The reason the U.S. is a good place to do business is that, for the past two centuries, it’s built a firm foundation on the rule of law. President Trump almost undid that in a weekend. That’s bad for business.
This piece combines a genre I love—the gritty crime story—with the utter weirdness of the cruise ship industry. Apparently people disappear from cruise ships all the time, but you usually don’t hear about it because the cruise lines keep it quiet. Ronson goes deep into the bizarre cruise culture as he tries to figure out what happened to Rebecca Coriam, who vanished from the Disney Wonder last March.
This story accomplished what seemed almost impossible, at least from an editor’s perspective: it made a compelling narrative out of the Occupy Wall Street encampment in lower Manhattan. Even though OWS was being covered to death, this story—along with Bloomberg Businessweek’s own fine contribution, Drake Bennett’s profile of David Graeber—found a new angle on it and made it fresh and compelling.
His piece about Iceland (“Wall Street on the Tundra”) is my favorite one he’s done about the global financial crisis, but Michael Lewis’s breakdown of the fiscal disaster that is California was his best in 2011. It really makes you think about the scary place we might be headed as a country, and the scene with Arnold Schwarzenegger is priceless.
Ian Frisch| Longreads | April 2018 | 32 minutes (8,040 words)
When 59-year-old Jack Mack wandered from picket station to picket station to ask the Question, he tried as best he could to ease into the conversation. He didn’t want to scare anyone off. It was two months into the strike, and tensions were high. “You know, we handle some pretty nasty stuff in there,” he’d say. Or, if the guy was older: “C’mon, you’ve been here as long as I have! You know everyone!” Sometimes, if he already knew the person, he’d cut to the chase: “Wasn’t there a guy you worked with down there that was diagnosed with cancer a few years back? Did he make it through?” If they didn’t answer, staring instead at their steel-toed boots, Mack would lean in and say, “You know, I’m sure you heard, but I was diagnosed with cancer myself. Beat it, but — you know.” Then he’d turn toward the sprawling complex across the street — the site of the only job he’d ever had — and nod, adjusting the cap perched on his head. “Yup. Forty years.” He’d inhale deeply, nearly a sigh. “That’s a lot of hours around those chemicals.” He’d shake his head, unsure if he should blame himself or Momentive Performance Materials, the chemical plant in Waterford, New York, where he had dedicated so many years of his life.
Like Mack, many of the employees on the picket line had worked at Momentive for decades, and while they didn’t know for sure that working at the plant caused their cells to metastasize, the workers certainly knew of the inherent consequences that stemmed from handling carcinogenic chemicals on a day-to-day basis. That fear of a link is what troubled Mack and his cohort, and it’s why in November 2016, nearly 700 unionized workers at Momentive went on strike, protesting what they thought was an unfair contract — one that pushed for more expensive and restrictive health insurance for workers and the elimination of health care for retirees altogether, “many of whom,” according to leaflets handed out during the strike, “are suffering from job-related illnesses caused by exposure to dangerous chemicals.” For decades, the workers had mixed and churned chemicals in a variety of forms to produce an endless array of products, which included specialized goods such as F14 fluids and rubber stoppers on syringes along with items encountered on a day-to-day basis like exterior coatings for soft drink bottles and the rubber used to manufacture nipples for baby bottles.
Now, though, those same workers were walking out for the first time, and the union outfitted a defunct hot dog shack across from the plant into a headquarters. Nearly all of them had been picketing the plant’s nine entrances 24 hours a day, powering through snow squalls, huddling around burn barrels for warmth, trudging through slush puddles.
Union strikers around a burn barrel outside Momentive’s Water Treatment Facility. (Jonno Rattman)
On the picket line, in rare close quarters with men who worked elsewhere in the massive plant, Mack learned his coworkers’ stories. He took a few minutes out of each day to ask strikers if they’d had cancer or knew anyone who did. Sometime after Christmas, Mack had started jotting down the names — current and retired, dead and alive.
He kept the handwritten list folded up in his jacket pocket, adding new sheets as he collected new stories: six pancreatic cancers, seven bladder cancers, nine brain cancers, 11 throat cancers, 18 prostate cancers — spine, skin, stomach, and more. While these are cancers that do afflict men of a certain age—according to the American Cancer Society, one in nine men will be diagnosed with prostate cancer—the diagnoses outpace certain national averages. Brain cancer afflicts .006 percent of adult males, far below the roughly 2 percent of the strikers with throat cancer whom Mack surveyed. By mid-January, he had 85 names. Many of these men had worked in the plant for more than 20 years, which meant they’d tallied up decades of exposure to dangerous chemicals. (Of the scores of men on Mack’s list, I’ve independently confirmed the cancer diagnoses of two dozen, through interviews with either the men themselves or, in the case of 11 who died, with family and friends.) Mack himself had long known coworkers with cancer. To him and other employees, it was almost commonplace to know a guy who had been diagnosed. “Three other electricians I worked with in waste treatment also have cancer,” he told me. “Long-term exposure — in some of these buildings, there’s no way you can avoid that.” Mack, an electrician who works on the machines that process the plant’s chemical waste was diagnosed with prostate cancer in 2014. His brother, who also works at the plant, was diagnosed with tongue cancer the next year. Their father, who worked at the plant for 36 years, died of cancer in 1994.
Mack’s oncologist, Dr. Kandasamy Perumal, who specializes in urology and has operated a practice in nearby Troy for 35 years, is no stranger to cases like his. “As time went on, more and more people came from that area with instances of malignancy, rather than Troy or Latham or other towns. My practice sees comparatively disproportionate numbers of tumors from people who live in Waterford and Mechanicville,” he said. “But do we know if they all worked at the plant? I don’t know for certain,” he added, explaining that his practice is not obligated to collect workplace information from patients. Momentive said that it was unaware of any chronic health problems among employees as a result of exposure to raw materials, and that their well-being is its highest priority. “The company takes all necessary actions to ensure strict adherence to all federal and state health guidelines,” said a Momentive spokesperson.
There were risks in taking on this kind of work, Mack knew. So did many of the men whose names were folded up in his pocket. But there had been some promise of security at Momentive, a belief that their jobs would take care of them — a good living, a secure retirement, health care. Today they’re not so sure. After the plant was acquired by a private equity firm in 2006, things took a dark turn. A decade of control by Wall Street brought pay cuts and a litany of increasingly rancorous labor disputes — culminating in the massive strike.
