepare to bargain over layoff issues such as severance.

"It'll be interesting to see whether people will still come and work for them, depending on the company's stance," she said.

Both sides have been playing hard ball. In November, the company suspended three union leaders, accusing them of acting improperly by contacting customers, including unions, who hired Express Scripts to distribute prescriptions.

The idea that closing these plants has "anything to do with unions is completely inaccurate," Zarin said. He said the company just added 250 union jobs at a plant in Harrisburg.

"I want to stay above the fray of the specifics" of the negotiations, he said. "We have made multiple offers and feel we have exhausted the process."