Made in America* -- How the U.S. auto industry was built with foreign labor
When Gerald Greiner walked into his first job as a safety manager for Eisenmann Corporation, a subcontractor building the paint shop at the Mercedes plant in Vance Alabama back in 2013, he was surprised to see Eastern Europeans pouring concrete, erecting steel and fitting pipe at the company's expansion project.
"There was Polish and Slovenian and Croatian people there it was hard for me to believe because I just didn't understand why they would be here," Greiner told "CBSN On Assignment" correspondent Vladimir Duthiers during an interview at a neighborhood park near Greiner's home in San Jose, California.
"The cars will be built by American workers. It's just the building of these plants that is being done by foreigners?" Duthiers asked.
"Exactly, they come in at groundbreaking," Greiner said of the Europeans who work on the construction of the auto plants. "They're done at start of production."
"Did you think to yourself that the jobs these guys were doing could be done by Americans?" Duthiers asked.
"Absolutely, yes," Greiner said.
Greiner said that he quickly realized that the European workers were making far less than Americans for the same work, about ten dollars an hour.
"How much would an American make doing the same job?" Duthiers asked.
"Probably 45, 50 dollars an hour," Grenier replied.
Greiner said he saw the same thing at BMW in South Carolina, Tesla in California,
and Volkswagen in Tennessee: temporary European workers rotated into the country for several months at a time.
A CBS News investigation has found the practice continues. We spent four months tracking more than 200 Eastern Europeans building U.S. auto factories
CBS News collected hundreds of videos and photos they posted on social media proudly showing off their American jobs, their work IDs, the money they were making, and the B1/B2 visas that got many of them into the United States. The visa costs less than $200 and allows foreigners to come and go for ten years. Visa holders are not allowed to work construction unless they are supervising a project which is not what appeared to be happening.
Our investigation led us us to this apartment complex in Spartanburg, South Carolina, where it appeared workers from Slovenia and Croatia were being housed by their employer nearby BMW's largest manufacturing plant in the world, built with the help of more than $250 million in tax incentives and subsidies afforded to BMW since 1992.
At the apartment complex, we observed the laborers as they gathered in the parking lot on their way to work around 6:30am. We observed the van take the workers to the BMW plant where they stayed for ten hours.
At Volvo, near Charleston, a new plant is being built thanks to $200 million dollars in tax incentives and subsidies. There, we observed white vans packed with Polish workers being shuttled from the worksite to nearby apartment complexes. A man from Poland told CBS News producers that he was working at Volvo's paint shop where he said he was making five to six times more than what he would make in his native country.
At Mercedes in Alabama, we found dozens of Eastern European workers, and some Americans, entering the construction project just before dawn.
This is how the Eastern Europeans usually end up working in the United States:
When a carmaker like Mercedes wants to expand its plant, they hire a contractor, like the German corporation, Eisenmann, to build parts of it. Eisenmann then subcontracts smaller companies to build parts of the plant and some of those companies hire labor from Eastern Europe.
One company is D2n Technologies whose workers we traced to BMW. Their website lists a U.S. office in Alabama. When we tried to pay them a visit, it turned out to be just a post office box in a strip mall.
D2n's European office was in a town in Northern Slovenia called Ptuj, home to at least eight other companies we knew to be supplying workers to U.S. construction sites. So, we headed to the capital of Slovenia - Lubljana - then drove north to Ptuj.
Our first stop was D2N technologies whose employees we spoke with in South Carolina. They said they had to run out to lunch, but would talk with us off-camera later. But that never happened. We also visited other Slovenian-based subcontracting companies sending workers to the U.S. including AVK automation, DATO and ISM Vuzem.
A former worker named Stjepan Papes had agreed to meet us at his friend's cabin across the border in Croatia. So off we went, up winding roads to this vineyard on the top of a hill. Papes worked for a Slovenian subcontractor called ISM Vuzem until last year.
