A Company Town Living in the shadow of industry

Seven years after the cement plant shut down, the shadow of multinational giant Cemex looms over Davenport


By Julie Reynolds Martínez

Photos by Reynaldo Barrioz
Davenport Landing | Adobe Stock

SOUNDTRACK: “Company Town” by Show of Hands

In late September, the light north of Davenport’s New Town turns golden around 6:30 p.m. We are standing in a field trying to capture the moment in which the Cement Plant’s white towers turn cream-colored. It’s also when the tire-covered pile of toxic cement kiln dust behind the plant becomes a lovely hillock splotched in a black-and-white pattern that resembles a Holstein cowhide.

Though we are parked on a public road, we keep an eye out for security. They’ve been on us all afternoon, as if the Cement Plant were a nuclear weapons arsenal. I’m beginning to wonder if it is. Or perhaps all that white powder is cocaine. With the twilight come delusions.

So far today we’ve been chased off by: a man in a pickup who works for a rancher who owns land next to the 5,400 acres of Bureau of Land Management turf near the Cement Plant; an employee of the Cement Plant who says we can’t stand near its gate and who keeps his truck parked behind us until we leave; a county employee in a pickup who says the local water system has been fixed and you can look it up, it’s public record. Only the county guy smiles back.

This is punctuated by several mad-dogging encounters with a private security vehicle whose driver has his eyes on us.

Seven years after it shut down, the Cement Plant is apparently still serious business. And its effect on the 300 or so residents of Davenport is as strong as ever.

I

Davenport has lived in the shadow of industry since Captain John Davenport built the whaling pier a few miles north of the town that today bears his name. And even as America is seeing the demise of the company town, its legacy lives here.

After Davenport Landing’s 450-foot-long pier was abandoned in the late 1800s, the industry that has come to dominate the town is the tangle of towering white machinery that everyone calls the Cement Plant. No matter who owned or operated it since it was built in 1905, that was the name. The street leading to its entrance is called Cement Plant Road.

Despite its dominance over the town — both physical and psychological — the Cement Plant has not been the primary employer of residents here for years. Of the 120 employees who worked there when the plant shut down in 2010, only ten lived in Davenport, local residents say. The rest came from Santa Cruz, 11 miles to the south. Today, Davenport’s population is largely an eclectic mix of farm workers, artists and retirees.

Historically, company towns may have owned the housing, the stores and sometimes even the schools. In Davenport, the Cement Plant claims to own and control that element most necessary for human life: the water supply.

Whether it really does own the water rights is now a matter of intense dispute. But ever since Latin America’s most powerful multinational corporation, Cemex, took over the plant in 2005, it has been dogged by controversy, unpaid bills and questions of corporate responsibility.

II

When I mention Cemex’s stateside environmental controversies to a friend from Mexico, he notes the irony.

“It’s usually the U.S. corporations coming to Mexico to pollute,” he says.

Cemex’s late owner, Lorenzo Zambrano, was a powerful figure in Latin American business until his death in 2014.

“Lorenzo Zambrano was the driving force behind one of the biggest cement companies in the world, Cemex,” says Alfredo Corchado, the Mexico-Border correspondent for the Dallas Morning News and author of Midnight In Mexico.

“He originates from one of the most storied, powerful families in Mexico,” Corchado told Voices, adding that Zambrano was also “a well-known philanthropist and maverick.”

Zambrano’s grandfather founded the company in 1906, in Monterrey, Mexico, but it was Zambrano who brought the business into the multinational era after earning his MBA from Stanford University. Besides being CEO of Cemex, he served on the board of IBM and was consistently on Forbes’ billionaires’ list, with a net worth of $1.5 billion to $2 billion.

For years, a story illustrating Zambrano’s connections and wealth made the rounds among Mexican journalists. In his 1996 book, Bordering on Chaos, Andrés Oppenheimer describes a secret dinner hosted by President Carlos Salinas de Gortari on February 23, 1993. Zambrano and 29 other Mexican billionaires attended this event to save the country’s notoriously corrupt ruling party, the PRI, which was facing competition from the rising PAN party. One of the guests stood up and declared, “Mr. President, I commit myself to making my best effort to collect twenty-five million.”

