March 5, 2018

Unions sue gunmaker Colt's for alleged outsourcing breach

Pablo Robles
Pablo Robles
Colt's West Hartford facility.

Colt's Manufacturing Co., which emerged from bankruptcy two years ago and received a $10 million loan from the state last year in exchange for a pledge to maintain and grow jobs in West Hartford, is being sued by two labor unions that say the gunmaker has violated a collective bargaining agreement by outsourcing significant production and laying off dozens of local workers.

The Amalgamated Local No. 376 and United Automobile, Aerospace and Agricultural Implement Workers of America, AFL-CIO filed the civil lawsuit last week in New Haven's U.S. District Court District of Connecticut, alleging that Colt's has violated a labor compact that runs through 2019 by outsourcing all manufacturing of major rifle components, including the two most significant parts -- bolts and barrels -- to outside vendors, court documents said.

That decision was made last October and challenged by the unions, which brought its grievance to arbitration, court documents say.

Last month, however, Colt's laid off 74 union employees because the company was moving forward with the outsourcing, even though the arbitration case isn't being heard until July, court records show.

In addition to the lawsuit, which is asking a judge to reverse the layoffs until the arbitration case is heard, the unions have filed a complaint with the National Labor Relations Board.

Colt's hasn't been unfamiliar to the courts in recent years. It filed for bankruptcy in June 2015 after losing a major military contract and not coming to terms with bondholders on restructuring over $200 million in debt at the time.

The bankruptcy case lasted until Jan. 2016 and was contentious at times, with bondholders accusing Sciens Capital Management, a New York investment management firm with a stake in Colt's, of draining the company of cash and not investing enough in research and development.

According to last week's lawsuit, Colt's management and the unions entered into a memorandum of understanding in Dec. 2015, right before the company exited Ch. 11 reorganization, reaffirming the provisions of an existing collective bargaining agreement that runs from 2014 to next year.

According to the MOU, obtained as part of the court documents, the unions and Colt's agreed to form a joint labor relations committee that was supposed to meet bi-weekly to help improve the business, including to: enhance visibility into sales forecasting, production scheduling and production volumes; develop protocols, where mutually agreed, to more effectively administer certain provisions of the CBA; and identify opportunities to improve gross margins and enable Colt's to become more competitive and profitable, among other things.

The MOU also talked about developing new incentive compensation programs for Colt's hourly employees and establishing guidelines regarding "make vs. buy" decisions that are consistent with existing job-security provisions of the CBA, court records say.

That included jointly identifying areas for further infrastructure investment and developing target levels of production for Colt's in West Hartford.

Colt's did not immediately respond Monday to a call for comment. Lawyers for Colt's and the labor unions also didn't return emails and calls for comment.

Shrinking workforce

Colt's unionized workforce has been shrinking over the years, court documents say.

The current spat started in Oct. 2016, when Colt's announced it was making layoffs and discontinuing second-shift operations at its 547 New Park Ave. plant for two parts-manufacturing operations — bolts and bolt barriers.

The union filed a grievance shortly thereafter alleging that Colt's was violating the CBA by continuing to purchase some of those parts from outside vendors while eliminating the jobs of union employees, court documents say.

Colt's responded to the grievance by stating that financial conditions forced it to reduce costs by outsourcing parts, court documents say.

Both sides worked for months to try to hash out their differences during pre-arbitration meetings and eventually agreed to develop more specific and detailed plans to return parts manufacturing in-house.

But by last October, Colt's informed the unions they would move forward with the outsourcing plans.

Colt's employed about 506 union members in Oct. 2016 compared to 288 today, court documents say.

State aid

In March 2017, shortly after Colt's emerged from bankruptcy, the state announced a $10 million loan package for Colt's in exchange for the company maintaining and growing its West Hartford workforce. Colt's employed 615 people at the time.

The UAW at the time supported Colt's request for state aid. Colt's received the loan funds last April, according to Jim Watson, a spokesman for the state Department of Economic and Community Development. Under the contract, the company must have an average of 615 jobs for 60 consecutive months ending Dec. 31, 2021.

According to the state at the time, the money was going to help Colt's acquire its New Park Avenue headquarters. It was also going to help the company retain its workforce of 600 employees (at the time) and lead to the creation of an additional 100 local jobs.

According to the lawsuit, Colt's and its labor unions discussed plans to pursue the $10 million loan while it was still in bankruptcy.

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