When I visited Momentive in January 2017, workers sat at the booths inside the hot dog shack wearing camouflage jackets, reading newspapers, drinking coffee, and eating hot dogs and stale pastries. One checked in picketers who, after nine weeks on the line, were eligible for unemployment. They were also paid $400 a week by the union. The 104-day walkout began November 2 and ended February 14, and during that time these men were constantly on edge, both about the security of their job but more importantly about the precariousness of the benefits they desperately relied upon. The men were on strike for many reasons, but high-quality, affordable health care was their main concern. It was what they needed most.
Bill Tullock, a 55-year-old senior advanced control operator, whose doctor had found a tumor in his throat during an endoscopy for acid reflux in 2015, maintains that he’d never have gotten the routine procedure that led to his cancer diagnosis without Momentive’s old health insurance. At the time, his annual deductible was $500; now it’s $3,500. Tullock doesn’t solely blame the plant for his cancer, but he’s adamant that were it not for the generous coverage, he’d never have known he was sick.
“I dodged a bullet,” Tullock said of his battle with cancer, which, thanks to the low deductible he paid courtesy of his previous health care coverage, was caught early. “With the new insurance, I am pretty confident I would’ve never had the endoscopy, and would’ve never known there was a tumor. Then it would’ve spread, and I wouldn’t have known.” Under the new contract, once he retires, he’s on his own. “I dedicated myself to this place,” he said during the strike in January, sitting in the basement of the hot dog shack, holding back tears. “I should have never started working here. And now they are trying to give us this shit insurance and just — what, ‘Go die?’” He rubbed his eyes with the palm of his hand. “Our health insurance is like the final firewall of personal protection,” he said. “It’s all we’ve got.”
Bill Tullock was told by his doctor to get an endoscopy in 2015; it turned out he had a tumor in his stomach. Jack Mack sits down with his list of sick workers while on a break at union headquarters. (Jonno Rattman)
The men who’ve worked at the plant for decades and battled cancer — whether they think it’s from the chemicals they handled or not — now face a task familiar to millions, one from which they thought they had a reprieve: They must either sign up for the company’s onerous coverage or fend for themselves to get health insurance, with costs varying widely through the complicated, cumbersome public exchange overseen by the government — the precariousness of which is compounded by the Trump administration’s promise to gut the Affordable Care Act, leaving workers in an even more fretful state of uncertainty.
Like so many Americans, they’re threatened by a toxic triumvirate of lax chemical-safety regulations, costly health coverage, and growing pressures on Wall Street to perform — the latter of which has forced businesses to perform under expectations that set them up to fail, with employees taking the brunt of the downfall
The decade of private equity ownership had gradually worn down a generation of workers, stoking a divide between those who would be taken care of and those who would go without. “Sacrifices were made with the expectation that we would get adequate health care when we retired,” Mack said. “If you are going to work in environments like this, you are going to need affordable health care.” The strike marked dividing lines between worker and owner and financier, but it also revealed a rift so deep that it was often left unspoken: What do American workers owe to one another?
Waterford, New York, is one of a cluster of manufacturing towns situated north of Albany, where the Mohawk River joins the Hudson. It blossomed into a factory hub as early as the mid-1800s and was known for its paper mills. A reported stop on the Underground Railroad, it was even visited by Alexander Hamilton and Frederick Douglass. Drive into town from across the Hudson and you’re greeted by a memorial to Waterford’s veterans, including men who fought in the Revolutionary War. Keep driving north on Route 4, past the village center, and the Momentive complex flanks both sides of the road, sprawling across an 800-acre plot.
The town greeting in Waterford, New York. (Jonno Rattman)
The chemical plant is one of Saratoga County’s largest employers. First built by General Electric in 1947, it anchors the region both economically and culturally. For decades, the plant with its hundreds of union jobs offered its primarily male workforce a stable, middle-class kind of prosperity, one where high school graduates could eventually earn a six-figure salary. There was a sense of local pride: The soles of the boots in which Neil Armstrong took his one small step were made of silicone rubber manufactured here. “If you’re from here, this is where you work,” said Vinny Anatriello, a third-generation employee. “And if you don’t work here, you work in the school where all the guys’ kids go to, or you work in the doctor’s office where the guy’s sick wife goes, or you work in the grocery store.”
It’s no secret to the workers that materials used in Momentive’s Waterford plant can be dangerous. It’s been this way for decades. The plant sources silicone ore and, through reactions with various chemicals, produces materials used in consumer products ranging from shampoo and medical equipment to caulking and car parts. Numerous longtime workers say that the current operations use dozens of toxic chemicals, among them benzene, lead, mercury, and hydrochloric acid. The waste it has produced over the years — over 11.4 million pounds in 2015 alone — has at times included more than three dozen toxic chemicals, 11 of which are carcinogens, according to the Environmental Protection Agency.
There used to be even more, workers say, decades ago when GE owned the plant. Numerous workers said that until the early 1980s, they cleaned their winter coats with pure trichlorethylene, now a known carcinogen, and used fiberglass and lead as fillers in chemical mixtures. For some processes, they weighed out raw lead by hand. “Back then we’d scoop it like it was salt,” said George LaMarche, 65, who retired in July 2017 after 44 years at the plant and whose doctor is closely monitoring his elevated prostate-specific antigen levels — potentially an early sign of prostate cancer. “We never wore any protection for that.” In a statement, a Momentive spokesperson said that the company provides all its employees with protective equipment, extensive training, and instructions in how to properly handle the materials they work with: “When employees act in accordance with the policies and procedures Momentive has in place, potential risks are mitigated.”
Millions of American workers are exposed to carcinogens, or possible carcinogens, according to the National Institute for Occupational Safety and Health, the division of the Centers for Disease Control and Prevention that researches and investigates workplace safety and health. In 2012 alone, upward of 45,000 diagnosed cases of cancer — and, since the agency is still investigating and uncovering potentially carcinogenic materials used by the American worker, perhaps twice that many — were caused by past workplace exposure. On average, nearly eight times as many people die each year of diseases acquired on the job as die from injuries sustained on the job.
