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Bayer Cuts Jobs, But Stays in Berkeley

Bayer's Berkeley plant is in an enterprise zone
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Bayer's Berkeley plant is in an enterprise zone
Oakland's Enterprise Zone was stretched to accommodate the company, but there are no job guarantees

When Bayer Healthcare laid off 39 employees at its west Berkeley biotech plant last month, the union representing 29 of them was more than a little surprised and upset. Just over a year earlier, the union, the International Longshore and Warehouse Union, sprang into action when Bayer announced that it might move some production from the Berkeley plant out of state or out of the country. Adding its voice to state and local officials, the union pushed to give Bayer tax benefits to keep the company in the Bay Area.

"We were concerned there would be outsourcing of various departments and a shutdown of the facility, said Carey Dall, a ILWU organizer. "We advocated for them. The main message was protecting good jobs in Berkeley."

In summer 2009, Bayer asked for and got help from the state economic development agency in concert with local city officials, and the solution was unusual and creative: The boundaries of the Oakland Enterprise Zone would be redrawn north to include Emeryville and west Berkeley to encompass the Bayer company's 43-acre plant.

In an amazing feat of inter-city collaboration and light-speed bureaucratic action, Oakland's City Council approved the Enterprise Zone expansion in a matter of weeks. All parties were racing to make the changes before Bayer's German corporate parent met on August 18 to discuss the Berkeley plant's fate.

"It took three weeks. It was phenomenal," said Susana Villarreal, coordinator of the new Oakland/ Berkeley Enterprise Zone, who was involved in the cities' joint action. "The number one effort was to retain jobs." Some 200 Bayer employees are Oakland residents, which was one reason spurring the city's willingness to help Berkeley.

It worked. Bayer kept full production in Berkeley, where it's 1,500-plus workers make the company the second largest employer in the city, after the University of California and one of the company's three research centers.  Inside the Enterprise Zone, Bayer will receive tax breaks for capital investments and energy cost savings from PG&E worth $10 million over five years. Other tax credits for making new hires are available, but Bayer has not applied for them, according to Bayer's Berkeley spokesman, Sreejit Mohan.

After the Enterprise Zone was extended, Bayer made a $100 million capital investment in new equipment at the Berkeley plant for an improved process for creating its one and only product, Kogenate, a drug to treat hemophilia, Mohan said. But a year later, the Berkeley plant was under the gun once again from its German headquarters, and the job cuts were a result of increased efficiencies from newly automated processes, according to Mohan.

"The changes we are implementing today are absolutely necessary for the success of the Berkeley site in the long-term," he said in an e-mail. "In an increasingly competitive biopharmaceutical marketplace, it is imperative for a business like ours to implement initiatives and make investments that make us leaner and more efficient. The implications of this highly competitive environment became evident to us last year when we had to compete very hard against external contract manufacturing organizations to be awarded the $100 million investment for the next generation FVIII manufacturing process..."

While the ILWU's Dall talks about the company's layoffs as a "betrayal," Michael Caplan, Berkeley's economic development manager, says they have nothing to do with the company's participation in the Enterprise Zone or his city's efforts to help out Bayer. "Sure, whenever there's layoffs we're disappointed," said Caplan, who was involved in last year's negotiations. "Am I glad I was able to help Bayer to stay in Berkeley? Of course I am. As business citizens of Berkeley, they are among the most responsible." Caplan noted that Bayer has a development agreement with the city that includes paying traffic mitigation costs and providing biotech training programs for Berkeley High School and community college students. "They tend to be philanthropic," Caplan said. "They're good neighbors."

The ILWU union jobs Bayer provides are good jobs, too. They pay from $23 to $40 an hour, with full benefits, according to Dall. The ILWU represents some 430 current employees of the total working at the Berkeley plant. On Wednesday, the union staged a rally outside the Bayer plant which Dall said drew 120 people, including current and laid-off employees and community supporters. The union is pushing for Bayer to rehire the laid off employees, and Dall met with Berkeley Mayor Tom Bates on Thursday afternoon to get his help. Bates did not respond to requests for comment.

But Bayer is entitled to make job cuts by seniority under the union contract, and in the hyper-competitive pharmaceutical industry, keeping Bayer in Berkeley is a coup for the city. Bayer's Mohan said the $100 million investment proves the company is committed to staying.

For the union, it's another matter. "Their ability to get up and go is kind of frightening," Dall said.

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