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Business

Who’s to blame for a factory shutdown: A company or California?




VERNON, Calif. — Teresa Robles begins her shift around dawn most days at a pork processing plant in an industrial corridor four miles south of downtown Los Angeles. She spends eight hours on her feet cutting stomachs, a repetitive motion that has left her with constant joint pain but also an income of $17.85 an hour that supports her family.

As early as June, when whispers began among the 1,800 workers that the plant would soon close, Robles, 57, hoped they were just rumors.

“But it was true,” she said grimly at the end of a recent shift, “and now every day gets a little closer to my last day.”[ads1];

The 436,000 square meter factory, with roots going back almost a century, is scheduled to close early next year. Its Virginia-based owner, Smithfield Foods, says it will be cheaper to supply the region from factories in the Midwest than to continue operations here.

“Unfortunately, the escalating costs of doing business in California necessitated this decision,” said Smithfield CEO Shane Smith, citing utility rates and a voter-approved law regulating how pigs can be kept.

Workers and company officials see a larger economic lesson in the impending shutdown. They just differ on what it is. For Ms. For Robles, it is proof that despite many years of often dangerous work, “we are only available to them”. For the meatpacker, it’s a case of politics and regulation trumping commerce.

The cost of doing business in California is a longstanding point of contention. It was cited last year when Tesla, the electric car maker that has been a Silicon Valley success story, announced it was moving its headquarters to Texas. “There’s a limit to how big you can scale in the Bay Area,” said Elon Musk, Tesla’s CEO, citing housing prices and long commutes.

As with many economic arguments, this one can take on a partisan hue.

Around the time of Tesla’s exit, a report by the conservative-leaning Hoover Institution at Stanford University found that California-based companies were leaving at an accelerating rate. In the first six months of last year, 74 headquarters moved out of California, according to the report. In 2020, the report found, 62 companies were known to have moved.

Dee Dee Myers, senior adviser to Gov. Gavin Newsom, a Democrat, countered by pointing to California’s continued economic growth.

“Every time this narrative comes up, it is consistently disproved by the facts,” Ms. Myers, director of the Governor’s Office of Business and Economic Development. The country’s gross domestic product grew at an annual rate of 2 percent over a five-year period until 2021, according to Ms. Myers’ office, while California’s grew by 3.7 percent. The state is still the country’s technology capital.

Yet production has fallen faster in California than in the nation as a whole. Since 1990, the state has lost a third of its factory jobs — it now has about 1.3 million, according to the Bureau of Labor Statistics — compared with a 28 percent decline nationally.

The Smithfield plant is an icon of California’s industrial heyday. In 1931, Barney and Francis Clougherty, brothers raised in Los Angeles and sons of Irish immigrants, started a meatpacking business that soon settled in Vernon. Their business, later branded as Farmer John, became a household name in Southern California, recognized for producing the beloved Dodger Dog and backyard al pastor. During World War II, the company supplied rations to American troops in the Pacific.

Nearly 20 years later, Les Grimes, a Hollywood painter, was commissioned to create a mural at the facility, transforming a bland industrial structure into a pastoral landscape where small children chased cherubic-looking pigs. It became a sightseeing destination.

In recent times, it has also been a symbol of the state’s social and political turbulence.

In explaining Smithfield’s decision to close the facility, Mr. Smith, the CEO and other company officials have pointed to a 2018 statewide ballot measure, Proposition 12, which requires pork sold in the state to come from breeding pigs kept in facilities that allow them to move more freely.

The measure has not yet been enforced and faces a challenge before the US Supreme Court this autumn. If not overturned, the law would apply even to meat packaged out of state — as Smithfield now plans to supply the local market — but company officials say that in any case, the passage reflects a climate inhospitable to pork production in California.

Tempers have sometimes run high outside the facility as animal rights activists have condemned the confinement and treatment of the pigs slaughtered inside. Protesters have serenaded and given water to pigs whose snouts protruded from the slats of arriving trucks.