The Wrong Visa
After a tour and a glass of homemade wine, he showed us his ID cards from BMW, Tesla, and Mercedes and told us how he and other workers were coached by their employer to get past U..S. Customs and immigration on a B1/B2 visa.
"When we are arrived in the United States on the immigration for the immigration agent, agents we must say that we are supervisor here," Papes told Duthiers.
"But you're not a supervisor?" Duthiers asked.
"No way. No," Papes replied.
"When you told the customs official that you were coming in as a supervisor, did he ask you any questions?
"He is asking "You work for what company?" "Where we will stay?" and I have this paper I just give him the paper. I just give him the address where I'm living and they say "you're ok."
His story may have been bolstered by a letter Eisenmann sent to the U.S. Consulate on his behalf, claiming Papes needed a visa because he had "specialized knowledge" of their equipment even though he had never worked for them before. Papes said he found out he had the wrong visa later.
"When I go to the Internet, I see, on the Internet, through the embassy of the United States, I see this is the wrong visa," Papes said.
"When you saw that you had the wrong visa, what did you think?" asked Duthiers.
"We are crazy. We are going to work in the united states. But I needed the money."
Papes was paid a monthly salary of about $900 by the Ptuj-based subcontractor ISM Vuzem, which was not subject to U.S. taxes. He said he also was paid cash under the table. All told, his wages added up to about $11 an hour, with no overtime. And his employers made sure they got their money's worth.
"We must go fast, like we are in our language, push, push, push let's go fast, you know?" Papes said.
"So how is your output compared to an American co worker?" Duthiers asked.
"One worker from Croatia or Slovenia or Bosnia who's working for ISM Vuzem and who's working like two or three Americans," Papes replied. "We are working in the morning at seven we are quitting at six or seven or eight in the evening - it depends."
Working Conditions
"It's basically sweatshop, is what it is," Greiner said describing the conditions and long hours of Eastern Europeans. Greiner oversaw safety at Tesla's plant in Fremont, California, while Papes and his colleagues were building its paint shop, along with approximately 200 other workers from Eastern Europe.
"These guys were working 12 hours a day, 7 days a week and you could just see in their face that they were tired. Most of these guys were just walking around like zombies," Greiner said.
In 2015, Greiner's fears came true, when a Slovenian worker named Gregor Lesnik fell through a hole in the roof, hitting a scaffold as he plummeted 30 feet.
"I'm almost positive that if that scaffold hadn't have been there he'd be dead," said Greiner.
Lesnik had worked thirteen days in a row leading up the to accident.
"Let's get it done, just get it done, we gotta get this done. Hurry, hurry, hurry and you know I believe that's what led to his accident," said Greiner.
"You would expect that kind of stuff happening maybe in like third world countries, not in the United States of America, you know?" said Daniel Travancic, who grew up with Gregor Lesnik in Slovenia. He helped Lesnik get a lawyer after his accident. He's also an American citizen, who has worked for the local 104 Sheet Metal Workers union out of San Jose, California for more than a decade.
"I can see both sides. I have nothing against those men," Travancic said. "They work here. I would do probably the same, to provide for my family, but that should go towards our pensions, towards my daughters' future, or sons, or, you know. Not some other country."
"CBSN: On Assignment" was told that one reason foreign workers are needed to build American car factories is that they can install the equipment to "European standards". We asked Travancic about that.
"What European standards? Aren't we the greatest?" Travancic shrugged. "Used to be 'Made in America,' then you know that's great right?"
When we were in Croatia, Papes gave us time sheets as proof that he and his colleagues -- welders and mechanics from Eastern Europe -- worked thousands of hours building a paintshop at BMW. Last month, BMW announced yet another expansion that will create 1,000 jobs and unveiled the new X3 SUV, with a metallic blue exterior, in the paintshop built in part by cheap, European labor.
"You're an American citizen. So, how do you feel about what you know from your friends, from people that are from your home country," asked Duthiers.
