At Service Steel, union buster turns campaign around

Sheet Metal Workers Local 16 had support from a majority of workers when, on March 27, it petitioned the National Labor Relations Board for a union election at Service Steel, a Swan Island steel processor, and its labor contractor, Aerotek. But Aerotek hired outside consultants and ran a by-the-book anti-union campaign. When the election was held May 10, the result was a 43-90 defeat for the union.

That’s despite the fact that when union organizers talked with workers, the picture that emerged was of an employer that keeps the rewards for its owners, while getting every public benefit.

Service Steel’s Swan Island factory is located in a state-defined “Enterprise Zone,” in which capital improvements get a property tax abatement. Its biggest contract comes courtesy of the U.S. military — a five-year, roughly $60 million deal with Oshkosh in which Service Steel makes armor plate for U.S. military vehicles. When Service Steel got that contract in January 2011, the State of Oregon stepped up with a “forgivable” loan of $150,000 from the Governor’s Strategic Reserve Fund, so that the company could buy new equipment valued at close to $1 million. In return for that help, the state agency known as Business Oregon announced, Service Steel agreed to “remain” in Portland and provide “good paying manufacturing jobs for Oregonians.”

But Local 16 union organizer Joe Harris found that those manufacturing jobs pay $10 an hour, and few of the workers make more than $12 – for a job that can require hard physical labor. At that income, most would qualify for food stamps. Harris said $15 to $16 an hour is more standard for such work.

And in fact, very few of Service Steel’s 150-plus workers are direct employees. Instead they work for Aerotek, a labor contractor.

A sizable portion of them — as many as half — are felons, which suggests that their employer could be making extensive use of a federal tax credit that pays 40 percent of their wages — up to $2,400 per employee. CEO Ed Westerdahl said Service Steel itself hasn’t used that tax credit, which he only recently learned of.

Harris says felons are an insecure workforce, because the stakes are high if they lose a job. They have a hard time finding housing and employment, and may face a return to prison if they violate conditions of parole, one of which can be that they maintain employment.

When management learned employees were talking with a union, Cruz and Associates, a union-avoidance consultancy based in Rancho Cucamonga, California, appeared on the scene. In the weeks that followed, workers were called, in groups of eight to 13, for mandatory anti-union meetings led by the consultants. If they unionized, they were told, Service Steel could drop Aerotek in 72 hours, and they’d be out of a job.

A 2009 Oregon law purports to ban mandatory anti-union meetings, but the law has yet to be tested. To test it, a worker would have to refuse an employer’s order to attend, be disciplined for it, and then sue for damages.

CEO Westerdahl said the company was against unionizing, primarily because they didn’t want a “third party.”

It’s common for employers to say they prefer to deal with employees directly, not through a union “third party,” but it’s an odd point to make for a company that already employs seven-eighths of its workforce through a third party staffing agency.

Local 16 business agent John Candioto said that while workers voted not to unionize, the campaign still could be a win, if the employer takes the experience as a wake-up call and improves compensation and working conditions