He kept the handwritten list folded up in his jacket pocket, adding new sheets as he collected new stories: six pancreatic cancers, seven bladder cancers, nine brain cancers, 11 throat cancers, 18 prostate cancers.
Since 1976, federal law has required all new industrial chemicals to be submitted for review by the Environmental Protection Agency. (Tens of thousands of industrial chemicals already in use were grandfathered in.) But after that initial environmental review, many industrial chemicals — which don’t necessarily have to get tested before being used in manufacturing — may never get a closer look by regulators. Once chemicals have entered the market, U.S. law only requires the EPA to collect data on the roughly 3,700 of them that are used at a rate of at least 500 tons per year. The data collected pertain mainly to their effects on the environment or the consumers of the products they produce — not on the workers who handle them.
“These chemicals are never sent back with actual information from the workplace,” said Jennifer Sass, a senior scientist with the Natural Resources Defense Council’s health program. “The regulations are focused on the end of the pipeline. But you can’t put the genie back in the bottle at that point. People are already affected.”
Updates to the Toxic Substances Control Act, which was amended by Congress in 2016, mandated more pre-market testing for new chemicals seeking federal approval and required the EPA to review already-approved chemicals in widespread use. Ten of the most toxic of those are slated to be tested in 2018, but it’s unclear whether that deadline will be met. (Two of the chemicals have been commonly used at Momentive.) Since then, however, President Donald Trump has promised to scale back regulations broadly and has targeted federal agencies, the EPA chief among them, for sharp funding cuts.
Momentive Performance Materials, a chemical plant in Waterford, New York (Jonno Rattman)
In May 2017, Nancy Beck, a former industry advocate and executive at the American Chemistry Council (of which Momentive is a member), was selected to become the deputy assistant administrator of the EPA unit tasked with implementing the updates to the toxic-chemicals law. Just two months earlier, she had gone before a Senate subcommittee as a then-executive at the ACC to push back against the review process. According to an investigation by Eric Lipton at The New YorkTimes, the EPA has spearheaded “a broad initiative by the Trump administration to change the way the federal government evaluates health and environmental risks associated with hazardous chemicals, making it more aligned with the industry’s wishes.” This included reevaluating plans to ban certain uses of two chemicals that have caused dozens of deaths or severe health problems: methylene chloride and trichloroethylene, both of which have been used by Momentive employees.
Regardless of these policy reversals, tens of thousands of chemicals that have been in production for decades still need review. The Union of Concerned Scientists, an environmental-advocacy group, estimated in 2015 that it could take 50 years to reevaluate 1,000 of the most toxic chemicals on the market. “Most toxins have not been adequately studied, employees have no tools to act on their suspicions, the companies have a disincentive to learn the full truth about what its chemicals do in terms of health impact, and the government is underfunded and doesn’t have sufficient tools to fully investigate,” said Dr. Steven Markowitz, director of the Barry Commoner Center for Health and the Environment at Queens College. “It’s a recipe for making the health consequences of working with toxic chemicals invisible.”
Tim Larson is a tall, broad-shouldered man who wears a musty cap tossed on his head. When I met him during the strike, he carried a megaphone that he used to shout chants on the picket line. His face lit up when he screamed, and his eyes — which seemed to hang out of his skull — bulged even further from their sockets. I stood with Larson most nights while I was there — he held the late shift on the picket line — and he explained that the plant is a complex of various buildings, each housing in a different part of the production line. You’re either breaking down raw ore, reacting the rock with chemicals, mixing together intermediate materials, packing products, or organizing them for storage and shipment.
Tim Larson steps off a bus before a protest in Momentive CEO Jack Boss’s neighborhood in Saratoga Springs. (Jonno Rattman)
Larson, a chemical operator, began working at Momentive in 1988 when he was 35 years old. He told me stories about the different parts of the plant, including Building 78. This area of the massive plant is home to the Waterford plant’s fluorosilicone manufacturing operations. There, a silicone base is reacted in roughly 100-gallon “dough” mixers at more than 240 degrees Fahrenheit to produce fluorosilicone gum for use in automobile gaskets and aerospace products. (The mixers are also used to produce “intermediates,” which are unfinished products that passed from building to building within the plant, and included different grades of polymers and fluids.) Long-term exposure to seven chemicals used in Building 78, according to Momentive material-safety data sheets, are suspected of or known to be reproductive toxins. Another chemical, Tris(2-chloroethyl) phosphite, is a carcinogen. Workers call the building the One-Nut Club, for reasons that to them seem less ominous than inevitable.
When GE owned the plant, risks from fluorosilicone production had been on the company’s radar since the 1970s. In a “strictly private” 1977 safety audit, a safety specialist said that research had shown that materials created by these processes, when ingested — which could mean breathing in the chemical or having it touch one’s skin — shrank rats’ prostates and testes “and may have similar effects in man.” The specialist also wrote that tests showed that the chemical compound handled by workers was “probably not a carcinogen.” GE performed a similar toxicity review 20 years after its initial testing and analyzed several chemicals used to the produce fluorosilicones. “The data, although not definitive, did not give rise to any concerns over the potential for carcinogenicity,” the report concluded.
“Nobody admits there is a correlation, but we put stickers on the tanks that hold this stuff, saying that it causes cancer,” Larson told me, referring to the warning stickers that California state law required them to affix. (Many of their products are shipped to the Golden State.) “It’s right there in front of you.”
“After six years, my eyes started bulging out of my head,” he told me, pointing to his face. He was diagnosed in early 1996 with Graves’ disease, an autoimmune disorder that affects the thyroid. “I had to get my eyelids sliced, because I couldn’t close my eyes,” Larson said. He knows he can’t prove a direct link, he added, but he is “convinced that all my autoimmune problems are directly related to working here.” Soon after his diagnosis, Larson transferred to another area of the plant.
The men were on strike for many reasons, but high-quality, affordable health care was their main concern. It was what they needed most.
Other workers voiced their concerns about Building 78. In 1998, a GE-employed research chemist named Herman Krabbenhoft wrote a letter to two operators who worked there, Joe DeVito and Dan Patregnani, explaining that the previous year he had expressed concerns to managers about the vapors released during fluorosilicone operations. Krabbenhoft wrote that GE’s health and safety manager was supposed to have initiated a study of how to measure the vapors’ concentration, but that after a year nothing had been done, adding that he was told by a colleague to “back off on pushing this because it might affect how GE’s managers viewed me and my performance.”