In addition to its objections to Proposition 12, Smithfield claims that the cost of utilities per head to produce pork in California is nearly four times higher than at the company’s 45 other plants around the country, although it declined to say how it arrived to that estimate.

John Grant, president of the United Food and Commercial Workers Local 770, which represents Ms. Robles and other workers at the plant, Smithfield said, announced the closing just as the parties were to begin negotiating a new contract.

“A total gut punch and, frankly, a shock,” said Mr Grant, who worked at the factory in the 1970s.

He said wage increases were a priority for the union going into negotiations. The company has offered a $7,500 bonus to employees who stay through the shutdown and has raised hourly wages, previously $19.10 at the top of the scale, to $23.10. (The rate at the company’s unionized Midwest facility is still slightly higher.)

But Mr Grant said the factory closure was an affront to his members, who were struggling through the pandemic as essential workers. Smithfield was fined nearly $60,000 by California regulators in 2020 for failing to take adequate measures to protect workers from contracting the coronavirus.

“After everything the employees have done through the pandemic, are they now suddenly going to flee? They are destroying lives,” Mr. Grant said, adding that the union is working to find new jobs for workers and hopes to help find a buyer for the plant.

Karen Chapple, a professor of urban and regional planning at the University of California, Berkeley, said the closure was an example of “the larger trend of deindustrialization” in areas like Los Angeles. “It probably doesn’t make sense to be here from an efficiency perspective,” she said. “It’s the end of a long exodus.”

In fact, the number of food manufacturing jobs in Los Angeles County has declined 6 percent since 2017, according to state data.

And as those jobs disappear, workers like Ms. Robles on what will come next.

More than 80 percent of the employees at the Smithfield facility are Latino — a mix of immigrants and first-generation natives. Most are over 50. The security and benefits have kept people in the job, union leaders say, but the nature of the workforce has made it difficult to recruit younger workers who have better options.

On a recent cloudy morning, the air in Vernon was thick with the smell of ammonia. Workers wearing surgical masks and goggles and helmets entered the facility. The sound of forklifts hummed beyond a high fence.

Massive department stores line the streets in the area. Some sit idle; others produce wholesale local baked goods and candies.

Mrs. Robles joined the Smithfield facility four years ago. For more than two decades, she owned a small business selling produce in downtown Los Angeles. She loved her work, but when her brother died in 2018, she needed money to fulfill his wish to have his body shipped from Southern California to Colima, Mexico, their hometown. She sold the business for a couple of thousand dollars, then joined the factory, making $14 an hour.

“I was proud,” she said, recalling the first few months at the new job.

Mrs. Robles is the sole breadwinner for her family. Her husband has several health complications, including surviving a heart attack in recent months, so she now assumes the $2,000 mortgage on their home in the Watts area of ​​Los Angeles. Sometimes her 20-year-old son, who recently started working at the facility, helps with expenses.

“But this is my responsibility – it’s up to me to give,” she said.

Mrs. Robles has long recited the Lord’s Prayer every night before bed, and now she often finds herself repeating it during the day for strength.

“They kick us out without an answer,” she said.

Other workers, like Mario Melendez, 67, who has worked at the plant for a decade, share the unmoored feeling.

It’s an honor to know his labor helps feed people all over Southern California, he said — especially around the holidays, when the factory’s ribs, ham and hot dogs will be part of people’s celebrations.

But the factory is also a place where he got the coronavirus, which he passed on to his brother, who died of the virus, like his mother. He was devastated.

“A terrible shock,” said Mr. Melendez, who says he feels betrayed by the company.

So does Leo Velasquez.

He started the night shift in 1990, earning $7 an hour wrapping and sealing bacon. A few years later, he moved to days, working 10-hour shifts.

“I have given my life to this place,” Mr. Velasquez, 62, said.

Over the years, the body began to wear out. In 2014, he had shoulder replacement surgery. Still, he had hoped to continue at the factory until he was ready to retire.

“It’s not going to happen,” he said. “Where I go from here, I don’t know.”



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