Last vestige of City’s manufacturing history will close next year
Santa Monica’s last factory will close early in 2019 after battling parking issues, rising rent and labor costs.
Pioneer Magnetics has manufactured power suppliers for six decades in Santa Monica. Television and radio stations, financial institutions, flight simulators, ultrasounds, and computers around the world all use technology manufactured on Berkeley Street.
“We power up the world,” said owner Jerry Rosenstein.
The manufacturing plant’s customers tell Rosenstein they don’t know where they will buy such critical equipment once Pioneer shuts down. All he can do is point them to United States Technologies, an engineering and manufacturing company based in New Jersey that acquired Pioneer late last year.
“United States Technologies has all our documentation, so with the necessary effort (they) can learn how to build our product and support our customers,” he said.
Rosenstein would like to keep his plant running, but different factors over the last several years have made it impossible.
The lack of parking near his business was particularly difficult, as it hurt employee morale and drove away some potential new hires, he said. Rosenstein offered to pay the City of Santa Monica for parking on Franklin Street but could not secure any new parking spaces, and many of his employees had to park miles away from the company’s four designated spaces. About 100 people worked at the company for the last few years, and it employed as many as 650 before rising domestic labor costs and rent took their toll.
Rosenstein paid his Santa Monica workers about $15 an hour, not including benefits or overhead costs, and it was difficult for him to justify keeping the plant open when the cost of production was $4.25 an hour in China or $7 to $10 an hour in Mexico.
The cost of rent became more and more expensive, he said, and eventually the property value of the company’s single remaining building – it once owned three in Santa Monica – exceeded the value of the company.
“You put everything together, and we’re fighting an uphill battle,” Rosenstein said.
About 15 to 20 people are still working at Pioneer as it winds down its operations and sells its stock. He estimates two or three of them will be able to work part-time for United States Technologies or one of their contract manufacturers.
Azed Sheth, who has worked at Pioneer for 38 years, hasn’t yet thought about where she will work after Pioneer closes.
“I’m glad I’m here til the last,” she said. “It’s like a family here.”
Rosenstein said most of his employees have worked at the company for 20 to 40 years, and many, including himself, are second-generation employees.
“We all grew up together,” he said. “Employees came to me and said “Try to buy another company. We don’t care what it is, we’ll for work it because we want to keep together.”