BOSTON — A Massachusetts union is demanding that the Bay State suspend its $1 billion, 10-year Life Sciences Act in order to add provisions requiring the use of union workers on construction projects.
The union took the steps after learning that subcontractors have been hiring nonunion workers over the past year on a half-dozen projects for local life-sci companies.
The International Brotherhood of Electrical Workers Local 103 of Dorchester has consolidated its battles with several Boston-area biotech giants into a single public outreach and advocacy campaign. The effort, launched last week, will get help from a New York consultancy that works with labor unions seeking attention from government officials, media, and the public.
The "Stop Biotech Looting" campaign, which includes a website of the same name, takes aim at tax breaks, multi-million-dollar CEO salaries, and other economic privileges enjoyed by the region's largest life-sci companies and their leaders.
"I think [the Life Sciences Act] should absolutely be suspended. It's not the right time to be giving that type of money to big biotech companies. It should definitely be stopped," Lou Antonellis, business representative for Local 103, told BioRegion News last week. "It's no longer prudent public policy to allow this kind of money to be squandered on companies that don't need it. Union construction workers, non-union construction workers — every sector of every industry is hurting right now. And these big companies, pardon my French, are whoring out the construction work."
Antonellis said the provision would help Massachusetts respond to the ongoing economic upheaval that has contributed to the increase in the state's budget shortfall to $3.1 billion from $2 billion in the past month alone. The weakened economy has also prompted state lawmakers to decide between a 19-cent-a-gallon hike in gas taxes, or a $100 million toll hike. Also affected are most cities and towns, which have cut costs by laying off union and nonunion workers.
Massachusetts, he added, should also impose caps on the pay of top executives and board members of life-sciences companies, similar to the $500,000 limit imposed by President Obama on the pay of executives whose banks are benefiting from the federal bailout.
"If they're going to take any money, [the state has] got to put limits and caps on corporate spending," Antonellis told BRN. "There's really got to be some oversight. Right now, there's no oversight whatsoever."
He said his union and its allies are "actively lobbying" state lawmakers, hoping to generate interest in legislation to reform the Life Sciences Act.
"We have yet to write up any legislation. We're hoping to get the governor's office and some of the legislators to take some action and straighten this out before we have to offer any legislative changes," Antonellis added. "Nothing's off the table, that's for sure."
Antonellis said Local 103 doesn’t buy the argument that new regulation of life-science companies could push many to move out of state: "The brainpower is here. There's a reason why Kendall Square is the bio capital of the world — because it's smack in the middle of Harvard and MIT. Some of the greatest minds in the world come out of these two colleges. They're looking to be exactly where they are. They want to be in Massachusetts, and they don't need a billion more reasons to be here."
Local 103 will not disclose the cost of the campaign, which Antonellis said is being coordinated by the New York firm Corporate Campaign, which calls itself "the nation's #1 Strategist for Labor Unions," and declares its purpose is "helping labor struggle for a better future."
In addition to the website, the campaign includes the posting of billboards within the Kendall Square section of Cambridge, the hub of the Boston/Cambridge life-sci megacluster.
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Antonellis spoke to BioRegion News Feb. 24, a day before leading some 100 members of his union and other supporters to press their case during the monthly meeting of the quasi-public state agency charged with overseeing the spending of funds under the Life Sciences Act.
"We all feel like we're being screwed by you people. And we need you for help. So are you going to help us or not?" Antonellis told the board of the Massachusetts Life Sciences Center. "Please explain how funding these corporate fat cats with $1 billion of our hard-earned tax dollars isn't criminal, let alone unethical."
"The millions of dollars in corporate welfare these companies stand to inherit can be much better spent lessening the cuts that imperil our most vulnerable citizens — the elderly, the disabled, and the mentally challenged," Antonellis added.
During the meeting, Jay Gonzalez, undersecretary of administration and finance in Gov. Deval Patrick's administration, said that "from the governor's perspective, this is not a corporate welfare initiative. This is an initiative for the people."
Gonzalez presided at the board meeting in the absence of the center's co-chairs, secretary of administration and finance Leslie Kirwan and Greg Bialecki, secretary of housing and economic development.
"This board is working very hard, based on sound information and research, and as much data as we can, to make targeted investments that will grow our economy and create jobs in this state," Gonzalez said.
According to the center, the life-sci act has helped to create more than 850 jobs since Patrick signed it into law last year [BRN, June 16, 2008]. Those jobs include the 200 union workers who will carry out $25 million in infrastructure improvements for the Marine Biological Laboratory/Woods Hole Oceanographic Institute — for which the life sciences center has approved a $10 million grant sought by MBL and the Regional Technology Development Corp. of Cape Cod.
The grant leveraged $15 million in funding from the Howard Hughes Medical Institute for the project, projected to create 50 permanent life-sci jobs. [See sister publication Biotech Transfer Week, June 18, 2008].
