A Madison Dearborn Partners’ portfolio company’s plans to close its Brisbane, California, distribution centre in 2012 and relocate the jobs more than 200 miles away has ignited a union fight.
The company, VWR International, a laboratory and chemical supply company, plans to relocate from Brisbane to Visalia, California. The Teamsters allege the company will be using taxpayer money in the form of a $2 million grant, while moving jobs that will offer reduced benefits including not offering a pension plan. Current employees at the Brisbane location will not be offered positions in the new Visalia warehouse.
Teamsters President James Hoffa sent a letter to the US Department of Commerce last week asking that a $2 million federal grant awarded to the city of Visalia this year be taken back on grounds that it was obtained on false pretenses. The grant stipulated that Visalia would create 237 jobs.
The Teamsters union is unfairly targeting Visalia in its battle with VWR International for erecting a warehouse in Visalia, city officials said.
According to the Brisbane city manager, the closure will devastate the local economy as the company accounts for 50 percent of the city's sales tax revenue.
“American taxpayers should not foot the bill for rich private equity firms like Chicago-based Madison Dearborn Partners to move jobs from one California labour market to another, devastating the families of longtime workers and decimating the local community that has supported the business for more than 50 years,” said Hoffa, in a statement.
Hoffa called on Rebecca Blank, acting secretary of the commerce department, to rescind the grant, which he said is being used to destroy jobs in the state of California rather than create them.
Hoffa said that by failing to include the VWR project as a beneficiary of the grant, the city has lied to American taxpayers and may be failing to obtain assurances of compliance with civil rights and other legal requirements obtained from the other listed beneficiaries.
“VWR and its private equity owners refuse to meet with city officials or the union to discuss viable alternatives that will keep operations local. The company won't even allow current employees to follow their work,” said Hoffa.
“Madison Dearborn's decision to walk out on Brisbane and the long-term workers who built this company is a slap in the face,” said Rome Aloise, president of Teamsters Joint Council 7, which represents VWR workers, in a statement. “But to know that taxpayer money is being used to help the company do it is unforgivable.”
Last year, Permira became embroiled in a union battle after its portfolio company, clothing line Hugo Boss, announced plans to close a plant in Ohio, putting more than 300 jobs in jeopardy. Several Permira limited partners, including the California Public Employees' Retirement System, the Ohio Public Employees' Retirement System and the Pennsylvania State Employees' Retirement System, asked the firm to re-think its plans to close the plant. The company eventually reversed its plans to close the plant.