“There was an awkward silence in the room,” Oppenheimer wrote. “Mexican pesos or dollars?” one of the guests finally asked. The answer was dollars.

Put on the spot, Zambrano and the others joined in, raising $750 million U.S. dollars in one evening for the party that helped forge their fortunes.

When he died suddenly at age 70 in 2014, Reuters reported that Zambrano had “turned Cemex into a global cement giant but also nearly brought the company crashing down.”

He had taken the stolid Mexican corporation to the international arena, where Cemex is still a major player. In a contrarian twist on the many U.S. corporations that moved to Mexico for cheap labor, Cemex headed north, becoming one of the largest cement producers in the United States.

But in 2008, Zambrano spent $16 billion buying an Australian construction company, and that disastrous gamble, just as the U.S. housing market crashed, led to pulling back resources from other investments worldwide — including the Cement Plant in Davenport.

Cemex continues to be embroiled in scandals. In 2014, its division in Spain was fined 455 million Euros by tax auditors over questions about reported losses. Last year, its CEO for Latin America resigned amid a $20-million bribery scandal. The U.S. Securities and Exchange Commission began investigating the company in December for possible violations of the Foreign Corrupt Practices Act.

This past June in Monterey County, Cemex’s sand mining plant in Marina was ordered shut down within three years because it was operating without state permits. Local scientists said the mine contributed to beach erosion in the area, a claim Cemex disputes.

Since Zambrano’s death, Cemex is recovering from its near-demise. This year, it made Forbes’ Top Multinational Performers list. Just last week, the company reported its net income has risen 72 percent so far in 2017, largely from increased sales in the U.S. and Mexico. Zambrano’s life and legacy are now reported to be the focus of a History Channel miniseries on Mexican business giants.

So why does this multi-billion-dollar player in the world construction market have so much trouble paying its bills in Santa Cruz County?

III

On October 2, 2008, parents at Pacific Elementary School, Davenport’s only school, received a letter from the principal. It was about air quality test results.

“Analysis of the data collected over two months indicates pollutants not previously tested for from the Cemex plant. The air tests taken in three locations found levels of chromium-6 that exceed the accepted (state) standards.”

In fact, they were up to ten times higher than allowable levels. Noel Bock, an artist and Davenport resident of 30 years, worked at the school. “Everything changed. We went into high gear. Students left the school, parents were up in arms,” she says.

Then Erin Brockovich — the whistleblower made famous by the Julia Roberts movie about her fight against PG&E’s chromium-6 pollution in the groundwater of Hinkley, California — swooped into Davenport to speak. Some locals were enthralled, while others felt she was only there to hustle up clients for a class-action lawsuit that never happened.

“Erin just showed up. She put out her pitch,” Bock says. “Lots of media came to that, but it was much ado about nothing.” Brockovich did not respond to an interview request for this story.

But the town quickly dealt with the testing and cleanup.

“We started this great research team, where we worked with employees at Cemex to work on the issues and not just be hotheads about it,” Bock says.

“We did a lot of things and looked into how bad was it? What did it mean for the community and how to mitigate it? It was a time where we all came together.”

And then it was time for Cemex to pay the nearly $500,000 clean-up tab.

“They were in full support of what we were doing up until the time it came to pay,” Steve Schneider, a Santa Cruz County Environmental Health manager, told the Santa Cruz Sentinel. “It’s not like it was hidden from them that they’d have to pay this. They knew that from the get-go.”

County spokesman Jason Hoppin says that faced with Cemex’s refusal to pay, officials ultimately got creative and figured out a way to collect.

He says Cemex had previously requested and was granted a property tax reduction. So instead of paying the full tax refund, the county simply withheld the amount Cemex owed for the chromium-6 remediation.

Throughout its history, the Cement Plant produced what’s called Portland cement — an essential ingredient of concrete — and it’s always been a dirty business. Everyone in Davenport remembers the days when balconies, gardens and cars were covered in an ashy powder.