Joining Gonzalez in defending the life-science center were its top executive and a board member. But while defending the life-sci initiative, they also expressed support for the union's goals, and insisted that the biotech law would ultimately benefit labor by creating hundreds of new jobs as new facilities are constructed or renovated.
During the meeting, Susan Windham-Bannister, the life-sciences center's president and CEO, said the center itself is translating its pro-union rhetoric into reality by using only unionized contractors to construct its new 5,855-square-foot offices at an office park in the Boston suburb of Waltham. The center said it plans to move into the space in early April.
And because half the funds in the life-sci act, or $500 million, are for public infrastructure projects, the law will ultimately create thousands of union jobs, according to the center.
"When a company comes in, the kinds of jobs that get done are not just scientists. They have to work in something, and that something has to be built. And it has to be built to very high standards, which is why we want folks like you involved in those buildings," Windham-Bannister told the union audience. "Jobs come out of this initiative at all levels. It's not just for the scientists and it's not just for the students."
In an interview after the board meeting, Windham-Bannister said the center has had an ongoing dialogue with Local 103 and other unions. She said any change to the Life-Sci Act would not come from the center, but from Patrick.
"We're here to make this a good place for life-sciences companies to be, but that includes having good relationships, fair relationships, with organized labor," Windham-Bannister told BRN. "We're trying to find a good balance between enabling companies here to be competitive, but also to be consistent with this administration's policies, which is very interested in fair labor practices."
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She added: "We just want to make sure that companies that are receiving help with dollars are aware of who their contractors are: Are they at least giving the unions a chance to come in, and present, and bid?"
The center will not tell companies to follow in its footsteps by hiring all-union. "We cannot dictate business practices to companies," Windham-Bannister said. But she noted that applications for many grants from the center include stipulations that encourage the hiring of unions like Local 103.
A center spokesman, Angus McQuilken, cited the center's processes for awarding grants under its Life Sciences Accelerator Program. Question 39 asks applicants to check four boxes affirming their adherence with several labor practices designed to promote union involvement. The practices include:
• Paying workers "the minimum hourly wage rates as determined pursuant to the Massachusetts Division of Occupational Safety's Prevailing Wage Program," and contracting "only with contractors and subcontractors that, to applicant's knowledge, provides their respective employees with Prevailing Wages;"
• Complying with state and federal employment laws, "including but not limited to minimum wages, unemployment insurance, workers' compensation, child labor, and the Massachusetts Health Care Reform Law;" and not knowingly misclassifying workers as self-employed or independent contractors;
• Not knowingly hire "developers, subcontractors, or other third parties" that knowingly misclassify employees or violate state and federal employment laws; and
• Working with the life-sciences center "to develop reasonable labor standards for applicants certified" as state-based life-sciences companies eligible for benefits under the life-sci act, and "make a good faith effort at complying with such standards as they are developed."
The same four stipulations are presented in the application for subsidies under the center's Tax Incentive Program, which provides a total of up to $25 million in tax incentives to state-certified life-sciences companies seeking to "expand employment opportunities, promote health-related innovations and stimulate research and development, manufacturing and commercialization in the life sciences."
Those stipulations don't go far enough because top life-sci employers aren't barred from using non-union labor, Local 13 argues.
Antonellis said the state should not have agreed to give $12.9 million to the town of Framingham toward water and sewer system improvements intended to help Genzyme expand its facilities in the town.
That project, which will include new office space and new cell culture-manufacturing and –purification facilities, would cost $250 million, last two years, and add 400 to 600 employees to the biotech's Framingham workforce of 1,600.
Local 103 has been at odds for months with Genzyme over the decision by the contractor to hire subcontractors that use non-union workers for another project: the construction of Genzyme's $125 million Science Center in Framingham.
Members of the union used a ribbon-cutting ceremony celebrating completion of that project last September to protest the use of the non-union workers, who were paid less and received smaller healthcare benefits than their union counterparts.
Local 103 stepped up public pressure on the company by criticizing the life-sci center's approval in Oct. 31, 2008, to pay the $5.2 million first installment of the MLSC's grant for the expansion infrastructure [BRN, Nov. 10, 2008].
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Genzyme spokesman John Lacey told BRN that subcontractors working on the science center project were selected through "a rigorous, thoughtful, and fair contract-award process that takes into consideration multiple selection criteria. We make sure that all of our contractors are compliant with Massachusetts and US laws.
"You should know that we survey the industry to make sure that the benefits we see in the bidding process are representative for the industry at large," Lacey said. Through this process, Genzyme ensures that it hires ethical contractors who provide competitive benefits."
He added that while union members accounted for 54 percent of workers on the Framingham Science Center, the company has built all-union facilities — from past projects like its Genzyme Center headquarters in Cambridge, and its original facility in Boston's Allston Landing section, to the $150 million, 86,000-square-foot expansion of the Allston site now in progress and slated for completion later this year [BRN, Sept. 24, 2007].
The union's campaign "is a means to an end: to control the contract-bidding process by forcing projects that have direct or indirect development support from public funds to have an all-union workforce," Lacey said.