“Herman was on our side,” DeVito said.“He said, ‘Stay away from it. It’s going to kill you.’” Shortly thereafter, DeVito said, Krabbenhoft was fired. (Multiple attempts to reach Krabbenhoft for comment were unsuccessful; GE declined to comment for this article, referring all questions to the plant’s current ownership, who also declined to comment on the specific incident.)
The building’s ventilation system was updated in the early 2000s, multiple employees who worked there said. The system was supposed to be air and temperature controlled. “It never worked, never sealed the room properly,” said John Ryan, who worked in Building 78 at the time, adding that temperatures could reach 110 degrees in the building due to the faulty system. In 2005, Ryan said he filed a formal grievance, asking to spend less time near the mixer, explaining that he didn’t want to be exposed to the hazardous mixture and its vapors. “But nothing changed,” he said. “And they never fixed the dough mixer either. Materials would come out into the air or spill onto the ground. That’s still going on, until this day.” In mid-2017, Momentive installed a second dough mixer to Building 78 to ramp up production, and though the machine suffered at first from issues relating to its packing seal, there haven’t been any recent health-related complaints. (Both the venting system and the initial dough mixer have also been serviced and are reportedly in working condition.)
Joe DeVito was diagnosed with throat cancer in 2013. He worked in Building 78. (Jonno Rattman)
Now, DeVito said, workers must wear full-face respirators when they clean the mixers, which have to be pristine before the machine can be used to produce another product. The fluorosilicone is so sticky, Larson claimed, that he used to have to climb into the 100-gallon drum and scrape off any lingering substance with a razor blade. “Fluorosilicone is a highly resistant chemical — oil, water, you name it,” he said. “That’s why it is used on gaskets and car bumpers, or in rocket ships.” According to DeVito, “Momentive took more steps for safety over the years,” but the process itself and the chemicals used in it remained the same. Additionally, the company’s material-safety data sheets do not indicate whether the vapors produced from these chemicals are hazardous to humans, despite there being a warning that TFPA vapors, which are highly toxic, may evolve from the products used to make fluorosilicone gums and polymers. “The company raised certain health issues related to the chemicals used in this building, but despite a very incomplete knowledge base, they draw the conclusion that there is no cause for concern,” said Dr. Markowitz of Queens College, who reviewed the documents. “My conclusion would’ve been: ‘There’s a big gap in what we know versus what we don’t know.’ That’s the proper conclusion.”
DeVito was diagnosed with stage 4 throat cancer in 2013, after a bump on his neck swelled to the size of a golf ball. DeVito told me he knows of five other control operators who worked in Building 78 who were diagnosed with cancer. He told his doctor about his decades of exposure to fluorosilicone vapors. “She said, ‘It would take years to prove that it happened from work,’” he explained. “‘Take care of this and just move on.’” His treatment, radiation, and chemotherapy, were successful. He retired in early 2018.
Some workers, like Tony Pignatelli, who worked in the plant for 34 years, weren’t so lucky. Pignatelli was diagnosed with brain cancer in January 2000 and passed away three weeks later. “My dad knew the risks, but he did it because they took care of them with good pay and health care,” his daughter said. “But I can’t even begin to understand what those guys are going through down there now with this new contract.”
Employees accepted the risks associated with working in the plant, the backbone of their community, for over half a century. They felt taken care of: stable pay, a sizable pension, affordable and quality health care, good communication with management, camaraderie with fellow workers. But that all changed when GE sold its global silicone operation, with the Waterford plant as its centerpiece, to a Wall Street investment firm in 2006 in a leveraged buyout. “When it was GE, they treated you like family,” Jack Mack said. “After the sale, everything changed.”
Matthew, Kenny and Vinny Annatriello—father, nephew, and son—on the picket line. (Jonno Rattman)
Apollo Global Management, a private equity firm that manages $249 billion in assets, bought a controlling stake for $3.8 billion, then saddled the corporation (which changed its name to Momentive Performance Materials in December 2006) with $3 billion in financing debt while it collected a $3.5 million that first year for “financial and strategic advisory services.”
Many employees didn’t understand the implications of the sale until 2009, when nearly 400 production workers received surprise pay cuts. Brian Cameron Jr., a 34-year-old second-generation employee, was making $27 an hour as a chemical operator. He had just bought a house in Waterford and a new Dodge Ram pickup the previous summer. “Everything was going good. I paid my bills,” he said. “I thought I was set for life.” Then his wages were slashed to $17 an hour. He eventually took a higher-paying position at the plant, but his debt piled up too fast. “I thought if I moved quickly, I would be able to save my life,” he said. “But it was too late.” He lost his house, gave back his truck, and moved into a coworker’s apartment.
The cuts meant that his coworker Ron Gardner, then 53, and his wife, Donna, could no longer afford the $1,300 monthly payments on their two-bedroom ranch home in Grangerville. “We were struggling,” he said. A few years later, in 2013, they abandoned it and moved into a trailer park in Saratoga Springs, just two miles from Momentive’s current CEO Jack Boss’s $950,000, 4,375-square-foot home. They took out personal loans to pay for a $23,000 double-wide, then used savings and loans from family members to pay for the roof and the lot’s rental fees. Unable to sell their ranch, they filed for bankruptcy and began paying off their new debts.
The local union contested the wage cuts, and 18 months later, in 2010, with their contract soon to expire, Momentive agreed to settle by issuing back pay — more than $50,000 before taxes for some workers — while making the wage cuts permanent going forward. Gardner, Cameron, and others who had lost their homes or been pushed into bankruptcy by the cuts couldn’t turn down the chance to repay their debts. “People were so broke from the wage cuts, they voted yes for that contract,” said local union president Dominick Patrignani, who has worked at the plant for over 30 years and was the chief bargainer during last year’s strike. “They were given no alternative.”