“Every day when I went out to my deck, I had to dust,” Bock says. “I had the Cemex environmental quality guys on speed dial. A couple of times we noticed a plume of dust, but one of the scariest things was finding mercury (in the plant’s emissions). It was not enough for a red flag, but it was a concern. The air quality monitoring system didn’t monitor everything.”

Bock says the town is downwind from the plant, and that’s where the dust has always settled. It was also where the workers lived long ago. The small development just north — and upwind — of the plant, called New Town, was built for the plant’s managers, she says.

Since the plant closed in 2010, residents have reveled in the clean, clear air. “We purchased our property knowing (the plant) was a polluter, but when it closed, we breathed a sigh of relief,” Bock says.

Newspapers reported that the closure was a logical conclusion to the housing crash, though few noted Zambrano’s expansion gambles into the world market.  But it’s also possible the environmental fuss and regulations were more than Cemex wanted to bother with.

Other U.S. towns are still dealing with pollution from Cemex plants. Last year, Cemex settled with the U.S. Justice Department after an Environmental Protection Agency lawsuit alleged that five of its cement plants violated the Clean Air Act. Cemex agreed to pay $10 million to clean up facilities in Alabama, Kentucky, Tennessee and Texas.

The EPA noted that nitrogen oxides and sulfur dioxide, “two key pollutants emitted from cement plants, have numerous adverse effects on human health and are significant contributors to acid rain, smog, and haze. The pollutants are converted in the air into fine particles of particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death. Reducing these harmful air pollutants will benefit the communities located near the Cemex plants, particularly communities disproportionately impacted by environmental risks and vulnerable populations, including children.”

“We did not close down the cement plant,” Bock says. “But when it did close, a lot of good things happened.”

IV

Just up the short, steep road from Bock’s house sits the St. Vincent de Paul Church. It’s the lovely building everyone photographs when they stop here. The church and the town’s tiny, historic jail are of course made with cement from the plant.

Farm worker families attend the Sunday services here and their children attend the school. Today, it’s these workers, not cement factory crews, who shape this town.

In a low bungalow above the church, Lizette Ponce caresses a round yellow squash as if she’s in love.

“Look at these! Aren’t they beautiful?” she exclaims, pulling more exquisite produce from a cardboard box. The box comes from the Homeless Garden Project on Santa Cruz’s west side. The project donates the goods to the Davenport Resource Service Center, where Ponce works. Every week, the center gives away produce, dried beans, canned goods, even clothing to anyone who asks. Recipients don’t have to justify their income or prove they’re hard up, Ponce says. Clients can try on and bag clothes in the bathroom of the small facility, so they’re not embarrassed to be seen as needy.

While the population of Davenport is around 45 percent Latino, the percentage increases if you count the labor camps in surrounding ranches. It’s this group the Davenport Resource Service Center watches out for.

Hidden from sight in the ranches, Latino farm workers are among the lowest paid of the area’s residents. The service center doesn’t wait for these workers to come to Davenport; instead they head out to eight ranches between March and October to deliver goods from Second Harvest Food Bank. This year, they hit the Jacobs-Del Cabo organic herb fields; Rodoni Farms, known for their pumpkin patch and corn maze; and the UFW-represented workers at Swanton Berry Farm, among others.

Some of the area’s farm workers are able to live in town, but the skyrocketing price of water here makes it unaffordable for many.

This summer, Davenport came close to running out of water. Last winter’s storms did a number on the town’s water system, which was “a bunch of PVC pipes literally hung from some bushes and trees,” according to Bock. The water comes from nearby San Vicente Creek, but after the storm damage, the lower-volume Mill Creek had to be tapped. The Cement Plant had for decades maintained the town’s water supply, so residents believed Cemex would pay to fix the pipes.

It didn’t happen. To avert a shutdown of the water supply, the county rushed in and spent more than $220,000 on repairs. Now, the county would like to get its money back, but Cemex says it isn’t paying.

“Our position is still that they should pay for it,” county spokesman Hoppin says. But just in case they don’t, county supervisors last month approved an application for a USDA grant they hope will cover the costs.