"I'm angry," Travancic replied. "There's lots of guys out there still looking for work in United States. And now we have how many thousands and thousands of East European workers here, and they're abused too. Who does this? How's somebody letting this happen, and it still happening?"
BMW, Mercedes, Volvo, Tesla, Volkswagen, and Eisenmann declined our requests for an interview, but sent us statements that all said essentially the same thing: their contractors are legally obligated to comply with all immigration, safety and employment laws, and any violations are promptly addressed.
Eisenmann also told us they stopped writing letters to the U.S. Consulate on behalf of specific employees' visa requests last summer.
Since we began reporting the story, Mercedes demanded all its contractors and subcontractors provide documentation that their employees are legally authorized to work in the United States.
As for the Slovenian subcontractor that employed Stjepan Papes, ISM Vuzem, they said they were on vacation, and would get back to us after the summer.
COMPANY STATEMENTS IN RESPONSE TO CBS NEWS' REPORTING
Mercedes-Benz:
MBUSI in Alabama and MBV in South Carolina are focused on ensuring a safe and fair working environment for everyone on our construction sites.
This is why all of our third party construction contractors agree to comply with relevant safety standards, immigration laws, and wage and hour rules. Any identified and substantiated issues with a contractor are addressed with the highest priority to ensure that our standards are met.
Every day, MBUSI and MBV have thousands of workers on their premises. We actively ensure that all of our employees are legally authorized to work in the U.S. We require and expect that all of our on-site business partners take the same measures. Because it is the responsibility of each business partner to ensure proper work authorization, any information / enquiries regarding individual workers' visas should be referred to their actual employer. This is necessary because in accordance with U.S. law, only the employer has the information needed to evaluate immigration status. We are not aware of any violations of U.S. immigration law.
In the event we receive any such information, we would directly engage the responsible employer to ensure compliance while working on our projects.
We will inform the contractors working in Vance and Charleston of your findings and point out their obligations "that they have to comply with relevant State and Federal law".
All contractors must comply with the safety / security regulations and requirements, site safety guidelines and attend a full safety orientation.
Follow-up from Mercedes-Benz:
Since we emailed last time we wanted to let you know what further actions we have taken as part of our ongoing effort to enforce compliance by onsite contractors with all applicable rules and regulations.
· Compliance with all applicable laws is of utmost importance to MBUSI.
· MBUSI contractually requires all of its contractors to comply with all applicable laws, including those laws and regulations related to immigration, safety, wages and hours.
· MBUSI's Vance, Alabama plant is one of the safest automotive plants in the United States.
· We conduct daily meetings with our contractors concerning safety, and perform daily audits throughout the plant where construction is ongoing to make sure that safe practices are being observed.
· When MBUSI was first notified of the CBS B1/B2 visa abuse allegations, MBUSI required written confirmation from the relevant contractors and their subcontractors that all of their employees are legally authorized to work in the U.S.
· When MBUSI first received an allegation of wrongdoing by a specific subcontractor, that subcontractor was immediately banned from MBUSI's site. Only when the contractor proves to MBUSI's satisfaction that all of its subcontractor's employees are legally authorized to work in the U.S. will they be allowed back on site.
· Additionally, MBUSI has begun an audit of its contractor/subcontractor employees to verify our contractors' and subcontractors' confirmations that their employees are legally authorized to work in the U.S. and are paid in accordance with U.S. law.
· MBUSI absolutely condemns all abuse of any immigration, safety, and wage and hour regulations, and we welcome any specific information you may have concerning any alleged violations of these laws. MBUSI will immediately investigate any such allegations and take prompt and appropriate action.
Eisenmann:
1. How many contracts does Eisenmann currently hold with U.S. companies? Please furnish us with a list of the companies, projects, and how much each project is worth.
Please understand that as a matter of business principle Eisenmann does not disclose information on our clients or projects to third parties without our clients' explicit consent. However, general information on our biggest current and past projects in the United States is of course publicly available in the press release section on our corporate website: http://www.eisenmann.com/en/media/press/press-releases.html
2. On average, what percentage of the work on Eisenmann's projects in the United States are outsourced to subcontractors? Of those subcontractors, what percentage are American companies?
