Unions Under Fire: Would You Invest in These Union Friendly Companies?

Unions Under Fire: Would You Invest in These Union Friendly Companies?

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UAW fails to unionize US VW plant. Will investing in union friendly companies help organized labor stay relevant?

For the past week, the United Auto Workers (UAW) has been dealing with the aftermath of a crushing defeat at a Volkswagen (OTC: VLKAF) plant in Tennessee. The Chattanooga facility seemed like the perfect candidate for realizing UAW President Bob King’s goal of unionizing a foreign-owned auto plant in the South. After all, the automaker didn’t oppose unionization; in fact, back in November, former VW America head John Browning expressed the company’s desire to have a works council—a joint worker representative-employer committee—at the plant.

Yet last Friday’s 712-626 vote revealed that the appeal of UAW membership failed to gain traction among employees. The outcome was the culmination of a strong campaign by local and national conservatives—including Tennessee Senator Bob Corker and a group linked to anti-tax advocate Grover Norquist—to stop the UAW’s union drive.

Earlier this month, the Norquist-backed Center for Worker Freedom placed billboards around Chattanooga warning workers of a Detroit-like future if they decided to unionize. And on February 12th, the first day of voting, Senator Corker released a statement saying that voting against the UAW would secure SUV production at the plant.

The Chattanooga vote was the first of several planned by the UAW in a Southern right-to-work state. The UAW is currently trying to sign up workers at Daimler AG’s factory in Vance, Alabama and at Nissan (OTC: NSANY) plants in Tennessee and Mississippi. Friday’s result throws the UAW’s foreign car plant strategy into serious question.

Unions Face Challenges

The UAW defeat is the latest obstacle for a union that has been suffering from a 75% decline in membership since 1979. It is also representative of the larger struggle US labor unions currently face in maintaining relevancy.

Last month, equipment maintenance and repair technicians at an Amazon (AMZN) fulfilment center in Delaware voted 21-6 against joining the International Association of Machinists and Aerospace Workers (IAMAW). The notoriously anti-union e-commerce giant celebrated the decision, stating, “Our employees have made it clear that they prefer a direct connection with Amazon.”

Earlier in January, Boeing's (BA) IAMAW employees narrowly approved an eight-year contract extension that secured production of the new 777X jetliner in Washington state. The vote follows months of back-and-forth between the aerospace manufacturer and the union, including a 67%-33% rejection of the deal back in November.

Following that decision, Boeing announced that it was soliciting offers from 22 states for the 777X project. The New York Times reports that the threat of losing thousands of jobs divided the IAMAW, with local members refusing to vote again and the parent union insisting on it. Ultimately, the parent union and Boeing won as members voted 51%-49% to accept the new contract.

Investing Ideas

These recent setbacks to unions at some of the most recognizable and successful companies in the world inspired us to take a closer look at union friendly companies. To do this, we turned to CSRHub, a corporate social responsibility database that scores companies' performances in numerous categories.

We began by screening for US companies that are labor union supporters. Next, we screened for companies with overall employees rating of 50 or higher. Scores on CSRHub are converted into a rating from 0-100, with 100 being the most positive. CSRHub compiles employee rankings from data provided in three subcategories: Compensation & Benefits, Diversity & Labor Rights, and Training, Safety, & Health.

We also included earnings per share (EPS) information: EPS growth quarter over quarter, EPS growth this year, and EPS growth expected over the next five years. This left us with three union friendly companies.

The List

Click on the interactive chart below to see sales data over time.

Do you think the EPS of union friendly companies benefit or suffer from the presence of labor unions ? Use this list as a starting point for your own analysis.

 

1. Koppers Holdings Inc. (KOP, Earnings, Analysts, Financials): Provides carbon compounds and commercial wood treatment products to aluminum, railroad, specialty chemical, utility, rubber, concrete, and steel industries.

Market cap at $776.58M, most recent closing price at $37.33.

Overall employees rating: 68. Its strength is in Diversity & Labor Rights where the company has a rating of 71. Koppers has ratings of 67 in both the Compensation & Benefits and Training, Health, & Safety subcategories.

EPS quarter over quarter at 19.50%. EPS this year at 15.00%. EPS next 5 years at 17.00%.

P/S ratio at: 0.5.
 

2. Great Plains Energy Incorporated (GXP, Earnings, Analysts, Financials): Engages in the generation, transmission, distribution, and sale of electricity in the United States.

Market cap at $3.95B, most recent closing price at $25.85.

Overall employees rating: 53. Its strength is in Diversity & Labor Rights where the company has a rating of 55. Great Plains Energy has a rating of 54 in Training, Health, & Safety and a rating of 53 in Compensation & Benefits.

 EPS growth quarter over quarter at -2.10%. EPS growth this year at 8.00%. EPS growth next 5 years at 7.00%.

P/S ratio at: 1.65.
 

3. United Continental Holdings, Inc. (UAL, Earnings, Analysts, Financials): Engages in the provision of passenger and cargo air transportation services.

Market cap at $15.62B, most recent closing price at $45.30.

Employee ratings: 52. Compensation and benefits: 59. Diversity and labor rights: 54. Training, health, and safety: 43.

Overall employees rating: 52. Its strength is in Compensation & Benefits, where the company has a rating of 59. United Continental Holdings has a rating of 54 in Diversity & Labor Rights and a rating of 43 in Training, Healthy, & Safety.

EPS growth quarter over quarter at 119.40%. EPS growth this year at 167.00%. EPS growth next 5 years at 35.70%.

P/S ratio at: 0.42.
 

(List compiled by Mary-Lynn Cesar. Employee ratings sourced from CSRHub. Quarterly sales data sourced from Zack's Investment Research.)

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