Problems persist at South Philadelphia railcar plant

Jun-Yeon Jeong, manager of the SEPTA project for Hyundai-Rotem USA Corp., downplayed labor friction at the South Philadelphia plant and said language barriers were not a major problem.
Jun-Yeon Jeong, manager of the SEPTA project for Hyundai-Rotem USA Corp., downplayed labor friction at the South Philadelphia plant and said language barriers were not a major problem.
Posted: February 28, 2011

The South Philadelphia factory that has fallen far behind schedule in building 117 SEPTA railcars is beset by material shortages, design flaws, inadequate equipment, and culture clashes and poor communication between Korean managers and American workers, according to interviews with workers and complaints filed with the National Labor Relations Board.

African American, Hispanic, and female workers say they are frequently disparaged as inferior by their Korean managers. Some managers have slapped employees, workers say, and a male employee says he repeatedly was grabbed in the crotch by supervisors.

Workers, who are in contract negotiations with manufacturer Hyundai-Rotem USA Corp. after voting to join the Transport Workers Union in August, also contend that wages and benefits are so low that many employees must rely on food stamps and Medicaid.

Jun-Yeon Jeong, manager of the SEPTA project for Hyundai-Rotem, downplayed labor friction and said language barriers were not a major impediment.

"Everybody is doing well, regardless of race or gender," Jeong said. "From my observations, that is not a problem."

He acknowledged cultural differences. He said he was unaware of slapping incidents, and he said he believed the crotch-grabbing incidents represented "a difference of way of expression, maybe."

SEPTA spokesman Richard Maloney said SEPTA officials were aware of the NLRB complaints. "We expect Rotem, and all of our vendors, to comply with legal and social norms. But this is not our issue - it's between them and their workforce down there."

Jeong, who has worked on the SEPTA project for four years, said Hyundai-Rotem "needed to get accustomed to the U.S. market, but we are getting over those issues."

He said the biggest problem was finding skilled workers, and he blamed the lack of skilled employees for many of the production issues.

"It is not so easy to find them around here," Jeong said. "We hired unskilled laborers and trained them. It was not so quick."

About 185 people, hired through two staffing companies, work at the Weccacoe Avenue factory in South Philadelphia, assembling railcars made in Changwon, South Korea. An additional 27 technicians from Korea and 90 local workers being hired now will increase the workforce to about 300, Jeong said.

"We are bringing in more workers from Korea to work on bottlenecks, where we need higher skills, so we can have a smoother process," Jeong said. The company plans to add a second shift to speed the work, he said.

This is Hyundai-Rotem's first foray into building railcars in the United States, and the company, a subsidiary of the Hyundai-Kia Automotive Group, hopes to use its Philadelphia experience to win more American contracts.

Under federal "buy American" requirements, the cars must have about 60 percent American content and labor.

Hyundai-Rotem, the world's third-largest manufacturer of urban mass-transit vehicles, also has contracts to build railcars for the Boston and Los Angeles transit systems. The Boston cars are to be assembled at the Philadelphia plant.

SEPTA ordered 120 Silverliner V cars from Hyundai-Rotem in 2006 for $274 million. Total cost, including spare parts and training and management, is $330 million. To date, SEPTA has paid $71.5 million to Hyundai-Rotem.

So far, only five of the new cars are in service for SEPTA, including three "pilot" cars built and assembled in South Korea. Five cars have been delivered from the South Philadelphia plant, but SEPTA is still testing three of them.

The new cars have been plagued by faulty communications systems, inadequate heating and cooling systems, balky doors, and computer software glitches.

And the cars are 10,000 pounds overweight.

"The manufacturing process has not gone as originally planned," SEPTA general manager Joseph Casey acknowledged in a message to rail riders this month.

"We tried rushing to get the Silverliner V cars into service, but there are too many complex systems that need to be tested and accepted. We believe it's more important that things are done correctly now so that the entire new rail fleet will perform at peak levels with a minimum of operational issues."

Luther Diggs, SEPTA assistant general manager of operations, identified such problems as wiring harnesses that had been drilled through and wires damaged by being pulled through sharp, unfinished openings.

Matt Mitchell of the Delaware Valley Association of Rail Passengers said those mistakes "can cause problems which might not show up for years and then be very costly to fix, so we have been consistently urging SEPTA to insist on the highest standard of workmanship, even if it results in cars' being rejected and further delays in getting them into passenger service."

He said Hyundai-Rotem was "encountering for the first time American management practices and American labor expectations, and I think they grossly underestimated those challenges."

