The Death of a Factory : Alcoa Closure Begs the Agonizing Question: Could It Have Been Avoided?
For all the shock, it is a blue-collar lament heard many times before: A once-bustling factory shuts its doors and a swarm of jobless workers hits the streets.
But if each shutdown is its own tale of agony, the impending death of Alcoa’s 56-year-old Vernon Works plant, near Downtown Los Angeles, is extraordinary nonetheless.
Because in the dreary litany of plant shutdowns in Southern California, it appears that this one factory might have stayed open--the jobs saved and the anguish avoided.
Instead, there were charges of broken trust, an outpouring of anger and, ultimately, a labor-management rift that grew wider than the 50-acre plant itself.
“It looks like we’re getting shut down because people won’t talk,” laments George Rodriguez, 36, a furnace operator and one of more than 600 aluminum workers who will lose their jobs as the plant closes, probably by the end of the year.
For decades, the factory complex has been a sturdy fixture on the gritty industrial landscape near the Long Beach Freeway. Recession, defense cuts, competition--the Vernon Works had survived them all. Its high-strength metals were used in aircraft, racing cars, softball bats and other products.
The plant employed parents and children, aunts and uncles--among them reportedly a grandfather, son and grandson from the same family.
Many identified closely with the factory, where union salaries enabled ordinary working people to afford a house, a new car, maybe college tuition for the kids.
Al Roberts, 61, moved from the coal country of eastern Pennsylvania to the factory world of Southern California in the 1950s. He was able to support a family of six on his Alcoa pay. It was an era when workers often felt loyalty toward their employers and typically were rewarded with wages affording a rising standard of living.
“Times have changed,” Roberts says. “People have changed, and I think Alcoa’s corporate thinking has changed. Personally, I feel sorry for the younger people.”
A few months ago, the situation in Vernon took a crazy turn. Pittsburgh-based Alcoa abruptly asked the United Auto Workers to reopen the three-year contract signed in June, 1993. The workers were flabbergasted.
“Mind-boggling!” said Gene Hurd, president of UAW Local 808, describing Alcoa’s bid to start the bargaining all oover again.
“Mind-boggling!” William R. Kvochak, a plant general manager and vice president, said of the union members’ answer. It was no.
It was not the first time Aluminum Co. of America had asked its employees for concessions, and the Vernon workers believed they had made their share of sacrifices over the years.
In 1984, the union reluctantly accepted a two-tier pay system under which new hires’ wages often would be $3 an hour less than those of others doing the same job.
Labor and management also had cooperated on disciplining workers who played hooky and on improving workplace safety. They had agreed to reduced vacation benefits and changes in employee medical coverage. Since the mid-1980s, the Alcoa workers had endorsed contracts with raises that barely kept them ahead of inflation.
Last year, when the UAW and Alcoa agreed on a three-year contract, the employees expected their jobs to be safe for a while.
Alcoa even awarded a $1,300 bonus for accepting the agreement, under which wages ranged from $8 to $16 an hour. Rodriguez went out and bought a house in Riverside. Some of his co-workers bought new cars and other costly items.
“I knew we had three years” of job security, Rodriguez says.
In fact, grave problems continued to endanger the health of the plant. Powerful global market forces were buffeting Alcoa. Russia was flooding the West with aluminum, battering the corporation’s bottom line and disrupting the entire industry.
Vernon, meanwhile, was competing with non-union shops in Anaheim and Santa Ana that reportedly enjoyed a $10-an-hour advantage on labor costs.
On top of that, Alcoa executives were increasingly disappointed with the pace of jetliner construction in recent years. The lull meant declining orders for aluminum from Boeing, McDonnell Douglas and other airplane builders.
“Business just kept deteriorating,” said William R. Kvochak, a vice president and general manager at the plant. “We really had no choice but to see if, collectively, we could save the business.”
In several meetings in the second week of March, company officials warned the workers that refusing to reconsider their wages and benefits could trigger a shutdown. Alcoa did not spell out what concessions it was seeking.
A few days later, about 400 members of UAW Local 808 gathered in Paramount to decide on a response.
A sense of bitterness filled the union hall, some who attended recall. The workers felt betrayed, and the tension was also awkward for the UAW hierarchy, which has seen the union’s overall membership slip from 1.4 million in the late 1970s to 800,000 today.
UAW International representatives from Detroit, backed by regional union officials in Artesia, drew an angry response when they recommended that the workers hear what the company had to say.
“People were screaming like crazy,” recalled Rosa Nunez, a Vernon plant employee for six years. “It wasn’t communication.”
There was another kind of uneasiness in the hall as well. A schism between generations was felt by at least some of those present.
One in three members of the local was qualified for retirement benefits. For the younger employees, however, plant closure was a tougher proposition, albeit cushioned by jobless benefits for 18 months or longer.
