Tension over layoffs and the future of pharmaceutical giant Merck & Co. spilled into the public domain Tuesday evening as a written exchange between CEO Ken Frazier and a union leader cast doubt on the safety of workers and people in the community near the company's factory in West Point, Montgomery County.
"I dread but expect the day when someone forced to work a double shift of work (16 hours) gets in their car after work, drives home and falls asleep at the wheel, hurting themselves, someone else or someone else's child," wrote Dan Bangert, a 29-year Merck employee and president of the United Steelworkers Union local. Bangert wrote the internal company blog post on July 30 and it was re-posted on the union website Tuesday evening, along with an exchange of emails between Bangert and Frazier on July 30 and July 31.
Bangert wrote - and other workers have told the Inquirer -- that Merck's decision to cut thousands of jobs to please Wall Street resulted in middle managers forcing workers to accept 16 hour shifts or face termination. Fatigue increases danger of injury at the plant, they said, and on the way home. The frustration grew when Frazier announced July 28 that all employees - except union members - would get an extra day off as a sign of appreciation for their efforts.
"Separate from your comments regarding the additional day off," Frazier wrote in an email to Bangert, "we want to ensure that we are addressing the other concerns you have raised. Merck goes to great lengths to protect the safety and well-being of our employees. Leadership from MMD (Merck Manufacturing Division) and Human Resources will work with local site leaders to address your concerns directly."
A link to the exchange on the union website is here. If the material is removed, PhillyPharma has saved what was posted and can re-post as a PDF if needed. If union or Merck officials share thoughts on Wednesday, PhillyPharma will try to update.
The West Point plant has not been perfect in producing medicine in recent years. For example, Merck notified the U.S. Food and Drug Administration in December 2013 that it was recalling one lot - 743,360 vials - of the human papillomavirus vaccine Gardasil because of "the potential for small glass particles to be present in the vial."
One production worker let go by Merck in the last year told the Inquirer this week that building 12 on the West Point campus was particularly problematic. Maintaining sterile conditions and making sure the viruses involved in vaccine production are handled properly from beginning to end are not the simplest tasks. Fatigue can create dangerous conditions for workers and potential for problems with the medicine they produce.
"The situation is pretty dire," said the man, who spoke on the condition of anonymity. "We're making medicine, not coat hangers. The numbers they gave Wall Street were inflated and not realistic. Lower and middle management don't want to say no to the big guys because they don't want to lose their jobs."
The United Steelworkers Union Local 10-00086 represents about 1,800 of the approximately 9,700 Merck employees in West Point and Upper Gwynedd in Montgomery County. The company said it employs about 69,000 worldwide, as of June 30.
Frazier, a Philadelphia native, rose in the Merck chain of command in part by devising the legal strategy of fighting patient lawsuits over the painkilling drug Vioxx on a case by case basis. Some estimates suggested the strategy cut Merck's legal bill from a potential $20 billion to between $3 billion and $4 billion. Since becoming CEO early in 2011, Frazier has increased focus on what he hopes are high-profit specialty medicine and pared the company of divisions, research programs, factories, assets and people that he didn't think offered the same promise.
Though there have been many points of union-management disagreement – grievances, complaints filed with the National Labor Relations Board and disputes heard by the Occupational Safety and Health Administration – the flash point came July 28, when Frazier announced a global employee Appreciation Day. He gave all Merck employees a day off on Friday, Sept. 4 – except for those in the union - and people could use the offday on some other date if they had to work Sept. 4.
Bangert saw this as a slap in the face of union workers who were already demoralized and exhausted.
"Can you please explain why you felt you needed to exclude Union employees?" Bangert wrote on July 30. "Do you feel they do not work hard enough to warrant the day off? Do you feel that Union employees are less a part of the Merck Family? Or, do you just not care about Union employees at all? We are the same employees that are forced to work because your cutbacks have left our West Point plant with inadequate personnel."
The collective bargaining agreement between the union and Merck includes Labor Day (Sept. 7) as one of the holidays and refers to Sept. 4 as a "floating holiday."
In his email reply to Bangert, Frazier wrote, "Merck's Executive Committee and I appreciate and recognize the hard work of the dedicated employees across Merck. We value the contributions of every employee regardless of the nature of their employment relationship with the company. As you know, there are constraints on implementing unilateral changes – for better or worse – for employees covered by a collective bargaining agreement. The union contract identifies a set number of recognized holidays and paid days off. I understand that in the case of USW 10-00086 this includes the Friday before Labor Day."
As reported by The Inquirer last week, Merck said in its second-quarter filing with the Securities and Exchange Commission that it expects to complete two layoff programs by the end of 2016, with the projected total of eliminated positions exceeding 40,000. The first program of layoffs started in 2010 and followed the $41 billion takeover of Schering-Plough that was first announced in 2009. About 1,210 jobs or vacancies will likely be eliminated by the end of 2015 in a program Frazier launched in 2013. Another 755 manufacturing jobs could be eliminated from all of Merck by the end of 2016.
Merck pays time and a half for those working overtime, one worker said, but it does not incur the cost of a full second salary or the cost of healthcare and other benefits. It is also easier to tell Wall Street that costs are being cut, which helps keep the stock price up, even though overall revenues have declined three straight years.
While laying off thousands, unionized and not, Frazier's pay has skyrocketed in the last year. According proxy statements filed with the SEC, Frazier's total compensation rose from $13.376 million in 2013 to $25.029 million in 2014. The big bump was partly attributable to stock awards. On Dec. 31, 2010 - the night before Frazier officially became CEO - the stock price was $36.04. Merck's share price at Tuesday's close was $59.66. A link to the SEC filing with the proxy statement is here.
While workers with jobs certainly enjoy any extra pay, they know that if they fall asleep driving home and are killed when their car strikes a tree, it will be harder to enjoy the extra money.
"All of us have stepped up," Bangert wrote. "I also want to be clear that this is not a union-versus-company issue, as many may want to make it. We are all Merck employees, and we all work hard. Now let me get to the point. Mr. Frazier, you are the CEO of one of the greatest companies in the USA. I am proud to say that I work for Merck. When I tell someone that I work for Merck, they almost always say that it is a great company to work for. But things have changed, and I am troubled by it.
"We were once a family. I have lived that and experienced it in my 29 years of work at Merck. But by putting money and profits above all else, including the people that work for you, you are tearing that family apart. (Not what the GREAT George Merck had in mind.)