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| Published Monday, September 10, 2001 - Minneapolis StarTribune |
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Discrimination suits still haunt Alliant, years after mass layoffs
By Sherri Cruz - Staff Writer
When Alliant Techsystems slashed nearly half its work force between 1990 and 1995, its stock began to take off. But lawsuits piled up as laid-off employees claimed discrimination based on age, race, gender and national origin.
Even now, the Hopkins-based defense contractor continues to be shadowed by regulatory scrutiny and bitter, costly litigation.
A half-dozen or so of the 70 discrimination cases filed against the company through the courts, the Equal Employment Opportunity Commission (EEOC) and the Minnesota Department of Human Rights still are pending. Most of the cases have been dismissed, and a handful were settled for undisclosed amounts, including one national-origin discrimination case last month.
The EEOC found 'probable cause' of discrimination in several of the age and national origin-based claims. A federal agency twice audited Alliant for its hiring and promotion practices; the second investigation has been ongoing since 1998.
The backlash that Alliant has faced is common among companies that have undergone major layoffs.. One reason: It's a natural reaction for an employee to personalize a layoff rather than to view it as an economic necessity. Also, an employer disposed to prejudice or bias is likely to exercise those feelings during a layoff, said Steve Lapinsky, an investigations supervisor with the Department of Human Rights.
'It's always a very, very tricky situation' when companies execute mass layoffs, said George Muchae, business development director at Diversity Village, a St. Paul-based organization that aids companies with diversity strategies. It's natural, he said, for employees to wonder why they were laid off and not someone else.
In a letter to the Star Tribune regarding this story, Alliant President Scott Meyers explained: 'Whenever any company has to reduce its work force, painful and difficult decisions need to be made as to who will be laid off. 'These decisions invariably lead to anger and frustration among some employees whose jobs are eliminated.
'[Alliant] is not an organization that discriminates on the basis of race, ethnicity, gender or age, as some of our former employees and their attorneys would have you believe.'
In the aftermath of the discrimination charges, Alliant changed its layoff procedure. Supervisors now are required to present lists of layoff candidates to a committee comprising representatives from its legal and human resources departments. If a woman or a minority is suggested to be cut, Alliant takes a deeper look to rule out discrimination.
The company also has tried to hire more women and people of color in leadership positions. It now has four female corporate officers and one minority corporate officer -- an improvement from 1990 when it had one minority board member and one female officer.
'Alliant is a very different, positive company,' said Paula Patineau, vice president of human resources.
Still, Alliant's workplace is largely made up of white males. White females are 22 percent of its work force.
Minorities are even more scarce. One percent of its work force is American Indian, 1 percent Asian, 2 percent Hispanic and 4 percent black.
In its defense, the company said its operations primarily are in states that don't have diverse populations. Half its work force -- 4,700 people -- is based in Salt Lake City and northern Utah, where Thiokol Propulsion, a recent acquisition, is based.
'It's not easy and it takes time,' Patineau said. 'We still struggle.'
A financial success
In one sense, Alliant is a Wall Street success story. The company not only survived the defense spending gulf at the end of the Cold War, it thrived, raising its value from $8 a share after the 1990 Honeywell spinoff to $101.10 on Friday.
But former Alliant employees still are bitter about what occurred years ago when the company was under pressure to cut costs.
'It went downhill pretty fast', said Don Fackler, a former lead engineer.
He said a new management team swooped in to raise the company, and it became apparent that the way they were going to do that was to get rid of the older workers.
Between 1990 and 1995, Alliant's revenue fell from $1.2 billion to $504 million. Profit went from $24.8 million to a net loss of $74.1 million.
Shareholders replaced the company's CEO with Richard Schwartz in 1995. Schwartz had been executive vice president of Hercules Aerospace, which Alliant had acquired months earlier.
Known more for his prickliness than his human resource skills, Schwartz brought in his own management team, and one of his first moves -- praised by Wall Street analysts -- was a 20 percent work-force reduction.
'Alliant was really struggling at that time,' said Patineau, who then was controller.
'Dick Schwartz was brought in to change the company,' Patineau said. Schwartz was not 'touchy-feely' or a 'people person,' but she said he didn't discriminate.
Schwartz could not be reached for comment.
Workers' stories
Fackler said that three days after returning from a business trip to the Ukraine, he had to interview for his job. He didn't get it.
'The guy that took over my job drew half my salary,' he said. Fackler was 61 when he was laid off in 1995.
'It really hurts when they nail you like that,' he said.
Robert Peterson agrees that the company's climate during that time became very chilly. 'It got to be a really unpleasant atmosphere,' he said. 'You were always looking over your shoulder.'
