Workers on the Slag Heap of History

By David Sirota

In ages past, cities in wealthy nations greeted visitors with gold-plated lions at their gates. But today, in America, the richest country on earth, the gates of many towns welcome visitors with abandoned factories. And the communities these factories flank tell you more about what’s really destroying America than any Wall Street analyst or Washington policy wonk ever could.

Since leaving the Philadelphia area, I’ve learned firsthand that these Anytown, USAs are everywhere—not just on the East Coast. One of them can be found by driving north through the shimmering cattle pastures on Montana Route 12, right near where I now live. There, you’ll be welcomed to East Helena by two defunct gray smokestacks rising from giant black mounds of what looks like spent coffee grounds, but is in reality industrial slag.

The towers, piercing an otherwise pristine Rocky Mountain vista, tell a story being told throughout America—a story not just of abandonment but of legalized theft afflicting both urban centers, and yes, small-town outposts.

East Helena’s plant was once a lead smelter, owned by Asarco. In 1999, the company was bought by Grupo Mexico. That international conglomerate is headed by Larrea Mota-Velasco, listed as a billionaire by Forbes magazine’s “The World’s Richest People” in 2001. Within two years of the takeover, Grupo Mexico shut the smelter down, costing East Helena more than 200 jobs.

If the story ended there, it would be just another tale about the brutal consequences of globalization on blue-collar America. But what happened after is what should instill fear in millions of workers, urban or rural, blue or white collar.

In 2003, the company hiked health-care premiums for retirees. Executives claimed the company was under financial duress and that it thus “reserves the right to amend or terminate the plans at any time for any reason...even after you retire.”

Retirees were forced to accept the increases while a lawsuit dragged into 2004. That was the same year Asarco’s corporate parent reported more than a quarter-billion in profits in the fourth quarter alone—yet the company refused to back down.

Last year and this year, it has been more of the same. The company began delaying disability checks to retirees, property tax payments to the budget-strapped East Helena schools and cleanup operations at the smelter. Meanwhile, according to the Associated Press, the company pressed a three-year wage freeze and reductions in pension and medical benefits for its workers in Arizona. These moves came as Grupo Mexico reported profits of more than $1 billion in 2005.

“The community worked really hard to understand and deal with the layoffs,” said Bob Pyfer, 56, who grew up in East Helena. “But when you hear about those profits and the company’s treatment of its retirees, it just makes you angry.”

Pyfer’s grandfather came to East Helena from Slovenia in the 1920s for a job at the smelter, where he worked for 40 years. Pyfer grew up working summers at the smelter, too. Now a lawyer, he sees a disturbing trend that goes way beyond one hamlet. “These workers, like others all over, gave their lives to their company and they incurred serious health risks along the way,” he said. “That means, at the very least, these companies shouldn’t be able to use bankruptcy or reorganization to get out of what it owes to their workers.” Being allowed to do that, he said, is “a serious concern whether you live in East Helena or not.”

These reverse Robin Hood tactics are everywhere. At both Delphi and United Airlines, executives have used bankruptcy to enact massive cuts in wages and pensions—while cementing millions of dollars worth of new bonuses for themselves. And GM and Ford are demanding wage and benefit cuts. But, as Business Week reported in June 2005, as “both GM and Ford still pay a dividend, GM CEO G. Richard Wagoner Jr. got a $2.5 million bonus for 2004 on top of his $2.2 million in salary” and “both companies have huge cash hoards—$20 billion at GM and $23 billion at Ford.” True, these companies have problems. But they are using those problems as an excuse to bilk workers and enrich themselves—and our government is doing nothing to stop them.

In the 1980s, audiences watching Oliver Stone’s “Wall Street” often cheered Michael Douglas’s famous “Greed is good” speech. After Enron, we stopped cheering, and lawmakers promised to stop corporate abuse. We now know those promises were lies.

Congress passed class-action “reform” limiting citizens’ capacity to fight back against corporate abuse in court, budgets cutting services for displaced workers and a bankruptcy bill allowing courts to rubber-stamp companies’ rip-off schemes. Meanwhile, in a recent Wall Street Journal story about pension cuts, the Labor Department said retirees “aren’t our constituents anymore.”

So, while East Helena, its rotting Asarco plant and its mistreated retirees may seem far away or isolated, the town’s tale is not as distant as you think. Unless our government starts outlawing these heists and forcing profitable multinationals to fulfill their promises to workers, East Helena’s story may soon be coming to a community near you.

David Sirota, a Philadelphia-area native who now lives in Helena, Mont., is the author of the upcoming “Hostile Takeover” (Crown) about how corporate interests distort public policy.

—The Philadelphia Daily News, Mar. 24, 2006