A unionized workforce is good for business.

It's been proven again and again by modern North American manufacturers like Caterpillar and Northrup Grumman. But many of those unionized factories are in the North and manufacturing is increasingly moving south. There are still bright examples of producers doing well and doing right by their union workers in the South, however, and one of the brightest is Delta Star.

Delta Star is not a household name, but it is a giant in the world of industrial scale transformers. Utilities across North and South America have Delta Star step-down transformers in their substations and switchyards. A small, privately held company, it makes the kind of massive, reliable, hand-built equipment that was never without a union label 50 years ago.

But instead of calling snow-covered downtown streets in a northern industrial town home, Delta Star's largest factory is nestled in the wooded foot hills of the Appalachian Mountains well south of the Mason-Dixon Line, where it has been making electrical components for large industrial applications for more than 100 years.

"The word union hasn't been very popular around here for the past 150 years," said Dayton Morrell, business manager of Lynchburg, Va., Local 2173, which represents the Virginia-based Delta Star workers. (Workers at the company's smaller manufacturing unit in San Carlos, Calif., are represented by Vacaville, Calif., Local 1245.)

In a conservative part of Virginia, Delta Star and Local 2173 have built a relationship that could be a model of workplace democracy and good profits as American manufacturing increasingly speaks with a southern drawl.

"We see real advantages to having a union workforce," said Delta Star's CEO, Ivan Tepper. "We are competing against companies that pay six cents an hour, so we compete on quality and that doesn't come from supervisors. You can't inspect it in. Because our workers have a voice, it improves the work they do."

The Turnaround

IBEW members work for more than a dozen North American companies that make industrial and commercial transformers including SPX in Waukesha, Wis., and Power Partners in Athens, Ga.

Delta Star was founded in 1908 in Chicago and bought by the locomotive manufacturer H.K. Porter in 1950. The Lynchburg factory opened in 1962. As H.K. Porter went through bankruptcy proceedings in the late '80s, the company was sold to the Delta Star employee stock ownership plan in 1988. It was a difficult period, with falling sales and falling quality.

"We didn't know it at the time, but we had gotten a reputation as a place where good people didn't want to work," Morrell said.

In 2004, Tepper came on as CEO, overseeing a resurgence in the business that has benefited management and workers alike. While the company is private and does not release sales figures, Delta Star Chief Operating Officer Jason Greene said the company made it through the recession without a single layoff.

While it used to make an array of products, today Delta Star's core focus is providing industrial transformers for utilities.

Today, management and union leadership describe the relationship as positive, even excellent, and point to the outcome of last year's contract negotiations as evidence that the relationship is built on intelligently matching common interests.

For example, in the most recent contract, management requested a move to four 10-hour shifts. Workers negotiated a 7 a.m. shift change, but both shifts get 5-9 p.m. off.

"The workers thought it would be more productive if we shifted where some of the breaks were. I went back and looked at it and I agreed: it was more productive," Greene said. "As long as there is that trusting relationship, having that voice on the floor has helped us out quite a bit."

The result is that, despite requiring the kind of large capital investments that would seem to put a smaller company at a disadvantage, it is the multi-national conglomerates like Mitsubishi, GE, Siemens and Westinghouse that are no longer competing for the business.

"It's us against the world," Tepper said. "We outlasted the big guys because we never forget that everyone under this roof wants the same thing: to make a decent living and be treated with respect."

The Cadillac of Transformers

Delta Star primarily makes what are known as "step-down transformers" which convert high voltage power from transmission lines into the lower voltages used on the distribution grid.

Aside from offices, a woodshop and the warehouse, the factory has three parts. The coils are made in the winding room. The metal shop fabricates the airtight outer tanks and then everything comes together in the assembly and testing room.

The heart of the Delta Star factory is the winding room. Like a bobbin on a sewing machine, thick, paper-wrapped copper cables are wound around a wooden frame. The spindles range from four to more than a dozen feet long, and at each machine is a technician.

"This is not an assembly line job. We don't build them cookie cutter," Morrell said. "We make the best in the world, the Cadillac of transformers."

It is meticulous work and the winding room is bright and, for a factory, quiet. The copper coils must be entirely isolated from each other. The smallest connection, a tear in the paper insulation, a small piece of wire falling into a winding, could lead to a catastrophic, even deadly, short-circuit during the decades of service the transformers will see. Every coil has hundreds of turns and takes three days to make.

"A mistake here won't be found for another month, and on some jobs is the difference between making and losing money," Tepper said. "But you can't supervise that quality in. You need to hire good people, train and then trust them to do it right."