Peterson, a 38-year employee, was a manager who was demoted to engineer before being laid off in 1996 at age 64. He had planned to continue working until he was 68. Instead, he got a year's worth of severance and took early Social Security. And luckily, he said, he has a spouse with a good-paying job.
Peterson, who believed he was laid off because of his age, filed a lawsuit. But now he worries that his suit, which is on appeal, could leave him in worse financial shape. While his attorney could earn a portion of proceeds from the suit, as a plaintiff he has to pay for out-of-pocket expenses such as statistical studies, travel and phone calls.
'I could end up on the short end of this thing,' he said.
John Garritsen was laid off in 1995 at age 62, after 12 years with the company.
He and Peterson worked in the facilities and real estate department, which was eliminated. It turned out that the most senior employees worked in that department, he said.
In a sworn deposition, Meyers, Alliant's president, said the department was eliminated because it was redundant.
Garritsen and four others filed a class-action suit. Alliant won a summary judgment and the case was dismissed, but it is being appealed. About 40 people filed suits through private attorneys; the bulk of them were age-based discrimination suits filed after 1994.
Garritsen had 30 years' experience and an electrical engineering degree. He was making about $64,000 a year. The company didn't pick the best people, he said. Instead, management was given less money in their personnel budgets; the result was that supervisors propped up their body counts by keeping the lowest-paid people.
Disparate impact
In legal terms, that could be considered 'disparate impact,' meaning the discrimination may not have been intentional but the effects were, said Malcolm Terry, an attorney handling a handful of the pending plaintiff cases.
The policy that probably had a negative impact on older workers was a change in the way Alliant determined whom it would lay off.
A company memo to Alliant managers in 1994 outlined Alliant's new reduction-in-force policy from one that considered the longtime employee as its best worker to one that ranked employees by more subjective means -- demonstrated job skills on a scale of 1 to 4.
In addition to the age-based claims, former employees say that when the layoff ax swung, minorities also were among the first to go.
Don Coleman, a former purchasing manager, said 'there was no talent good enough to promote from within in Minnesota.' Based on who was getting jobs -- white males -- Coleman, who is black, said he didn't see any opportunities for himself.
But he didn't file a suit.
'I saw what was going on with the people who were challenging them,' he said. '[Alliant] had a strategy to wait those people out.' Some people were financially ruined, he said. 'I felt I didn't want to go through that.'
Pat Narendra left Alliant after a 23-year career in 1999, without filing a suit either. He saw dwindling opportunities for advancement for minorities. He led the smallest division, based in Pennsylvania, which made batteries for military and aerospace applications.
Narendra, who is of East India descent, contends that the new management wasn't interested in minorities. He now works at Motorola.
'It's like night and day,' he said referring to the number and status of minorities. Motorola is one of the leading employers of foreign workers who hold H-1B visas.
From Narendra's perspective, the conservative, predominantly white, male defense-industry culture provides fertile ground for discrimination to take root.
In the wake of the layoffs, the number of Asian managers and supervisors at Alliant went from 12 to two. Today, Asians make up 1 percent of Alliant's total work force of 9,535 people.
Court documents allege more overt forms of discrimination at Alliant.
An affidavit by John Buck, former vice president of administration, alleges that Schwartz told him to fire an employee because Schwartz couldn't understand the employee's thick East Indian accent.
Alliant disputes that remark, claiming that it wasn't the accent that Schwartz didn't like, it was the logic of the employee's presentation.
A federal investigation
The company also is being investigated by the Office of Federal Contract Compliance Programs (OFCCP), which ensures that federal contractors are promoting equal employment to minorities, women, veterans and disabled people. This is Alliant's second review, ongoing since 1998.
While the OFCCP doesn't reveal information regarding open cases, a letter from the OFCCP to a former employee says it is conducting an 'affirmative action audit' of Alliant. 'We are particularly interested in the reduction in force and or layoff process,' the letter says
A 1994 affirmative-action audit found deficiencies in Alliant's affirmative action recordkeeping, planning and reporting. As a result, Alliant agreed to revise several of its affirmative action reports and plans.
In theory, OFCCP has a lot of power, even the authority to cut off federal contracts. But that rarely happens and isn't likely to happen in this case.
'You don't throw the baby out with the bath water,' said David Forro, a labor and employment law attorney for Caldecott Wheeler & Searles in Minneapolis. He settled one of the cases he represented against Alliant.
While companies usually aren't heavily penalized and settlements aren't considered admissions of guilt, companies have paid considerable sums.
In some recent high-profile OFCCP investigations involving Texaco, Ford and Boeing, all were ordered to revamp their workplace practices and pay money to settle their cases. Boeing paid the largest amount, $4.5 million.
©2001 Minneapolis Star and Tribune. All rights reserved. Reprinted for educational purposes. |
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