Otherwise, that bill could fall on Davenport residents, who already pay some of the highest water rates in the state. Bock showed me her current water and sewer bills, totaling $3,868.92 for the year. In contrast, Santa Cruz city water, sewer and garbage cost many households $1,200 a year or less.

“It’s an enormous cost to put on a small community,” says County Supervisor Ryan Coonerty, whose district includes the North Coast. “We hope the county will find the funds and won’t put the burden on the ratepayers.”

Asked if he knows why Cemex isn’t paying, Coonerty says, “You’d have to ask them that.”

While it’s possible the county could sue the company, “the challenge is that this is a small community and the county can’t afford to underwrite it.”

Hoppin says part of the problem is a dispute over who actually owns the town’s water rights.

“Everybody has claims to the water. We think the town has a claim, they (Cemex) have a claim, the fish have a claim,” — he means the San Vicente Creek’s protected coho salmon — “but it hasn’t been determined judicially.”

Town residents suspect Cemex wants to play it both ways. Several said the company doesn’t want to pay to keep up the town’s water supply, but it sure would like to include valuable water rights when it sells the plant and the 100 acres it sits on.

“It’s the county’s position that the community have the rights to all the water that they need,” Coonerty insists.

Finally, there’s the questions of what several people in town referred to as “that slag pile” behind the plant. It’s a giant mound of cement kiln dust, or CKD, that’s covered with tires and plastic sheets. Cemex’s Safety Data Sheet for CKD says the powder causes severe burns and eye damage, and may cause cancer and damage to lungs.

The site cleanup, which Coonerty says includes “18 to 20 spots with contaminants,” is not the county’s responsibility — it falls to the Central Coast Regional Water Quality Control Board. Cleanup is “ongoing,” Hoppin says, adding, “we do think Cemex is the responsible party.”

He and Coonerty say state officials have decided that covering the CKD pile is safer than trying to remove it, which would stir up more toxins. Hoppins says the pile has developed a kind of solidified crust that might help in sealing it off.

They both say they’re confident Cemex will do its part. Residents aren’t so sure.

Bock says that after the plant shut down, Cemex’s vice president of manufacturing Satish Sheth “looked me in the eyes and said ‘We will move that pile before we leave.’

“And it’s still there.”

“We’re going through a divorce with Cemex,” Hoppin says. “And there are good days and there are bad days. We expect we’ll all arrive at a good spot in the end.”

Before photographer Reynaldo Barrioz and I were chased away from the plant’s entrance, I asked the employee doing the chasing if the plant was for sale. He said he didn’t know, and told us to call the company.

But our attempts to reach Cemex USA’s press office by phone and email weren’t successful.

It’s very unlikely the plant will change hands next year, or the year after. The county is holding a series of public meetings to figure out what the site could be used for.

Cemex has already sold 8,500 mountainous acres of redwoods behind the plant to several environmental groups, led by the Sempervirens Fund. They’re working to develop 38 miles of hiking, biking and horse trails for public use. That has fueled the dream, for some, that the Cement Plant site could become a visitor reception center for what is now called the San Vicente Redwoods.

Other possibilities include allowing light industry. Whatever the end use, arriving at a sale is going to be a process. Once allowable uses are identified and the cleanup completed, potential buyers will be courted and negotiations with Cemex can finally begin. But even the county’s final report on potential reuse isn’t expected until summer 2019.

“It’s certainly a complex property,” Coonerty says. “It’s also a pretty amazing property on the California coastline, going from a 19th Century industry to 21st Century use. If we don’t figure out a reuse plan for the site, it’s just going to increasingly stay a rust-filled site.”

So when might the sale happen?

“Could be years,” Coonerty says. “We also want to do it right. Whatever we put there is going to be there for a long time.”

Julie Reynolds Martínez

About Julie Reynolds Martínez

Julie Reynolds Martínez is a freelance journalist who has reported for the Center for Investigative Reporting, The Nation, NPR, PBS and other outlets. She is a co-founder of Voices of Monterey Bay.