Battle in Berkeley: Does Bayer Owe the Bay Area?

The contentious negotiations between Bayer and the 400 or so unionized workers at its Berkeley, California biotech facility have become a test case for whether workers in pharma/biopharma (and other industries) have any leverage whatsoever in the face of potential or expected downsizing and outsourcing.

The crux of the issue is that, two years ago, Bayer was granted tax subsidies in exchange for maintaining its commitment to, and providing jobs for, the Bay Area, including its Emeryville and Berkeley plants. When Bayer decided to close down Emeryville earlier this year, workers in Berkeley--where the successful hemophilia drug Kogenate is produced--began to fear a similar fate, despite reassurances from Bayer to the contrary. They want Bayer to reciprocate on what they view as preferential treatment from the local community and government.

From Bayer’s perspective, the tax subsidies pale in comparison to the tax dollars, jobs, and other economic benefits it has delivered to the community. Pharmalot’s Ed Silverman has an excellent overview of the two camps’ positions, and has passed along this Community Impact Report from Bayer on how it has contributed to the Bay Area. [UPDATE 9/27: Bayer has since responded to our questions as well.]

To get more on the workers’ perspective, we contacted Craig Merrilees, communications director for the International Longshore & Warehouse Union (ILWU), which represents the Berkeley employees. “In America, Bayer’s behavior is different,” says Merrilees. Though raises have been promised for Berkeley workers, they “mean little if your job can be outsourced tomorrow.”

Here’s the full interview:

Paul Thomas: The contract covering 400+ workers in Berkeley expired in August. What’s the status of their work at the facility and the ongoing negotiations with the company?

Craig Merrilees: The contract remains in effect now, and will continue unless either Bayer or union members provide 48-hours notice. Workers have been trying to negotiate an agreement with Bayer for months, but the company has failed to address three important issues:

  • Protecting jobs from being outsourced.
  • Providing health care benefits that are affordable.
  • Assuring safe staffing levels to protect workers on the job and ensure that quality is never compromised.

Workers are showing up and working hard, but patience is running thin.

P.T.: In your mind, what did Bayer promise two years ago when it accepted subsidies? Was there specific language that indicated they would preserve jobs and support the community for a given period of time?

C.M.: Everyone in the community expected Bayer to maintain good jobs after receiving millions of dollars in tax subsidies. The fact that Bayer closed their Emeryville facility and outsourced the work raised community concerns that Bayer may try to do the same thing in Berkeley. Bayer did not negotiate any specific contract language with the union two years ago when they took the tax breaks. Any specific language negotiated with state and local officials was not shared with the community. The concern that companies are taking tax breaks then cutting jobs is a legitimate problem that’s widely felt in America.

P.T.: Bayer has indicated that some of the jobs lost in Emeryville will be moved to Berkeley. Doesn’t this, along with the fact that the Berkeley site is being expanded, offer reassurance to workers?

C.M.: Bayer’s facility in Emeryville employed hundreds of workers.  Bayer has no plan to hire hundreds of workers at Berkeley. In fact, the company hasn’t hired a handful of workers who were waiting on a recall list for 6 months. By saying that “some of the lost jobs in Emeryville will be moved to Berkeley,” Bayer appears to be manipulating language to create a misleading impression about jobs that is hurting their credibility with the community. That’s why workers are asking Bayer to put things in writing, so there’s less spin and more honesty when it comes to good jobs that the community needs. The best way to reassure the community is for Bayer to negotiate meaningful language on job security and safe staffing.

P.T.: I understand that Bayer has offered workers a raise and benefit guarantees. Why has the union not accepted this offer?

C.M.: Raises aren’t the central issue for Bayer workers in Berkeley. Workers and the community are concerned about job security, safe staffing, and affordable health care.  Raises alone don’t mean much, because:

  • Raises without job security mean little if your job can be outsourced tomorrow; and
  • Raises without affordable health care mean a big part of your raise will disappear because its spent on health care premiums; and
  • Raises without safe staffing levels means more hazards for workers and the possibility that quality could be compromised for patients.


P.T.: What are the “range of options” that workers and the union will consider should negotiations continue to stagnate?

C.M.: The best option for workers and Bayer is to reach an agreement that addresses the key concerns and works for everyone. There’s no reason why Bayer can’t negotiate a sensible compromise on the issues of job security, safe staffing and affordable health insurance. There’s no need to speculate about other options at this point when a reasonable settlement is the best option.

P.T.: Bayer has stated that it has a “robust contingency plan” in place in order to continue operations should negotiations fail. Do you view this as a threat or ultimatum?

C.M.: Workers are committed to negotiating and reaching a fair settlement. Negotiations will only fail if the company is unwilling to address the reasonable concerns of job security, safe staffing, and affordable health care. Issuing real or implied threats to workers and the community would be a mistake that would only hurt Bayer’s credibility.

P.T.: Most pharmaceutical/biotech workers let go in recent years have had little leverage to resist. What makes this case different? Is it simply that the workers have a strong union?

C.M.: The union for workers at Bayer in Berkeley provides a way for workers to solve problems, gain a fair share of the profits they earn, and have a voice. Bayer generally respects these principles with workers in Germany, but in America, Bayer’s behavior is different. Workers in Berkeley want a positive relationship with Bayer, based on mutual respect and a willingness to work together to solve problems. Having a union makes that goal much more possible.

P.T.: Local and state subsidies and tax incentives play a role in where all major manufacturers (especially in biotech) locate or relocate facilities. Does this mandate that manufacturers must keep jobs in a given area once making a commitment and building facilities?

C.M.: The problem is that local and state tax subsidies are often abused by big companies who play one community off another, in an effort to get the best deal by minimizing—or avoiding taxes altogether. This leaves working families to pay an increasingly large share of taxes that are needed to pay for schools, roads, police and other vital services. When companies negotiate agreements on taxes, the process should be open and the terms should be clear, which rarely happens.

The problem is compounded when companies and elected officials suggest that the company is agreeing to provide good jobs in exchange for the tax subsidies, without securing specific written commitments. Recent studies have confirmed that Enterprise Zones and other tax breaks have been frequently abused, with questionable benefits for the local communities who were shortchanged, or provided benefits that far exceeded the value of jobs that resulted.


--Paul Thomas