Ron and Donna Gardner lost their home, then Ron developed esophageal cancer. Dominick Patrignani, president of the local union, is the chief bargainer for the 700 strikers. (Jonno Rattman)
But Momentive wasn’t done. In 2013, the company froze pensions for workers under 50 and those with less than 10 years of service. “Every contract, they slashed benefits and made it harder for me to do what my father did: provide for his family,” Cameron told me during the strike. All of this is par for the course for private equity firms like Apollo. According to a study led by Josh Lerner, professor of investment banking at Harvard Business School, private equity buyouts lead to sizable reductions in earnings per worker compared with traditional companies, as well as modestly greater job loss, with a comparative decline of 4 percent over a two-year period.
“If a private equity firm needs to goose their returns, they will take it out of worker’s compensation — wages, pensions, benefits, all of it,” said Eileen Appelbaum, a co-director at the Center for Economic and Policy Research and the co-author of Private Equity at Work: When Wall Street Manages Main Street. To her, private equity firms only care about one thing: profit. “The fastest and easiest and least controversial way, in their point of view, is to cut compensation. They make a dollar every time they take a dollar out of workers’ compensation,” she said. “Private equity controls management and the board of directors. They can fire anyone at any time. They sit at both sides of the table. There is no one looking out for the workers.”
In 2014, still under Apollo management, Momentive filed for Chapter 11 bankruptcy, trimming its debt obligations from $3.2 billion to $1.2 billion. This is also a familiar tactic for the firm. “It makes sense [Apollo did that] because you create money out of thin air,” said Tony Casey, professor of law at the University of Chicago, who studied the Momentive bankruptcy case. “Apollo is an aggressive investment firm,” he added. “They are not shy when it comes to using bankruptcy to their advantage.” The company announced a public offering three years after it emerged from bankruptcy, but the offering was postponed. When it did, Apollo owned the largest stake of shares.
Taking advantage of bankruptcy courts is also a preferred method of President Trump, who counts Apollo CEO Leon Black as a friend. And while Trump boasts about his dedication to the American worker, the company he keeps deliberately erodes the foundation upon which the middle class is built. In a 2011 interview with George Stephanopoulos on ABC News, Trump said: “If you look at our great businesspeople today — Carl Icahn, Henry Kravis, Leon Black of Apollo — all of them have done the same. They use and we use the laws of this country, the bankruptcy laws, because we’ll buy a company. We’ll have the company. We’ll throw it into a chapter. We’ll negotiate with the banks. We’ll make a fantastic deal. … You know, it’s like on The Apprentice. It’s not personal. It’s just business. OK?”
“Every contract, they slashed benefits and made it harder for me to do what my father did: provide for his family.”
During Momentive’s bankruptcy proceedings, GSO Capital Partners, the credit arm of Blackstone Group, one of America’s largest hedge funds — headed by Steve Schwarzman, who chaired President Trump’s defunct Strategic and Policy Forum — translated its bond investment in Momentive into public stocks, a 6.8 percent stake. (A spokesman for Blackstone said the firm sold its stake in Momentive on August 3, 2016 — the same day union workers voted to strike if a contract agreement could not be reached. The spokesman, however, could not provide documentation of the sale. The spokesman also confirmed that Blackstone senior adviser John Dionne is still on Momentive’s board of directors.)
In 2013, Blackstone had bought a 20 percent controlling stake in another longtime upstate New York employer, then-declining Eastman Kodak, which had already slashed retiree health care benefits and pensions (though the company did restore elements of its pension plan upon emerging from Chapter 11 bankruptcy in late 2013). When Carl Icahn, the recently ousted special adviser to the president on regulatory reform — whom Trump also counts as a close friend — came to Trump’s rescue and retained full control of his Taj Mahal casino through a bankruptcy proceeding, he shut down the operation rather than give the union employees better health benefits. Roughly 3,000 people lost their jobs. “It’s a classic take-the-money-and-run — Icahn takes hundreds of millions of dollars out of Atlantic City and then announces he is closing up shop,” Bob McDevitt, the president of the local union, said in a statement after the closing.
Others in Trump’s family and inner circle have deep ties with these Wall Street operators, whose business tactics, like those being implemented in Waterford, affect middle-class families. Blackstone has loaned Kushner Companies, the real estate empire of Jared Kushner, Trump’s son-in-law and senior adviser, more than $400 million for real estate deals since 2013. The firm is one of the company’s largest lenders. Two months ago, the New York Times reported that Joshua Harris, a founder of Apollo, met with Kushner several times in 2017, at one point even discussing a possible job opening in the White House; by November of last year, Apollo would lend $184 million to Kushner Companies. (While Kushner is no longer CEO of the real estate company and has sold a chunk of his stake, he still reportedly holds properties and other interests in Kushner Companies — those investments are worth upward of three-quarters of $1 billion.) Kushner Companies is also on the clock to pay the $1.2 billion mortgage debt for 666 Fifth Avenue, a 41-story albatross in Manhattan that the company purchased in 2006, which is due February 2019.
Jack Boss joined Momentive as an executive vice president in March 2014, one month before the company filed for Chapter 11 bankruptcy, and he officially became CEO that December. The union believes that Apollo brought in Boss specifically to weaken the union during the next contract negotiation, which was slated for 2016. “They planned this entire thing,” Dominick Patrignani, the local union president, told me. “They knew what they were doing.”
Dan Patregnani, a union member who worked in Building 78, and the headquarters of Apollo Global Management at 9 West 57th Street in. New York City. (Jonno Rattman)
In mid-January 2017, workers rallied outside the midtown Manhattan headquarters of Apollo Global Management, the private equity firm that had bought their company more than a decade prior. About a month later, members of their parent union, the Communications Workers of America, also handed out leaflets near the White House as President Trump met with Schwarzman, whom he had named an economic adviser and head of the Strategic and Policy Forum during the early days of the strike. (The 16-member group would disband just months after this meeting.)
Jack Mack, the second-generation worker who compiled the list of employees with cancer, trekked down to New York City to participate in the demonstration outside Apollo HQ. He stood with dozens of other workers and supporters, and his hot breath crusted in the frigid air as he called out Leon Black by name. This was the first time I met Mack — the strike had just begun. As the event came to an end and the NYPD began to shuffle protesters off the street, I asked Mack what he planned to do next.
He looked me in the eye and said, “Go back up to the plant and stand out there until this whole thing comes to an end — until we get what we deserve.”