Eisenmann is always looking for the most qualified and experienced business partners to bring our projects to successful realization. Subcontractors are chosen based on their knowledge, qualifications, and experience dealing with our technologies and products as well as the project's specifications. This business practice helps us pull together highly effective and qualified teams of partner firms from the U.S. and around the world. A major part of the subcontractors supporting Eisenmann on projects in the U.S. are American businesses.
3. How does Eisenmann verify that its subcontractors and their workers in the United States are complying with federal, state and local laws, ordinances, rules and regulations?
Compliance with all statutory requirements is an indispensable precondition for our business relationships and is set forth in the terms and conditions of our contracts with subcontractors. Based on these agreements, our subcontractors must fully comply with applicable laws, statutes, ordinances, codes, rules, and regulations of the countries in which they operate.
4. What actions does Eisenmann take when it learns its subcontractors and/or its workers are in violation of U.S. law?
Compliance with all statutory requirements is an indispensable precondition for our business relationships and is set forth in the terms and conditions of our contracts with subcontractors. Based on these agreements, our subcontractors must fully comply with applicable laws, statutes, ordinances, codes, rules, and regulations of the countries in which they operate. If a subcontractor allegedly has violated any of those terms, Eisenmann immediately investigates. If wrongdoing is found, Eisenmann takes appropriate action up to and including terminating its business relationship with the subcontractor.
5. We have obtained letters written by Eisenmann employees Friedburga Betsch and Robert Keller, to U.S. consulates falsely stating that U.S. visas are needed for certain laborers due to their "specialized knowledge" of Eisenmann equipment, and their "long experience installing them", when the workers in question have neither. Why is Eisenmann making false representations to the U.S. Consulate?
Eisenmann has a strict U.S. visa policy and compliance with all statutory requirements is an indispensable precondition for our business relationships and is set forth in the terms and conditions of our contracts with our subcontractors. Based on these agreements, our subcontractors must fully comply with applicable laws, statutes, ordinances, codes, rules, and regulations of the countries in which they operate. Any deviation from that principle is not tolerated. Please understand that right now we are unable to comment on the specific allegations mentioned in your question. Please let us know what particular letters you are referring to and we are happy to look into these claims.
6. How many "welcome letters' has Eisenmann sent to U.S. consulates on behalf of specific workers' visas? Please provide a list of the countries to which Eisenmann has sent those letters, broken down by country.
Eisenmann issues letters for our own employees and for subcontractors in light of the appropriate visa classification. As stated above, Eisenmann is always looking for the most qualified and experienced business partners to bring our projects to successful realization. Subcontractors are chosen based on their knowledge, qualifications, and experience dealing with our technologies and products as well as the project's specifications. This business practice helps us pull together highly effective and qualified teams of partner firms from the U.S. and around the world. A major part of the subcontractors supporting Eisenmann on projects in the U.S. are American businesses.
7. Is Eisenmann aware that dozens of its subcontractors' workers on projects currently underway throughout the United States are working on B1/B2 visas in violation of U.S. law?
Eisenmann has a strict U.S. visa policy and compliance with all statutory requirements is an indispensable precondition for our business relationships and is set forth in the terms and conditions of our contracts with our subcontractors. Based on these agreements, our subcontractors must fully comply with applicable laws, statutes, ordinances, codes, rules, and regulations of the countries in which they operate. If a subcontractor allegedly has violated any of those terms, Eisenmann immediately investigates. If wrongdoing is found, Eisenmann takes appropriate action up to and including terminating its business relationship with the subcontractor.
