“This is God’s country. Please don’t drive through it like hell,” reads a sign 40 miles west of San Antonio on U.S. Highway 90 just outside of Hondo.
For about 255 members of Local Union 209, divine intervention might be the only way to save their jobs at a plant set to close on April 18 after providing work to five generations of Molders, Glass, Pottery, Plastics and Allied Workers.
Management at the plant located about two miles north of U.S. Highway 90, past the western city limit, asked union workers late last year to agree to wage reductions of 15 to 20 percent.
The plant produces vitreous china plumbing products like fixtures, toilet seats, bathtubs, sinks and urinals. Vitreous china is pottery clay fired in a kiln at high temperature to make porcelain and ceramic products that are impervious to water.
The Hondo plant was being asked to compete with cheaper plumbing products made by the same company but imported from China. The mandate came from the new owners at Sun Capital Partners Inc., headquartered in Boca Raton, Fl. Plant workers in this small Texas town either had to accept lower wages or have their manufacturing jobs shipped offshore to other countries.
“Vitreous china products produced in China and shipped to the U.S. are several dollars below what is made in the U.S., and the big box retailers are looking for (those) lower prices,” said Lee Wingert, director of human relations and administration at Crane Plumbing LLC.
Crane will be down to one vitreous china-producing plant in the United States with the closing of the Hondo facility, Wingert said.
An affiliated portfolio company of Sun Capital Partners, Inc. acquired a majority interest in Crane during February 2005, according to A. Richard Hurwitz, communications vice president for the company. In November 2007, an unrelated portfolio company acquired a controlling interest in American Standard Americas. American Standard is one of the largest North American manufacturers of bath and kitchen products and operates eight facilities employing approximately 7,500 associates, Hurwitz said.
Wingert said Hondo was competing against probably no more than eight plumbing supply plants still operating in the United States.
The unions face a growing trend towards outsourcing of domestic manufacturing jobs to achieve greater sales volumes, lower prices and, most of all, higher profits.
City Manager Robert Herrera negotiated with the company and union to try to avoid the plant closing. According to Herrera, Crane management said the company needed to reduce annual operating costs by about $3 million. Management found about $2 million in cost savings before asking the union for $1 million in lower wages, Herrera said.
“The union knew the numbers but chose not to believe them. The union truly believed the company would renegotiate after the December vote, but Crane had exhausted its goodwill (toward the union),” said Evelyne Barbotti of the Hondo Chamber of Commerce. Barbotti said the company was asking for between $.85 and $1.20 per hour – on average about $1 per hour – in wage concessions from all employees at the plant “so they could stay open for a while longer.”
Under the offer, workers would keep benefits worth $4 to $5 per hour and a 60-percent match in their 401(k) retirement packages.
Richard Kline, spokesperson with the national union in Media, Pa., said a union accountant confirmed that Crane had not made any money in 2007, after reviewing the company’s financial statements.
Based on data from Crane management, workers were making between $23,000 and $33,000 annually, plus benefits, and would have had to agree to reductions that averaged between $4,000 and $6,000 per year -- a cut of between 12 and 25 percent of their pay checks.
The local union vice president, Xavier Gueda, who worked for the company 20 years and supported the wage reductions, said, “Unions are about sticking together and making the higher dollar. But (work) going overseas sometimes makes you bite the bullet, so you can keep going and put food on the table.
“A lot of the 62 [who voted against the wage cuts] were wearing blinders, unaware of what’s going on in the world and unwilling to stand up [to social pressure within the union]. I was trying to save the jobs. People egged my house.”
Gueda added, “A lot of people here don’t know how to read, write or speak English. They were asking for help to keep the place open. I did everything I could.”
About half of the union members have a high school education and 30 percent have limited English proficiency, according to Christine L. Kailipaka, career counselor at the Alamo Work Source Career Center in Hondo.
“The first union vote, taken about a month before the December 2007, was close to 100 votes not to accept the wage cuts versus 20 [votes] in favor of accepting a cut in wages of about 18 percent ‘across the board’ for both hourly and incentive workers,” said Andres Guevara, a union member.
“That would have meant hourly workers would have made about $9 to $10 an hour instead of $11 to $12 – a cut of about $2 an hour. Incentive [“casting”] workers would have gone from $16 to $17 an hour to $13 to $14 – a cut of about $3 an hour,” Guevara said.
Guevara explained the divisions within the union stemmed from a sense of inequality with the higher wage workers sharing steeper cuts. He said, “We wanted to make a wage cut one that everyone would feel the same. But the second proposal [the company] came back with was completely lopsided. [It proposed cuts of] about 20 to 25 percent from the incentive workers and about a 10-percent cut for the hourly workers. So that swung the vote more in favor of accepting the cuts.”
Even so, in the second union vote, there were 62 “against” and 60 “for” accepting the cuts. The second proposal would have cut incentive workers pay between $3 and $4 an hour but hourly workers by about a $1, according to Guevara.
“If you take $2 an hour from one guy, he’s going to vote ‘no’ and then you take $.25 an hour from another guy, he’s going to vote ‘yes.’ It was the incentive people who were being asked to give up more,” Guevara said. “I’m kind of upset [about the plant closing] because of what it is going to mean long-term.”
Crane’s HR director Wingert said the second proposal was essentially an ultimatum that included an opportunity to speed up the production line. Workers could earn back much of the lost income simply by “producing more pieces at their bench.”
“The really bad part was the older guys who had one or two years to retirement,” said Gueda, the union member. “It’s real hard to start all over again at 62 years old,” [especially] with a label: ‘They didn’t want to work’.”
Almost unnoticed, the job crisis in Hondo developed when a majority of family members in Crane Plumbing LLC sold out for an undisclosed sum to new, absentee owners. Sun Capital Partners is a private investment firm based in Florida with management offices in financial capitals worldwide and combined sales in excess of $35 billion.
The company’s investment brochure says, “On a consolidated basis, Sun Capital's affiliated portfolio companies would rank in the top 100 of Fortune Magazine's listing of the 500 largest companies in the United States.”
Sun Partners has more than 185 affiliated companies and over 150,000 employees. As a holding company seeking more investment, “Sun Capital has approximately $10 billion of equity capital under management," says its Web site, "and can invest more than $2 billion of capital in any one transaction. Sun Capital often bridges the entire purchase price at closing; raising permanent debt financing afterwards.
“Sun Capital affiliates invest in companies which typically have the number one or number two market positions in their industry....Industries targeted for investment are broad and diverse, with no particular industry excluded from consideration.”
Work Source counselor Kailipaka estimated that the Career Center had found new jobs with other companies for about 20 percent of the Crane workers.
As for cities like Hondo in high-wage, high-cost countries that are losing manufacturing plants to lower-wage, lower-cost countries, Kailipaka said, “This town has really pulled together for these people. In 10 years we have not seen anything like this [response] from the city and local employers, county judges, the area Council of Governments. San Antonio has even helped.”
Although for Xavier Gueda, finding work for the same pay without a long commute will be difficult.
“There’s nothing within 50 to 60 miles working for the same money,” Gueda said. “This is what you’re going to now – $8 an hour with not-so-good insurance and driving 50 miles.”