The labor negotiations broke down over the summer of 2016, and by August a strike seemed imminent. In early September, 85 percent of workers rejected an offer that would have forced current employees into more expensive health insurance plans and eliminated the much-beloved benefit for future retirees altogether. They officially went on strike November 2. Five days later they voted again, with the same result — they rejected the offer by a larger margin.
Ron Gardner retired on New Year’s Day 2015. He was 61. He’d already lost his home and moved into his trailer, and he’d spent much of the previous summer at Saratoga’s venerable racetrack, watching and sometimes betting on the races. “I won enough to keep going the entire season,” he said, seated at his dining room table, television game shows audible in the background. Soon after he retired, he changed his health insurance on Momentive’s recommendation, switching providers and opting for a plan that was cheaper from month to month but caused his deductible to rise from zero to $3,500. He wasn’t worried. “I had never been sick a day in my life,” he said. But shortly before he retired, right around Thanksgiving 2015, he began having trouble swallowing. “It scared me,” he recalled. “I couldn’t even swallow my own spit.” There was a nearly two-inch tumor in his esophagus: adenocarcinoma, a form of cancer.
Gardner had begun working at GE’s Schenectady plant in 1973 and transferred in 1988 to Waterford, where he held various positions over the years, including the production of chemical mixers for caulking After GE sold the plant in 2006, he worked for more than two years refining chemicals in Building 30, filtering out cloudy imperfections before transferring those same liquids into drums to be sold to consumers. “I often inhaled a lot of vapors,” he said.
The water treatment facility at Momentive Performance Materials. (Jonno Rattman)
Gloves, Gardner said, weren’t required for the job. According to material-safety data sheets, gloves are required only if a risk assessment deems them necessary. “He would come home covered in this caulking shit, all over his clothes and his hands,” his wife, Donna, said. “It would be everywhere.”
He transferred five years later to wastewater treatment, where he ran presses that compacted hazardous waste into dry, disposable cakes the size of kitchen tables before dropping them into trailers for disposal. He had to clean up spilled waste by hand and scrape out the presses if the cakes didn’t fall properly. The plant, he added, didn’t require respiratory protection for that particular job. “I breathed that stuff in for three and a half years,” he said. By the time Gardner began his last job at Momentive, the white walls of the facility had long turned gray from the dust produced by the waste. “That’s where I think I got the cancer from.”
Starting in January 2016, Gardner began a six-week course of chemotherapy and a month of radiation, paying off the $3,500 deductible in installments. Despite the treatment’s apparent success, Gardner’s doctor pressed him to undergo an esophagectomy. The operation — which would remove part of his esophagus and reconstruct it with the upper portion of his stomach — would be risky, and one of his lungs would have to be temporarily deflated during the procedure. Gardner decided against it.
By October 27, 2016, his cancer had returned. He needed the surgery to survive. But now he was racing against two clocks: the cancer and the company. Labor negotiations had broken down months before; the strike would begin within a week, and his current insurance coverage would run out at the end of December. “Company-paid medical, dental, vision, and drug coverage will not extend for the duration of employee strike activity,” a letter to employees from Momentive said.
“I wrote all the numbers down, in case I didn’t make it through the surgery, so Donna could get my pension,” Gardner said. “I didn’t trust Momentive to call her and say she was entitled to it.” He called his lawyer and had his will updated. He went into surgery on November 29, and spent nearly two weeks in the hospital. “I wish I could’ve been out there on the picket line,” he said. “It was all such bad timing.”
Once home, Gardner was told by Momentive to sign himself and Donna up for new health insurance through Mercer, a private online benefits marketplace, where employees can choose from a variety of providers and plans. A 2014 Aon Hewitt survey found that despite accounting for only 5 percent of current plans, 33 percent of employers said they would begin offering insurance through private marketplaces in the next three to five years. In a 2016 report, Mike Gaal of Bloomberg BNA wrote that large employers pitch private exchanges to employees as a way for them to “buy down” to more appropriate levels of coverage. “While this may be true,” he wrote, “the reality is that the plan savings, in this example, are derived through shifting costs to employees through high deductible, copayments and out-of-pocket limits.”
“I wrote all the numbers down, in case I didn’t make it through the surgery, so Donna could get my pension,” Gardner said. “I didn’t trust Momentive to call her and say she was entitled to it.”
The Gardners’ 2017 deductible would drop to $600 each, but their monthly premium soared from $262 to $1,152 per month — a hike Momentive promised to offset for already-retired workers under 65 with a $400 monthly subsidy. He got his first subsidy check on January 27, 2017. As a retiree, Gardner was one of the lucky ones. The younger generation was battling a contract that offered them expensive insurance while they worked — and nothing when they were finished with their working lives.
As the strike wore on, it drew the attention of elected officials in the area. Twenty-one Albany County lawmakers wrote to Momentive chief executive Jack Boss that the proposed contract seemed “to greatly hurt retirees and take too many health care and retirement benefits away from active employees.” State comptroller Tom DiNapoli reached out to Apollo; he has New York’s state-employee pensions partially invested through the firm. “I urge you to encourage Momentive to work diligently towards an expeditious settlement of this dispute on terms that are fair to labor and management,” he wrote. On the picket line in Waterford, one popular sign slung around the necks of strikers called out Apollo’s chief executive by name: hedge fund billionaire leon black, tell momentive: don’t destroy good jobs.
Union strikers hold a sign outside of Momentive CEO Jack Boss’s home near Saratoga Springs. (Jonno Rattman)
In early February 2017, likely facing pressure from the governor’s office and intense publicity around both the strike and Momentive’s high-profile shareholders, Boss contacted the union’s regional leadership, bypassing the local chapter, and offered to resume negotiations. Four days later, a tentative deal was reached. Governor Andrew Cuomo, in his first public statement on the strike, announced his support for the deal, calling it key to “investing in the [union’s] world-class workforce, restoring operations at the plant and keeping upstate New York moving forward.”
