Pacific Steel Lays Off Half its Workforce, Citing Weak Economy

By Riya Bhattacharjee
Friday July 10, 2009 - 02:49:00 PM

West Berkeley’s Pacific Steel Casting, the nation’s fourth largest surviving steel foundry, is hurting badly. 

Company spokesperson Elizabeth Jewel told the Daily Planet Friday that a weak economy was playing havoc with its sales, forcing the steel plant to cut half its workforce. 

The foundry, which has been operating at Second and Gilman streets for 75 years, laid off a couple of hundred workers in the last seven months, including 40 in June, and announced that another 75 new layoffs are on the way, sometime after Aug. 31. Pacific Steel had about 600 workers on its payroll until earlier this year; the cuts will leave the company with just 300. 

Management positions have also been eliminated, she said. 

The company, founded in 1934, is suffering low sales in part because one of its biggest customers, the Peterbilt Motors Company, has drastically reduced orders. 

“They were a longtime, consistent customer,” she said. “We can only hope that the economy will turn around as quickly as possible and people will start ordering trucks once again.” 

Jewel also blamed the recession and the weak housing market, explaining that steel products were just not in demand at the moment. 

“Orders are way, way down,” she said. “Nobody is ordering castings. It’s similar to what’s happening in other cities, and we are not immune.” 

Because the company is privately owned and operated, it is not required to make its profits public. 

Jewel said Pacific Steel laid off a few workers in the 1980s, but the numbers have never been this bad. 

“There have been cuts across the board—it’s the most serious situation in the last 20 years,” she said. “It’s heartbreaking. We are a family-held company and we have multiple generations of employees. These are people who have been working here for 30 years.” 

Most of Pacific Steel’s workers are Spanish, Asian or German immigrants and belong to the Glaziers, Molders, and Plasterers Union Local 164B. 

The union is working with Pacific Steel to provide counseling to the laid-off workers, advising them on how to find new jobs and survive foreclosure. 

Ignacio De La Fuente, the union’s vice president and an Oakland city councilmember, blamed the layoffs on the economic slump as well as environmental activism, which he said had compelled Pacific Steel to invest a lot of money on new technology for cleaner air. 

Local environmental groups and West Berkeley residents have protested what they say are toxic air emissions and odors from Pacific Steel for over two decades. Some area residents have blamed the steel mill for their health problems, even taking the company to court several times. 

“When there are no orders for products, no work and no money, eventually the workers will have to go,” De La Fuente said. “The economy is down, and the City of Berkeley and some environmental groups and small groups of people in West Berkeley have asked Pacific Steel to spend millions and millions of dollars on environmental technology, installing scrubbers, fan systems and air monitors.” 

De La Fuente said Pacific Steel’s legal expenses in battles against environmental groups may have affected the company as well.  

“The fact is that all this has taken its toll and there is less and less money,” he said. “I have represented the union since 1978 and we have had 10 to 20 layoffs at the most in the past. This is serious.” 

However, environmental groups and activists denied having any role in the layoffs. 

“There is not a shred of evidence that the layoffs are the result of environmental activism,” said Bradley Angel, executive director of Greenaction for Health and Environmental justice, one of the nonprofits which have pushed for cleaner emissions. “Pacific Steel still has the same permits with the same operating conditions they have had for a very long time, so blaming concerned community members for the layoffs ordered by this greedy corporation is shameful. Ignacio De La Fuente and the Pacific Steel bosses are more concerned about protecting corporate profits than the jobs or health of their workers.” 

L A Wood, an environmental activist who ran for Berkeley City Council last year, questioned De La Fuente’s motives for singling activists out. 

“Perhaps he feels threatened by the community’s inquiries into health issues—that says something about how effective we have been about getting his attention,” he said. “Honestly, we did very little to affect their operations. Pacific Steel has been operating under the gun since 1980 and they have dictated their own course. They should be working with us, and not see us as the enemy.” 

Ruth Breech, program director for Global Community Monitor, another environmental group, said that a cleaner, technologically advanced facility showed that the company was interested in making a long-term investment in the community. 

“When they make that investment, it means ‘we are going to be in the city for a long time,’” she said. “It shows they want to be a good citizen. Being a visionary, you’d expect Pacific Steel to reform its plants way ahead of everyone. All the legal stuff doesn’t have to happen if Pacific Steel is transparent and willing to talk to everyone, rather than pointing fingers at neighbors who are entitled to breath clean air.” 

Berkeley councilmember Linda Maio, whose district includes Pacific Steel, said there would be tremendous ramifications from the cuts. 

“There’s going to be a ripple effect—not just for the families of the workers, but for the city as well,” she said. “These are very good jobs with high-quality benefits, so there will be social impacts as well.” 

Maio blamed Gov. Arnold Schwarzenegger for California’s budget deficit, which she said was negatively impacting trade and industry in the state. 

“Maybe when President Barack Obama’s stimulus plan really hits, we will see some new construction projects which will improve things,” she said. 

The only other large industrial employer in West Berkeley was the pharmaceutical company Bayer, Maio said, which had not been as badly hit. 

As for whether environmental activists had effected the layoffs at the plant, Maio said there was very little basis for that argument. 

“For many decades Pacific Steel didn’t pay very much attention to upgrading their facility.” she said. “They are playing catch-up now. They should have been doing this a long time ago.”