Second Email from Eisenmann:
1. Regarding your response to question 5, attached are two letters. Neither of these employees had any "specialized knowledge" of Eisenmann equipment at the time these letters were sent on their behalf by the U.S. Consulate. In fact, neither had ever worked with Eisenmann before. Additionally, neither were employees of "Co. Gregurec", as both letters state. Finally, in the case of the November 5, 2014 letter, the employee did not work at BMW Spartanburg. Why did Eisenmann make these false representations to the U.S. Consulate in these letters?
Eisenmann disagrees with that assertion. These letters only speak to the specialized knowledge of the subcontracting company and not to the individual workers. The names of individuals included in the letters are based on information received from the subcontracting company as to who they were intending to assign to the project.
In 2016, Eisenmann investigated this issue after questions were raised about the individual workers. Consequently, Eisenmann looked into our visa policy in workshops with lawyers from the United States and Germany, which confirmed that Eisenmann's visa policy fully complies with U.S. immigration law. Additionally, several measures were taken, to further tighten our visa policy. In summer of 2016, Eisenmann decided that it would no longer write invitation letters for employees of subcontractors but only for our own employees and subcontractors as a whole. Furthermore, Eisenmann has set up a "Visa Guidebook" that is available to Eisenmann employees worldwide at any time outlining the details of the rules and regulations. Eisenmann also has been conducting regular trainings related to our visa policy for Eisenmann employees dealing with U.S. immigration questions.
As we stressed before, compliance with all statutory requirements is an indispensable precondition for our business relationships and is set forth in the terms and conditions of our contracts with our subcontractors. Any deviation from that principle is not being tolerated.
2. Regarding your response to question 7, our investigation has uncovered dozens of its subcontractors' workers on projects currently underway throughout the United States are working on B1/B2 visas in violation of U.S. law. Does Eisenmann plan on investigating our findings?
As stated before, Eisenmann has a strict U.S. visa policy and compliance with all statutory requirements is an indispensable precondition for our business relationships and is set forth in the terms and conditions of our contracts with our subcontractors. Any deviation from that principle is not tolerated. Please understand that we are unable to comment on unspecified allegations. Please provide us with information you have regarding subcontractors working throughout the United States on B1/B2 visas in violation of U.S. law.
Let us add some general remarks about B1/B2 visas: The B-1 visa category has sub-classifications, which allow foreign workers to work in the U.S.. Specifically, the B-1 in lieu of H-1B and the B-1 Commercial or Industrial Worker sub-classes allow foreign workers to work on projects like the sophisticated paint systems that Eisenmann installs and services.
Third message from Eisenmann
As it is Eisenmann's standard policy, compliance with all statutory requirements is an indispensable precondition for our business relationships and is set forth in the terms and conditions of our contracts with subcontractors. Based on these agreements, our subcontractors must fully comply with applicable laws, statutes, ordinances, codes, rules, and regulations of the countries in which they operate. In April of 2017, Eisenmann became aware of allegations that a subcontractor had misclassified its employees as independent contractors at the Volvo plant. Eisenmann looked into the allegations. As a result of its review, Eisenmann terminated its contract with the subcontractor and expelled the company, including its 12 workers, from the construction site.
Volvo:
Volvo Cars is building its first U.S. manufacturing facility in South Carolina - showing a commitment to the U.S. market. Once completed, Volvo estimates that the plant will create at least 2,000 American jobs over the next decade, the majority of which will employ residents of the surrounding South Carolina communities. According to a recent economic impact analysis, the Volvo plant will contribute almost $5 billion annually in total economic output to the U.S.
Volvo contractually requires contractors and suppliers to fully comply with all applicable laws and our Code of Conduct, including U.S. immigration laws, human rights, a safe and healthy work environment, and working hours and compensation. We periodically ask our contractors to confirm in writing that they are in compliance. Any violations are promptly addressed, including termination of business relationship and removal from the site, as was the case with a recent subcontractor involved with the installation of specialty equipment in our paint shop.