Steven Callahan has manned the winding machine for less than six months, after about a year of training. Before Delta Star he worked at a Sam's Club tire center.

"I wish I'd gotten here a lot sooner," Callahan said. "What I love is that if I do six transformers, not one is the same. I didn't think I'd remember half this stuff in training, but now I talk with the engineers to figure out the best way to do each winding and I don't start until I understand each one."

Callahan said the quality of the training, by other technicians on the floor, is why he's been successful, and a large part of the reason he became an IBEW member after probation.

"I am really grateful to the people who trained me. They were all members," he said. "They stressed the importance of keeping the union strong, so I joined too."

A single wall separates the brightly lit world of paper, wood and copper from the darker, dirtier, louder metal shop where a row of shaping machines stand in a line ready to bend, cut and machine the plates.

A 12-foot wide metal brake can put a 90-degree bend in a half-inch plate. The computer controlled plasma cutter slices precise lines out of panels nearly 20 feet long. Once the basic shapes of the tanks and components are bent and cut, close to three dozen machinists and welders piece them together into the airtight tanks that will seal the transformer cores and coils.

It's loud and dirty work, with one welder knocking a piece into place with a sledgehammer while the crack of welders echoes off the high ceiling.

Unlike many of their competitors, Delta Star tanks have no corner welds. All corners are bent on the brakes and butt welds are run inside and out on the sides. It is more expensive, but dramatically improves the longevity of the tanks, Morrell said.

"That's what we mean by competing on quality," he said. "Better material better handled."

After the custom tanks are finished and all the welds ground, the tank is pressure tested, degreased, steel-shot blasted and painted.

Both the tanks and the windings are then rolled into the long, high-ceilinged assembly bay and into one of two room-sized dehydrators.

Local 2173 member Ernest Barnett works in the assembly room where the hollow windings are lowered onto laminated steel cores made up of dozens of paper-thin steel sheets shaped like a capital E. After the three windings are in place, a stack of I-shaped sheets is shuffled into place across the top. The entire assembly is then placed inside the tank, connections are made through three-foot tall bushings that poke out of the top of the tank and the whole thing is filled with mineral oil.

Finally the transformer is rolled to the end of the assembly bay and placed between towering test apparatus that look like they were stolen from the set of a Frankenstein movie. The largest — a toroidal metal doughnut mounted on a tower — creates an arc flash as powerful as a lightning strike. Failing any one of the structural or functional tests can mean the difference between making and losing money on a job. Happily, Morrell said, failure is rare.

The entire process takes about three months and the Lynchburg factory finishes about a dozen transformers each month. Weighing up to 75 tons each, they cost between $800,000 and $1.4 million.

Greene said having a union workforce helps the company compete for contracts with unionized utilities, and Morrell said the union-only requests have helped the local win more members. PG&E, for example, will only allow IBEW members to do service calls on company property.

"There are utilities that won't let a nonmember on-site," Morrell said. "That shows the way union organizing in one place can help unions in another grow."

A Unionized South

Manufacturing has been one of the few bright spots in the economy since the recession ended in 2009. Nearly a quarter of the growth in the U.S. economy in the last five years has come from industry and manufacturers have added nearly 50,000 new jobs since 2009, according to the Bureau of Labor Statistics. While that brings the total factory employment to nearly 13 million, that is nearly 6 million fewer than the peak in the 1980s.

Perhaps because of a southern history of hostility to unions and the good relations with management reducing some workers' sense of the importance of organizing, only about 60 percent of Delta Star's 300-member Virginia workforce are members of the IBEW. But Morrell sees that changing soon.

The company has been hiring, and many of the trainers are union members. Most of the trainees have already told Morrell they are signing up. An internal organizing campaign is underway to help educate nonmembers about the importance of a strong union to keep labor-management relations good.

"With the way we're organizing and the new guys coming in, it's really picking up. In the last two months we've added 12 new members," Morrell said. "I would think in the next two years we should be at 90 percent."

It would be a remarkable performance for a region that has gained a reputation for attracting manufacturers because of its antagonism toward unions.

"What Delta Star shows is that in the most conservative part of a right-to-work state, unions and employers can make a successful run of things," said Fourth District International Vice President Kenneth Cooper.

Cooper said he'd like to see the company sign up to the IBEW's manufacturing Code of Excellence program in the next year.

"We've talked about implementing it, but they are living it," Cooper said. "What they're doing is a model the rest of the country should pay attention to."

Morrell hopes the rest of the region, and the rest of the IBEW is watching.

"Even though we're not as large as some of the locals, the people here know we're just as strong fighting for them as a local that has thousands of members," Morrell said. "They know, as long as we stick together, we can get anything accomplished."