Diggs also said Hyundai-Rotem was not prepared for the U.S. market:

"It's kind of obvious that they faced requirements and regulations they had never had to deal with. The learning curve was much steeper than they had imagined."

Diggs said SEPTA "won't accept anything less than what is specified in the contract."

"I believe they'll get it done," he said. "I don't have any confidence they'll get back on the original schedule, but I believe they will get it done. I've got people down there night and day to make sure they do."

Hyundai-Rotem faces penalties of $200 for each day a car is late. The project is more than a year behind schedule.

The company now expects to deliver the last car by "the first half of next year, no later than that," Jeong said.

Last week, the vast South Philadelphia factory was filled with 56 cars in various stages of assembly.

SEPTA inspectors at the plant continue to flag problems and require Hyundai-Rotem to make fixes.

"Every time they find something doesn't fit, we have to go back 10 or 15 cars to replace it on each one," said Pascual Veloz, a door installer. Air conditioners and floor heaters had to be replaced on every car, and side panels had to be removed to add insulation, he said.

"We'll try to tell them about problems, and then we'll wait months for the solution to be dealt with," said Angelique Long, leader of an interior-finishing crew. Instructions are changed, workers are told to substitute wrong parts for missing ones, and retrofits are slowing the job, she said.

Communication is a constant issue, workers said. Because of language barriers, instructions often consist of gestures, and workers' questions cannot be answered.

"The workers have to talk among themselves to solve problems, because the supervisors can't communicate," said Edward Bengochea, leader of a door-installation crew.

"They tell us they're the brains and we're the muscle," Long said. "But they can't do anything without going back and asking another supervisor."

Jeong said: "Korean workers can easily demonstrate without too much verbal communication, so language is not a big problem."

Cultural differences and what the workers see as disdain from Korean supervisors also create problems.

Bengochea said that on several occasions he was grabbed in the crotch by a Korean supervisor, "and they're laughing about it."

"It's like they look down on us," Long said. "They look down on me because I'm a female lead [crew leader]."

"They look down on Americans, period," said Ivan McNeil, who works on the cars' underflooring and roofs.

In July, a Korean supervisor twice slapped a worker's arm and threw a two-inch bolt at another worker, according to a complaint that TWU Local 234 filed with the NLRB.

The TWU, which represents SEPTA bus drivers and mechanics, is negotiating a labor contract with Hyundai-Rotem and TTA-Philadelphia, a staffing company that hires most workers.

"We do feel there will be a contract," said Michael L. Nisbet, chief administrative officer for TTA. "We don't believe it will be too much longer."

Currently, the hourly wage is $12 or $12.50 for most of the 120 electrical and mechanical workers hired by TTA, according to the union. Most team leaders get $15 an hour.

Nisbet said pay rates were based on studies of the Philadelphia labor market. He said he was confident TTA had hired a competent workforce.

Employees pay $30 a week for individual medical insurance, $60 a week for a family. They get five vacation days after one year. There are no sick days, and no pension or retirement benefits.

Britnee Ray, a worker on the underflooring, said she relied on Medicaid for herself and her 2-year-old son because she could not afford the medical insurance.

Veloz displayed his food-stamp card, which he said he used to supplement his pay.

A worker making $12 an hour earns $1,920 a month, about $1,000 below Pennsylvania's eligibility limit - $2,941 - for food stamps for a family of four.

About 50 workers at the plant, such as electricians and welders, were hired by another staffing company, Aerotek Inc. They voted not to join a union.

Two Aerotek workers were fired over the summer for what they said were their union-organizing efforts. Last month, Aerotek agreed to pay the two, Don Kleinback and Joseph Flynn, full back wages and an additional settlement, according to TWU attorney Claiborne S. Newlin.

Aerotek declined to comment.

Hyundai-Rotem's workers said they hoped conditions and production would improve.

"When I started here, I was very excited," said Narcissus Dutton, who works on car interiors. "I love the job. The first time I saw a train go out the door, I was jumping up and down."

"Now, it's like they're trying to hold us back. Why not give us the parts and let us do the job?"

Some of the issues were raised before Hyundai-Rotem won the contract.

In 2004, critics questioned the company's lack of U.S. experience and familiarity with federal requirements.

Since work began, "from what we've seen, the management has had a very difficult time coping with any problems, from material flow to labor issues," Mitchell said.

He said Hyundai-Rotem's efforts to get the first production cars delivered took workers and materials away from subsequent cars, further delaying the whole project.

"It will have a wave effect down the line, and we don't see them making the nine-cars-per-month schedule any time soon," Mitchell said. "It's questionable if they'll ever be able to make that schedule."

Contact staff writer Paul Nussbaum at 215-854-4587 or

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