Under the proposed new contract, to be voted on February 13 and 14, Momentive would keep matching 401(k) contributions of workers whose pensions had previously been frozen and would pay each striking employee a $2,000 bonus upon returning to work. In exchange, the union would accept the proposed health care amendments for current workers — more expensive premiums and deductibles. The company, rather than provide health insurance to future retirees, agreed to give at least 100 veteran workers a $40,000 cash bonus upon retirement — around $23,000 after taxes — that would hopefully cover any medical expenses before workers were eligible for Medicare at age 65. Though this was a win for the union, the next round of negotiations, in 2019, could decide the future of whether retirees will continue benefitting from Momentive’s medical coverage. “We have the right to negotiate now, which we didn’t have before last year’s strike,” says Patrignani. “It was going to sunset, but it’s still a topic of bargaining for future contracts.”
“You either have a preexisting condition, or you have an underlying condition, or you have an undiagnosed condition because of the inherent risk of working in a chemical plant,” said Robert Hohn, a 55-year-old employee. “You would probably have to pay a high premium and a high deductible. Would $23,000 cover that if something went wrong?” Hohn’s wife has degenerative disc disease, which requires constant care, and chronic gastrointestinal inflammation. Under the new contract, Hohn would have to pay $74 per week for him and his wife, with a $3,500 deductible and an annual maximum payment of $7,000. (Most workers signed up for this plan, which is the cheaper of the two; the other option has a $12,000 out-of-pocket maximum for a family). “The health care is going to kill me,” he said the day of the vote. “With my wife’s condition, we will definitely be hitting the maximum every year.” When the new contract came up for a vote, he felt he had no choice but to vote no. (At the beginning of 2018, Hohn’s wife left the insurance plan; he now pays $36 per week and a deductible for himself of $1,750.)
But many other workers feared that if the contract didn’t pass, some would cross the picket line to return to work, giving up their representation and fracturing the union. “They are pitting us against one another and using that to their advantage,” one worker said as he waited in line to vote on the proposed contract. “People are scared, feeling forced to vote ‘yes,’ even though the contract isn’t much better than what we went on strike for.”
A classified ad for temporary replacement chemical operators in the Saratogian newspaper on a table in the union’s break house.
This internal tension became more and more apparent as the strike wore on, endless weeks of picketing outside during the coldest part of the year for upstate New York. “When it comes to these guys losing their health care, I should give a fuck?” one Momentive worker, speaking on condition of anonymity, wondered aloud in January, before the new union contract was ratified. “Why should I care about you when you didn’t give a shit about me in the past?”
Like some other younger union workers at the plant, he was in the minority and had voted yes on the contract back in September, recalling the wage cuts and pension freezes of years past. To them, the older generation were on their way out; the younger workers needed this place to provide for their families for decades to come. They wanted a fair contract for everyone, but they didn’t want to ruin what they had already — a stable job — and were willing to sacrifice benefits in the process.
Apollo has shut down other manufacturing plants in the past, and that threat was real for workers on the picket line. Noranda Aluminum’s Missouri plant once employed over 800 union workers. Then it began a slow decline, and after Apollo sold its position in 2015, the plant shut down in early 2016. To some workers, a long and intense strike could make that possibility a reality. “To me, it’s not worth losing all of this. If they shut down, where will we go?” said another during the strike. “Stop whining and move forward. These old guys, they’ve had it so good for so long that they don’t want to give anything up. Sometimes, to me, it’s better to take one step back so I am able to still move forward — not like this situation now.”
The contract passed on February 14, 2017. The men went back to work within days. “They didn’t achieve everything they wanted,” said Bob Master, the union’s legislative director for the region. “But sometimes the fruits of victory don’t show up until later on, during the next round of negotiations, when the company remembers the spirit and determination of a united workforce.”
Robert Hohn and his coworkers are already anxious about what new concessions their next contract negotiation in 2019 might bring. Since the company’s sale to private equity a decade ago, men like Ron Gardner, who went into bankruptcy after leaving his home for a double-wide trailer and fought cancer from exposure at the plant, have watched as their Wall Street–backed corporation trimmed job benefits they’d counted on for decades — benefits all the more crucial now, as they face retirement tinged with the threat of cancer. This time around, it was health care for retirees. What will it be next time?
Outside the entrance gate of the Momentive chemical plant. (Jonno Rattman)
Apollo, meanwhile, announced in July 2017 that the firm had raised $24.7 billion for its latest global buyout fund, the largest sum of leveraged-buyout capital ever raised by a private equity firm, poised to pave the way for many more acquisitions like the one that created Momentive. Up in Waterford, there are whispers that Apollo is even trying to force the landlord to sell the hot dog shack — which the union still uses as it’s headquarters — and its surrounding land rights.
But despite these big-picture moves by corporate financiers, workers at the plant are still focused on their benefits — assets that are crucial to their survival. “I still don’t trust Momentive,” Gardner told me. The company had already cut his pay. What, he wondered, would prevent it from eventually taking away the insurance subsidy he received each month? If he lost the subsidy before he got Medicare, he explained at his dining room table, he won’t be able to afford health insurance. “After that, I don’t know what would happen,” he added, looking out the window. It was starting to rain. “If the cancer came back and I didn’t have coverage, I would die.”
Ian Frisch is a journalist based in Brooklyn. He has written for The New Yorker, The New York Times, Bloomberg Businessweek, Wired, Playboy, and Vice, among others. His first book, on magic and the secret lives of the subculture’s most prominent young magicians, will be published in 2019 by Dey Street Books, an imprint of HarperCollins.
A 68-year-old Japanese woman walks in Hiroshima, Japan. (Getty Images)
Of imprisoned women in Japan, nearly one in five is a senior citizen. Repeat offenders, many of these women live lonely lives even in the company of husbands and children. They’re turning to petty theft and are thriving in prison, a place where they find the companionship and security lacking in their lives on the outside. Shiho Fukada brings us the story at Bloomberg Businessweek. The Pulitzer Center provided funding for this story.
Ms. O, 78
Has stolen energy drinks, coffee, tea, a rice ball, a mango
Third term, sentenced to one year, five months
Has a daughter and a grandson
“Prison is an oasis for me—a place for relaxation and comfort. I don’t have freedom here, but I have nothing to worry about, either. There are many people to talk to. They provide us with nutritious meals three times a day. My daughter visits once a month. She says ‘I don’t feel sorry for you. You’re pathetic.’ I think she’s right.”