All Volvo employees on the construction site are authorized to work in the U.S. Volvo has contracts with specialty equipment companies that may bring in workforce from outside of the U.S. with specialized knowledge essential to the installation of the purchased equipment. All of these workers - including subcontractors - receive workers' compensation coverage at no cost to them while working on behalf of Volvo in the U.S.
We can confirm that an individual working for a subcontractor in the body shop was injured the morning of July 18, 2017. The individual is reported to be in stable condition and a thorough investigation of the incident is underway. Per the individual's employer, the individual is a foreign national who was surveying a job installation as part of the individual's position to train the U.S. workforce on the installation process. As there is an ongoing investigation, there will be no further comment on this at this time.
In reference to your request for incentive information, please refer to the FOIA documents provided to you by the SC Department of Commerce.
BMW:
BMW Group (U.S.)
Statement to CBS News
July 13, 2017
BMW Manufacturing Co, LLC (BMW MC) takes seriously its obligations under U.S. immigration laws and all other applicable federal, state and local laws, and expects the same from the Suppliers with which it does business.
Over the past 3 years, BMW MC has invested over $1 billion in its U.S. production facility in South Carolina in order to significantly expand its production capacity. As part of that expansion, BMW MC entered into contracts with equipment Suppliers from across the U.S. and throughout the world to supply and install equipment to the Spartanburg production facility. Much of this equipment is highly technical and specialized for modern automotive assembly operations, and requires experienced personnel to perform installations, calibrations and customizations. The Suppliers are responsible for providing the workforce to perform the installation of their equipment to the Spartanburg production facility. Many of those Suppliers utilize the services of subcontractors who work under the supervision and control of the Suppliers.
BMW MC has always required Suppliers to comply with all applicable federal, state and local laws, ordinances, rules and regulations, including all immigration and employment laws. BMW MC also requires Suppliers to ensure that the Suppliers' subcontractors also comply with all applicable federal, state and local laws, ordinances, rules and regulations.
Both as a matter of contract and as a matter of federal law, it is the responsibility of the Suppliers and their subcontractors working to perform the installation of their equipment at the Spartanburg production facility to ensure their employees are legally permitted to work in the United States.
BMW MC has always cooperated and will continue to cooperate with federal, state and local law enforcement regarding any investigation concerning a Supplier and its workforce.
BMW Manufacturing Co., LLC has always maintained the highest safety standards for both its associates and contractors at its U.S. manufacturing facility in South Carolina. BMW MC's constant and consistent safety practices and procedures have resulted in an incident rate for construction contractors that is significantly below the OSHA national average for construction.
The OSHA national average incident rate for construction is 3.8
The BMW MC all construction overall incident rate is 0.26"
Volkswagen:
Volkswagen Group of America requires all contract workers to obtain any necessary work authorizations for their employees and ensure that all on-site employees are authorized to work in the United States. While working on-site, proof of work authorization is required before an access badge can be obtained. The Volkswagen Group subjects all potential new business partners and suppliers to an integrity check (Business Partner Check). By examining the social integrity of potential business partners, we aim to reduce the risk of forming relationships that could adversely affect the Group and its business.
Additionally, suppliers and vendors must agree to Volkswagen's general procurement terms which can be found here:
I'd like to point out the specific language below:
§ 3.4.2 Contractor shall enforce strict discipline and good order among Contractor's employees and other persons carrying out the Work. Contractor shall not permit employment of unfit persons or persons not skilled, licensed or permitted, as applicable, in tasks assigned to them. Contractor shall take all appropriate measures to verify that all personnel performing
Work at the site are legally eligible to work in the United States. Contractor shall complete, execute and maintain all forms and documentation, including a federal Form I-9, for all personnel performing Work at the site. Contractor shall not knowingly or intentionally direct or allow any of its personnel to enter the site or to perform any Work of any nature who is not legally eligible to work in the United States. Upon Owner's request and subject to Applicable Laws, Contractor shall make available to Owner the employment, qualification and training records and documentation of its personnel, including Form I-9 and other records and documentation regarding the eligibility of Contractor's personnel to work in the United States.