The union has raised a second issue against Genzyme: the multi-million-dollar pay of its chairman and CEO Henri Termeer. Local 103 cited public filings showing Termeer made more than $35.6 million in 2007, consisting of $14.6 million in compensation and nearly $21 million in exercised stock options. Termeer is also a member of Patrick's Council of Economic Advisors, an appointment Local 103 says should be rescinded.
Genzyme is one of two corporate giants set to benefit from multi-million-dollar grants included in the Life Sciences Act. The law earmarks $12.6 million to help construct a new exit off Interstate 93 at Lowell Junction, which straddles portions of Andover, Tewksbury, and Wilmington. The project is intended to facilitate a long-discussed expansion of Wyeth BioPharma's manufacturing plant in Andover, projected to add at least 100 jobs.
Local 103 has also targeted Wyeth for what it deems high executive and board-member pay, complaining in particular that Chairman Robert Essner made just over $33 million in 2007, and a plan by Pfizer to lay off thousands if it completes its planned acquisition of Wyeth, valued at $68 billion.
A Wyeth spokesperson did not respond to BRN in time for this publication.
Four other life-sciences giants have been targeted by Local 103:
• Shire – The union has complained about the $48.1 million in state and local government tax breaks give to a unit of the British pharmaceutical company. The benefits, which Local 103 calls "corporate welfare," are tied to Shire Human Genetic Therapies creating 680 new jobs and retaining 675 existing ones at a $394 million expansion in the Boston suburb of Lexington. [BRN, Feb. 19, 2008]
• EMD Serono – Local 103 cited years of litigation against the company over the sales and pricing practices for its AIDS drug Serostim, as well as high executive compensation.
• Biogen Idec – Local 103 has raised issues about the pay of top executives, and has demanded that an all-union workforce build the 350,000-square-foot new headquarters in the Boston suburb of Weston, for which preliminary site work has begun.
• AstraZeneca – The union has faulted the British pharma giant for using subcontractors who hired non-union workers during construction of a $100 million expansion of a research and development facility being completed in Waltham.
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"On our ongoing construction project, our procurement processes involve specific steps to consider union and non-union labor, and we take due diligence seriously," AZ spokesman Tony Jewell told BRN. "Awarding of contracts has been based on safety performance, quality, ability to meet the aggressive project schedule and competitive pricing.
"As we near the end of the project, 61 percent of the job has been awarded to union contractors," he added.
On its website, the union also cited a Boston court decision finding AZ, Bristol-Myers Squibb, and Schering-Plough liable for damages on charges that they overcharged on some drugs paid for by Medicare and employee benefit plans.
Local 103 has also cited a $160 million Alabama judgment against the company citing it for overcharging on drugs for the poor and elderly, and a dispute on whether two jury members who selected Harald zur Hausen for the 2008 Nobel Prize in medicine had a conflict of interest with their roles on the board of AZ, given its stake in two viruses against human papillomavirus, the target of zur Hausen's research.
Jewell noted that the company has appealed both decisions, adding: "AstraZeneca has competed responsibly with respect to pricing and marketing of medicines, and we firmly believe that we have acted at all times in accordance with the law."
Jewell said AstraZeneca rejected the conflict-of-interest argument, and is associated with the Nobel Prize through "two companies that are totally separate from the prize-awarding committee, as we seek to increase public understanding of science and medical improvements to patient health and quality of life."
Biogen Idec spokeswoman Amy Reilly told BRN her company uses a merit-based bidding process for contractors that "has resulted in the majority of our large building projects being done by union building contractors here in Massachusetts."
For example, Biogen Idec used "more than 75 percent union labor" in the construction of an addition to its Cambridge campus in 2005, she said.
"We're committed to having contractors and subcontractors based on merit, to ensure the highest quality, efficiency and safety on our construction projects," Reilly said.
As for the Weston project, slated for completion "in the late summer or early fall of 2010," Reilly said her company could not ensure an all-union workforce because it was a tenant in a building being built for owner-developer Boston Properties, to which she referred a question on the union presence in that project.
Boston Properties at deadline had not responded to e-mailed questions from BRN.
Reilly would not comment on other anti-Biogen Idec material the union posted on its web site, including links to press stories about the company's troubles with two multiple sclerosis drugs, Avonex and Tysabri, as well as the 2005 sale of stock by executives soon before the company pulled Tysabri off the market.
Antonellis said the union's campaign against biotech giants will not be extended to developers of life-sciences space. They include publicly traded Alexandria Real Estate Equities, which won support from Local 103 and several other unions for its $1 billion plan to build 1.8 million square feet of lab and office space on 15.7 acres in the East Cambridge section of Cambridge.
Earlier this month, Cambridge's City Council approved 8-1 a rezoning sought by Alexandria, which still needs site plan approval before it can start work [BRN, Feb. 17].
"We're not against everything," Antonellis said. "We're supportive of many big projects. We build buildings for a living. We're supportive of economic growth. We're supportive of buildings and development. We're not against it by any means. That's how we make a living."