Family and friends of Jeff Wood and anti-death penalty activists march to deliver a petition with over 10,000 signatures asking the governor and the Texas Board of Pardons and Paroles to commute Wood's sentence. (Tamir Kalifa / AFP / Getty Images)
This week, we’re sharing stories from Sabine Heinlein, Leslie Jamison,Ijeoma Oluo, Eric Newcomer with Brad Stone, and Jill Lepore.
Industrial meat processing is a messy, smelly, unsavory business, which is why it’s highly regulated. Once animals are slaughtered for processing, a team of sanitation workers come into facilities after hours to clean up. But where 30% of America’s meat production workers are foreign-born, the majority of sanitation workers are immigrants. The reason is economic: to keep costs low, profits high, and legal responsibility minimal for producers like Tyson, contractors do the dirty work — some of most dangerous industrial work in America — without workers’ comp insurance.
Gilberto Gonzalez, a 47-year-old Guatemalan immigrant who has been cleaning poultry plants in Alabama for 11 years, says smaller plants and sanitation contractors ask few questions of undocumented hires and accept virtually any supposed proof of employment eligibility. “They have a way of working it out to get people on,” he says. (“Gonzalez” is a pseudonym he provided for this article in order to speak openly about his experiences as an undocumented sanitation worker.)
He lives with three of his sons in a decaying mobile home just outside Albertville on northeastern Alabama’s Sand Mountain, famous for its snake-handling preachers. He sent for each son separately in recent years. Just teenagers when they came, the boys paid smugglers $10,000 apiece to spirit them along the 2,300-mile trek from Guatemala through Mexico, across the Rio Grande, and on to Alabama, the last leg in the back of 18-wheel trucks. They’re still mostly invisible. They work at night, stay inside during the day, use back roads to avoid police, and never open the door for anyone they don’t know. Once, the family huddled inside as Immigration and Customs Enforcement agents snooped around the trailer park and knocked on their door for several minutes. “We just prayed to God, and they finally left,” Gonzalez says.
He works now at a Tyson plant, an employee of a large cleaning contractor called QSI, owned by the Vincit Group of Chattanooga, Tenn. (QSI and Packers say they use the federal E-Verify system to confirm employment authorization.) The work is good, as these things go. He’s still haunted, though, by his previous job. For about 15 months, he and his oldest son, who is 22 and identifies himself as Miguel, worked sanitation at a small processing plant called Farm Fresh Foods LLC in Guntersville, Ala. The facility is typical of the makeshift warehouses that dot the back roads of chicken country, picking up deboning work and other butchering jobs from the big poultry producers. Most operate on thin margins—bad news for workers, particularly the undocumented, who are always the most vulnerable to abuse.
Farm Fresh’s sanitation supervisor rode the cleaning crew without mercy, according to the Gonzalezes and other former colleagues, who filed a complaint with OSHA in 2016. They were forced to work at punishing speeds in ankle-deep water with floating fat and chicken guts. They were enclosed in poorly ventilated rooms with chlorinated cleaning products wafting in the air, severely limited in bathroom and water breaks. The chemical vapor caused heart-pounding insomnia, Miguel says. Several workers had to seek medical help. Workers who didn’t keep up the pace were moved to an extremely cold area of the plant as punishment.
As the disaster preparedness phenomenon spreads from the rich and eccentric into mainstream America, survivalism is becoming big business. One leader in this sector is Wise Co., a manufacturer of shelf-stable food packed in Mylar pouches. In Bloomberg Businessweek, Amanda Little examines how Wise Co. CEO Aaron Jackson is steadily growing the business by targeting who he calls Mr. and Mrs. Smith in everyday America.
Rather than focusing on niche survivalists and evangelicals who believe in end times, Jackson is focusing on Target, Home Depot and Walmart, where survival foods are positioned as purchases just as practical as fire extinguishers and bottled water, and consumer habits are shaped by mounting global paranoia about natural disasters, terrorism and climate change. So far only 2% of Americans buy survival foods. He intends to change that. The whole approach seems a bit strange, though, since as a CEO who wants what he calls “stable customers” and “predictability,” his success has everything to do with global instability. Also, he doesn’t really believe the world will end, because if he did, why would he work so hard to make money he won’t be able to spend?
Then again, it’s the fear behind the idea that you should be prepared, just in case, that nags at you as a potential consumer. It can’t hurt, right? Because what if you’re wrong? Maybe it won’t matter. When the world has been devastated by warlords and ecological disaster, and you’re hiding in a bunker in the burned out woods, eating shelf-stable beef stroganoff mixed with radioactive rainwater, the flavor will probably make you feel like the rest of the world can’t end fast enough.
Jackson first connected with Wise in 2012, when a headhunter tried to recruit him from Post to run the fast-growing startup. He declined the offer, but commenced some research. “My aha! came in mid-2012 when I read that more than half of American homes have first-aid kits on hand, along with fire extinguishers and flashlights. I realized then they haven’t added the food component. I saw incredible growth potential.” When the headhunter extended the offer again a few months later, Jackson accepted the job of CEO and cautiously started to shift the marketing focus to his ideal customer, one who looks less like Ted Kaczynski and more like himself, his wife, who’s an attorney, and their two tweens: someone who isn’t entirely convinced that humanity is hurtling toward annihilation but who’s willing to stock the pantry with a Mylar-fortified food supply just in case. “This is the food equivalent of life insurance—staples that every American household in this age of uncertainty should have,” he says.
Jackson hired a young designer who’d been at the surf company Quiksilver to revamp the packaging. “We’d been selling our products in large, black plastic tubs. We needed something that doesn’t scream doomsday, so we moved to clean white boxes, contemporary fonts, high-quality food images—packaging that makes sense on a Target shelf,” Jackson says. As orders came in from big-box stores, he added a manufacturing facility a 15-minute drive from the office (production had previously been outsourced) that can produce 25 million pouches a year.
In the past four months, the spate of natural disasters combined with the specter of nuclear war with North Korea has pushed up Wise’s total sales 40 percent from the previous four-month period. Concerned suburbanites as well as disaster responders have contributed to the increase. The factory has made it possible for Jackson to meet both sudden surges and steady growth in demand. He ultimately managed to ship the 2 million servings to FEMA in a matter of weeks, with only a brief disruption to his regular customers’ supply.