Local business

West Berkeley’s Pacific Steel files for bankruptcy

Caption here

Pacific Steel Casting has been operating in West Berkeley since 1934. Photo: Michael Layefsky

Pacific Steel Castings, based in west Berkeley since 1934, filed for Chapter 11 bankruptcy protection in Oakland on Monday. Pacific Steel, one of the largest independent steel casting companies in the U.S., has 410 employees in three separate plants at the eight-acre site off Gilman Street. There are no immediate layoffs or interruptions in payment of wages or pensions.

The company hopes the bankruptcy proceedings will enable it to restructure its liabilities and remain in operation, possibly under a different owner from the Genger family which is in its fourth generation of ownership. Pacific Steel makes carbon, low-alloy and stainless steel castings for U.S. and international customers, largely for heavy-duty trucks and construction equipment. 

“Pacific Steel is not going anywhere,” said chief operating officer Chuck Bridges in a statement. “The process we have chosen is to restructure the company while preserving jobs and exploring the best way to continue making high quality castings for our customers.”

According to company spokeswoman Elisabeth Jewel, several companies have shown interest in acquiring Pacific Steel. She said the Genger family emerging from bankruptcy as owners or with a role in Pacific Steel was “definitely within the realm of possibility, but right now it’s very uncertain.”

The bankruptcy was provoked by what Jewel described as a “series of difficult financial events.”

Several hundred people gathered at Old City Hall for a rally before the protest march. Photo: Lance Knobel

Hundreds of people rallied at Old City Hall in 2012 before a protest march about the Pacific Steel immigration audit. Photo: Lance Knobel

First, Pacific Steel lost a third of its workforce in 2011 after a U.S. Immigration and Customs enforcement audit.

“One day a third of the workforce with hundreds of years of experience walked out the door,” Jewel said. “That’s hard to recover from.”

Workers’ compensation insurance costs went up four-fold following a flood of claims from those departing workers.

Second, this January the company settled a lawsuit about the timing of worker lunch breaks for around $5.4 million, which is owed to about 1,300 current and former employees. According to the bankruptcy filing, the company “was not in a financial position to immediately fund the settlement.” The lawsuit had not been supported by the union, GMP 136B, and was originally filed by a former employee, Jewel said.

“These are great jobs, great wages, great benefits,” said Jewel. “The union has been notified every step of the way what’s going on. There have been no secrets with the union. We have a good relationship with the union.”

“They’re a major employer, and a union employer,” said Berkeley Mayor Tom Bates. “We’d really like to see them continue to work in Berkeley and continue to strive to be good neighbors and clean up the plant as much as possible. They have done that in the past, and we hope they can get out of these financial problems.” 

Jewel said that despite the extraordinary expenses from the legal settlement, the company was operating well.

“Business is good,” she said. “We’ve had steady orders. It’s a little ironic, but when you have the huge amounts of the settlement in particular, it makes it very difficult.”

A hearing in bankruptcy court should take place in the next month. Jewel said the company hopes the situation can be resolved this year.

Update 2:20 p.m. The bankruptcy court held a first-day hearing this morning, according to Jewel. The court agreed that Pacific Steel could access funds from a Wells Fargo loan to make payroll, pay vendors and meet operational expenses.

Related stories:
Peaceful Pacific Steel protest ends at west Berkeley plant (02.17.12)
Hundreds rally in Berkeley to protest Pacific Steel layoffs (02.17.12)
Pacific Steel accused of labor violations in lawsuit (12.27.11)
200 undocumented Pacific Steel workers lose their jobs (12.19.11)
Pay raise, no added health costs in Pacific Steel contract (03.28.11)
Workers at Berkeley’s Pacific Steel accept new contract (03.25.11)
Negotiations resume in Pacific Steel strike (03.23.11)
Workers from Berkeley’s Pacific Steel go on strike (03.21.11)

Do you rely on Berkeleyside for your local news? You can support independent local journalism by becoming a Berkeleyside Member. You can choose either a monthly payment or a one-time donation.

Print Friendly
Tagged , , , ,
  • guest

    If we are lucky the largest source of toxic air pollution in Berkeley will finally be closed. http://content.usatoday.com/news/nation/environment/smokestack/school/103441

  • guest

    Will the end of Pacific Steel be the death knell for the idiotic West Berkeley zoning? One can only hope.

    http://www.berkeleyside.com/2011/01/26/on-the-table-the-future-of-west-berkeley/

  • Anonymous

    Almost every school in Berkeley has atrocious air quality. Being right next to a major freeway that has regular backups during the morning and afternoon commutes has far more to do with the air quality problems in Berkeley than Pacific Steel.

