When home furnishing giant Ikea selected this fraying blue-collar city to build its first U.S. factory, residents couldn’t believe their good fortune.
Beloved by consumers worldwide for its stylish and affordable furniture, the Swedish firm had also constructed a reputation as a good employer and solid corporate citizen. State and local officials offered $12 million in incentives. Residents thrilled at the prospect of a respected foreign company bringing jobs to this former textile region after watching so many flee overseas.
But three years after the massive facility opened here, excitement has waned. Ikea is the target of racial discrimination complaints, a heated union-organizing battle and turnover from disgruntled employees.
Workers complain of eliminated raises, a frenzied pace and mandatory overtime. Several said it’s common to find out on Friday evening that they’ll have to pull a weekend shift, with disciplinary action for those who can’t or don’t show up.
Kylette Duncan, among the plant’s first hires, quit after six months to take a lower-paying retail job. “I need money as bad as anybody, but I also need a life,” said Duncan, 52. She recalled having to cancel medical appointments for her ailing husband because she had to work overtime at the last minute.
Some of the Virginia plant’s 335 workers are trying to form a union. The International Assn. of Machinists and Aerospace Workers said a majority of eligible employees had signed cards expressing interest.
In response, the factory — part of Ikea’s manufacturing subsidiary, Swedwood — hired the law firm Jackson Lewis, which has made its reputation keeping unions out of companies. Workers said Swedwood officials required employees to attend meetings at which management discouraged union membership.
Plant officials didn’t return calls and declined to meet with a Times reporter who visited the Virginia facility. Swedwood spokeswoman Ingrid Steen in Sweden called the situation in Danville “sad” but said she could not discuss the complaints of specific employees. She said she had heard “rumors” about anti-union meetings at the plant but added that “this wouldn’t be anything that would be approved by the group management in Sweden.”
The dust-up has garnered little attention in the U.S. But it’s front-page news in Sweden, where much of the labor force is unionized and Ikea is a cherished institution. Per-Olaf Sjoo, the head of the Swedish union in Swedwood factories, said he was baffled by the friction in Danville. Ikea’s code of conduct, known as IWAY, guarantees workers the right to organize and stipulates that all overtime be voluntary.
“Ikea is a very strong brand and they lean on some kind of good Swedishness in their business profile. That becomes a complication when they act like they do in the United States,” said Sjoo. “For us, it’s a huge problem.”
Laborers in Swedwood plants in Sweden produce bookcases and tables similar to those manufactured in Danville. The big difference is that the Europeans enjoy a minimum wage of about $19 an hour and a government-mandated five weeks of paid vacation. Full-time employees in Danville start at $8 an hour with 12 vacation days — eight of them on dates determined by the company.
What’s more, as many as one-third of the workers at the Danville plant have been drawn from local temporary-staffing agencies. These workers receive even lower wages and no benefits, employees said.
Swedwood’s Steen said the company is reducing the number of temps, but she acknowledged the pay gap between factories in Europe and the U.S. “That is related to the standard of living and general conditions in the different countries,” Steen said.
Bill Street, who has tried to organize the Danville workers for the machinists union, said Ikea was taking advantage of the weaker protections afforded to U.S. workers.
“It’s ironic that Ikea looks on the U.S. and Danville the way that most people in the U.S. look at Mexico,” Street said.
The Swedwood factory is situated on the outskirts of Danville, in the midst of rolling tobacco country, just north of the North Carolina border.
For most of the last century the town of 45,000 relied on textiles and tobacco for jobs. Today the riverfront is lined with empty red brick warehouses and crumbling mills. With the unemployment rate high — currently at 10.1% — the city has put muscle behind attracting new companies, including Ikea.
“They’ve definitely given jobs to people that desperately needed them here,” city manager Joe King said.
Swedwood says it chose Danville to cut shipping costs to its U.S. stores. The plant has been run mostly by American managers, along with some from Sweden.
The facility looks like a series of interlocking, windowless white boxes — as neat as an Ikea store — with a blue-and-yellow Swedish flag flying out front. Employees inside produce Expedit bookshelves, which start at $69.99 in Ikea stores, and Lack coffee tables, which retail for as little as $19.99.
Low prices have helped Ikea weather the economic downturn. The company made 2.7 billion euros in profit last year, up 6.1% from 2009, according to its most recent financial statements.
Still, last fall, Swedwood eliminated regularly scheduled raises and made cuts to some pay packages in Danville. Starting pay in the packing department, for example, was reduced to $8 an hour from $9.75. Steen said the changes were made to free up more money to pay incentive bonuses to top performers.
The median hourly wage in the Danville area is $15.48, according to the Virginia Employment Commission.
Current and former plant employees said they resented the unpredictable work hours and high-pressure atmosphere. The plant assesses penalty points for violations of work rules; workers who accumulate nine of them can be fired.
“It’s the most strict place I have ever worked,” said Janis Wilborne, 63, who worked at the plant for two years and quit last year.
Six African American employees have filed discrimination complaints with the Equal Employment Opportunity Commission, claiming that black workers at Swedwood’s U.S. factory are assigned to the lowest-paying departments and to the least desirable third shift, from 11 p.m. to 7 a.m.
“If we put in for a better job, we wouldn’t get it — it would always go to a white person,” said Jackie Maubin, who worked the night shift in the packing department until last year, when she was fired on her birthday.
Swedwood has been trying to settle four of the discrimination complaints through mediation. The company initially offered Maubin $1,000. She settled for $2,000. She said she needed the money to keep her car from being repossessed.
Global competition has motivated all manner of companies to seek out low-cost sources of production, said Ellen Ruppel Shell, the author of the book “Cheap: The High Cost of Discount Culture.” Ikea is no exception. What’s different, she said, is that the company has done such a good job of burnishing its own corporate image.
“There’s a mythology around the company,” Shell said. “That’s why these kinds of revelations surprise a lot of folks.”