Nunez, 40, says she holds no ill will toward older colleagues, but she offers a blunt analysis of what happened at the fateful meeting:
“Sure, you’re going to vote not to open the contract--because you’re going to go home and rest and watch TV and get your check every week.”
In fact, the vote to reject Alcoa’s request was made by a unanimous show of hands and supported by workers young and old.
“My friends told me, ‘You’re going to be in trouble if you leave your arm down,” ’ says Nunez, who is now working to start a child care business. “I felt the pressure, and I put my arm up.”
That Monday, in compliance with a 1988 federal plant-closure law, Alcoa announced that it planned to shut down the Vernon Works.
It was not an epic event in California industry. Los Angeles County alone has lost 167,400 of its high-paying industrial jobs since early 1990--and more than 250,000 jobs since the peak in 1979--as employers leave the region--and often the nation--in pursuit of cheaper labor, less red tape and other cost savings.
Some of the more famous names survive as relics on the map: Firestone Boulevard, and now Alcoa Avenue.
South Gate was walloped by closures of a Firestone tire factory and a General Motors assembly plant in the early 1980s. Ford in Pico Rivera, Chrysler in Commerce, Kaiser Steel in Fontana, GM in Van Nuys--the stories are similar.
According to labor economist Goetz Wolff, who compiled the Los Angeles figures, closure of the Vernon Works “illustrates the bleeding” that continues.
But if many mourn heavy industry, others warn against getting sentimental: The future, they say, belongs to newer, more competitive manufacturers in Southern California that make everything from designer drugs to specialized software.
The departure of an Alcoa or a GM may be distressing, but it falls within the normal flux of a dynamic economy, they assert.
What’s more, Alcoa--a powerhouse whose growing empire employs 63,000 people at 164 operations in 24 countries--was acting in line with other U.S. corporations that have sought changes to improve productivity. Layoffs, consolidations and other measures have won plaudits from economists who believe that U.S. industry has gained muscle in the painful process and that the nation ultimately will benefit.
Alcoa “can’t control the price of aluminum,” notes Charles A. Bradford, an analyst at UBS Securities in New York. “The real key is to be the low-cost producer. Otherwise, you’re not going to survive.”
Still, nagging questions make it difficult to write an obituary for the Vernon Works.
Did the workers make a grievous mistake and doom their own jobs by refusing to reopen the contract? Did Alcoa, bent on cost cutting, plan to unplug the factory no matter what?
Threatening to shut down a factory is a classic form of management pressure used at contract time, one that leads to a perilous game of who-blinks-first.
“Companies say this all the time. Sometimes they mean it and sometimes they don’t,” says Richard Rothstein, a research associate at the Economic Policy Institute and a former labor negotiator. “Sometimes unions guess right and sometimes unions guess wrong. Sometimes companies guess right and sometimes companies guess wrong.”
As some employees see it, one part of Alcoa’s explanation for wanting to reopen the bargaining--the aerospace slump--is dubious because that slump had been going on for years. Surely, the workers figured, aerospace ups and downs were built into Alcoa’s thinking long before 1994.
“We don’t trust them any longer,” says Rodriguez, a father of three who makes $13.70 an hour. “Alcoa is a big corporation. If they give us a signing bonus in July and then come right back to say, ‘We need concessions,’ something smells.”
Some of the workers interviewed said they believed the shutdown ultimatum was just talk, or would apply only to the least profitable sections of the factory.
Finally, there was the anger. Many employees felt they had been asked for concessions “one too many times,” says Hurd.
From the management side, a profoundly different view emerges.
Kvochak is a soft-spoken manager whose three stints at the plant add up to 18 years. He maintains that the beleaguered factory could have been rescued with a new labor contract.
On a recent stroll through one of its cavernous buildings, now mostly vacant except for scattered piles of shiny metal tubes and other unfinished materials, Kvochak points to a $200,000 concrete floor that was installed this year.
“If there was some predestined plan to shut this place down, we wouldn’t have spent the money,” he says.
Despite the labor-management breach, Kvochak speaks with affection of his former employees and the factory complex that was their home for so many years.
“It’s a great place,” he says, walking past furnaces and machines that are mostly silent now.
“There are great people. It’s really sad. Really sad.”
Factory Jobs
Los Angeles County has lost more than 250,000 manufacturing jobs since its all-time peak in 1979, while non-manufacturing jobs have increased. Heavy industry, including many high-paying unionized jobs, has been hit the hardest. In the job index below, 1979 = 100.
High-tech manufacturing (1993): 69.0
Non-manufacturing (1993): 114.6
Light manufacturing (1993): 90.9
Heavy manufacturing (1993): 55.0
Source: Goetz Wolff, Resources for Employment and Economic Development
Aluminum Prices
As the Soviet Union fell apart, Russia flooded the West with aluminum in a bid to earn hard currency for its battered economy. Worldwide aluminum prices collapsed in 1990 and remain at low levels. Quarterly prices per pound, in cents:
‘94: 56.45 cents
Source: WEFA Group