  • ray

    Pacific Steel is not going any where. You tree huggers can relax

  • EBGuy

    A cautionary tale for those who build (and finance) their business on the backs of undocumented workers?

  • guest

    Funny to see “John Freeman” – the resident champion of West Berkeley’s antiquated manufacturing zoning requirements – “like” your comment.

  • Blade

    Chinese and South Korean steel foundries with cheap labor are eating Pacific Steel’s lunch. Might as well close them down now to end the drawn out suffering and put this old dog to sleep.

  • Chris J

    Undocumented workers. Well, there was a big oops. A big problem waiting to happen. Then work men’s comp filings.. Which are accidents and injuries claimed by the previous workers. What was that all about? Yah, the rates would go up if accidents and injuries increased.

    Mostly, like a guy said…a cautionary tale.

  • brycenesbittt

    We should definitely make sure all our polluting industries are moved to China, which is sufficiently far away to avoid problems. All those workers should just get college degrees and start in on useful work like making smartphone apps. Why make things near where they are used anyway? Shipping is cheap and mostly controlled by American flagged vessels. Right?

  • Bill N

    Cheap labor and no pollution controls – like I couldn’t live in Beijing!

  • Guest

    Gee…a steel plant located in the middle of some of the most expensive real estate in the US with the highest wage rates. I wonder why this isn’t working? It’s time to rezone the West Berkeley area. Let’s get some urban infill projects that will help lower the ridiculous housing costs.

  • Truth Sayer

    Good point. The state is required to penalize the company for not reporting the number of workers (even if they are illegal) and their specific occupations, and paying the correct worker’s compensation premiums. As in most cases, when employees are terminated, worker’s compensation claims are filed by those workers.and the company’s experience modifier would be quite high. Here are the facts. Hiring individuals who are illegal puts the responsibility on local hospitals (the public) for the occupational injury cost, as the company do not pay there premiums for these injured workers. Pacific Steel knew the risk for their hiring practices, and whoever buys the company will assume the cost of these workers’s injuries. Incidentally, I know the difference between undocumented and illegal. When a company is penalized by the State for falsification of worker’s compensation reporting, it is for illegal acts, not undocumented acts.

  • John Galt

    The photo by Michael Layefsky of the Pacific Steel plant as seen from a airborne camera is fabulous!

    http://www.berkeleyside.com/2012/01/23/capturing-a-birds-eye-view-with-kites-and-balloons/

  • Chris J

    Moving all the polluting businesses to China does us a short term favor, I suppose, but this planet now is too small, of course, to consider it a solution. I’ve always wanted to visit China and even may do so,,,someday, but my impression is that the country is so corrupt and dirty in its national rush to manufacturing prominence that environmental concerns are minimal. Plainly the hidden costs of the health impact isn’t clear to them or is ignored.

  • guest

    Based on http://www.ci.berkeley.ca.us/uploadedFiles/Council_1/Level_3_-_General/bates_let_4-14-09_0011.pdf I would conclude that the largest source of air pollution in Berkeley is cars and trucks. The second large is home wood burning. USA Today is not a reliable source.

  • guest

    A careful audit of H1B visa use by software biggies in Silicon valley could invalidate way more than 200 visas for 1) Using H1B visa to depress compensation 2) Treating workers on H1b visa like slaves

  • guest

    Too bad those jobs didn’t go to legal workers: goodness knows we have enough unemployed people on our streets…

  • guest

    Another huge source of pollution in the bay area, particularly affecting children, is poor quality housing. Housing which is moldy, poorly ventilated, poorly insulated, poorly heated and poorly maintained abounds here. We do not even require kitchen and bathroom fans in rental housing. Fixing that problem by requiring sensible improvements in housing would be much more beneficial than shutting down Pacific Steel.

  • Hime L.

    I’ve lived in Berkeley for over 30 years in my house which is about 15 blocks downwind from Pacific Steel Casting. Many days, usually around midday, I smell a most foul odor coming from PSC which is immediately felt in my nose and chest. After a few minutes of breathing this noxious odor, I become nauseated, especially when I’m riding my bike around town and breathing heavily. I’ve called the Bay Area Air Quality Management District’s Ron Cary who came to my house and verified and traced its origin. He said he had many complaints from other people but was unable to do anything about it. Many residents in our area have complained and demonstrated about this issue over the years but evidently nothing can be done about forcing PSC to install stacks to filter out their contaminants coming from their plant. Even our mayor and district politicians have not been very receptive in addressing the issue. PSC “MUST!!!” clean up their act or shutdown completely….or release those contaminants in the middle of the night which is not a great solution either.
    -Hime