Reading Works

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The Reading Works in Berks County, Pennsylvania, was a key player in manufacturing and delivering innovative integrated circuit and optoelectronic equipment for communication and computing in the United States and around the world. The work force grew to nearly 5,000 by 1985 making the Reading, Pennsylvania, facility one of Berks County's largest industrial employers. As a part of Western Electric and the Bell System, it changed it masthead many times during its life. The following is a chronology of how it all came about and where it went. ^[1]

Contents 1 1952 - From Allentown to Laureldale 2 1962 - From Laureldale to Reading 3 1984 - WE to AT&T Technologies- 4 1996 - AT&T to Lucent 5 2000 - Lucent to Agere 6 2003 - From Agere to Closure 7 2005 - From the USA 8 2006 - Greater Reading Expo Center 9 Berks County on the Rebound 10 References 11 Notes

[edit] 1952 - From Allentown to Laureldale

The origins can be traced back to 1876, when Elisha Gray lost his race to invent the telephone; Alexander Graham Bell put in a patent application just hours before Gray filed one. Gray nevertheless left his mark on the telephone industry in 1869 when he and Enos N Barton formed Gray and Barton, a small manufacturing firm in Cleveland, Ohio. Three years later, the firm, now based in Chicago, was renamed the Western Electric Manufacturing Co. By 1880 it was the largest electrical manufacturing company in the US. A year later when growth of the telephone network was outstripping the capacity of smaller suppliers, American Bell purchased a controlling interest in Western Electric Company and made it the exclusive manufacturer of equipment for the Bell telephone companies. Western Electric Company was responsible for developing as well as manufacturing Bell equipment. In 1907, Theodore N. Vail combined the AT&T and Western Electric engineering departments into a single organization that became Bell Labs in 1925. Western Electric became the manufacturing "arm" of the Bell System (Ma Bell).

In 1951, just four years after the invention of the transistor by Bell Laboratories, the Allentown Plant was opened to manufacture the first transistors.^[2][3]

In 1952, operations in Reading began when Western Electric Company (WECO) converted the old Rosedale knitting mill in Laureldale into a factory that produced electronic components for the U.S. government for use by the military and the space program.^[4] On August 22, 1952, Western Electric Company opened the doors of its new electronics manufacturing facility in Laureldale.^[5][3] Growth was slow but steady.^[6] By the end of 1952, there were 130 employees, and by the end of 1953, 253 employees. In 1958, a group of Bell Laboratories scientists moved to Reading, Pennsylvania, from other locations and started the Laureldale Laboratory in the Laureldale Western Electric Plant. Bell Labs was a division of Western Electric. Initially the Laureldale Laboratory designed electron tubes (vacuum tubes). Eventually, after becoming the Reading Laboratory, it designed semiconductor devices which eventually included integrated circuits, light emitting diodes, and lasers.^[2][3]

[edit] 1962 - From Laureldale to Reading

By the late 1950s, the increased demand for its products necessitated Western Electric building a larger facility, so plans were developed for a 200,000-square-foot (20,000 m²) building at the North 11th Street site. The Greater Berks Development Fund built the Reading plant at the end of 11th street for $2 million to lease to Bell Labs and Western Electric.^[3]

Ground breaking took place in November 1960, and on Jan. 2, 1962, Western Electric took possession of the new building, Building 30 (the manufacturing building).^[3]

In 1964, Western Electric bought the 290,000-square-foot (27,000 m²) building. By 1966 all facilities had moved from the Laureldale plant to the Muhlenberg Township, Pennsylvania, site. The new facility was called the Reading Works and the branch of Bell Labs was called the Reading Labs.^[3][7]

In 1967, when the Reading Works celebrated its 15th anniversary in Berks County, it employed about 2,600 employees. Various additions since the-mid 1960s increased the manufacturing space to 1,300,000 square feet (121,000 m²). Construction on the 210,000-square-foot (20,000 m²) office building (Building 20) began in 1980, and the building was first occupied in 1982. ^[3]

[edit] 1984 - WE to AT&T Technologies-

In 1984 the Bell System broke up into the various Baby Bell operating companies and AT&T. As a result of this Bell System divestiture in 1984, the Western Electric plant became an AT&T Technology Systems (AT&T Technologies) location as part of AT&T, supplying devices of the highest reliability and technical sophistication for use in the former Bell System's network. By 1984, employment had reached what would be an all-time high of 4,900.^[8] In 1988, microchip and fiber-optic component manufacturing was combined into an AT&T organization called AT&T Microelectronics. In 1989 the AT&T work force nationwide was 297,000 and while employment at the Reading Works was 3,200.^[9] In 1992 the Reading Works of AT&T Microelectronics had 3,300 workers and provided an annual payroll of $100 million. The product mix included lightwave components, linear bipolar integrated circuits, high voltage integrated circuits, high speed silicon integrated circuits, and gallium arsenide integrated circuits.^[7] A satellite manufacturing building, Building 10, was constructed on North 13th Street, just north of the General Mail Facility, in 1992. The same year the Falconer building across the street was also used.^[7] AT&T Reading Works was the No. 2 employer in Berks County in 1993 ^[10], but that was soon to end. In February of 1994, AT&T Reading Works announced that it would be cutting 850 jobs over a 3-year period. ^[11] In 1994 the Reading Works' work force was reduced from 2,929 to 2,700 with most of the cuts in the Lightwave unit. The Lightwave unit makes fiber-optic laser transmitters and receivers.^[12] In 1995 the Reading Works' work force stood at 2,400 including AT&T Microelectronics and Bell Labs as it prepared for the spin off from AT&T into Lucent Technologies.^[13]

[edit] 1996 - AT&T to Lucent

Under the 1996 restructuring of AT&T, AT&T Technology Systems (a division of AT&T Technologies) became Lucent Technologies. The Lucent Technologies Reading, Pennsylvania, facility became both a Lucent Microelectronics and a Lucent Optoelectronics facility, designing and manufacturing optoelectronic and integrated circuit components for applications in the telecommunications and computing industries.

The Lucent Reading Plant was unique in the semiconductor industry because it manufactured both optoelectronic and integrated circuit components. The facility received a $6 million renovation to boost its optoelectronics manufacturing capacity.

In addition to serving the traditional communications markets, the Lucent Optoelectronics portion of the facility provided a family of transmitters and receivers for use in network computing applications. Lucent was also a leading player in the cable TV and hybrid fiber coaxial markets. In addition to Reading, Pennsylvania, other Lucent Optoelectronics facilities were located in Breinigsville, Pennsylvania; Murray Hill, New Jersey; Alhambra, California; and Matamoros, Tamaulipas, Mexico.

The Lucent Microelectronics portion of the facility produced linear bipolar, high voltage and gallium arsenide integrated circuits. These microchips were used in tone ringers, data processing, voltage regulators, video distribution, and in the industrial, computer, communication and instrumental markets. In addition to Reading, other Lucent Microelectronics integrated circuit sites included Allentown, Pennsylvania; Orlando, Florida; Bangkok, Thailand; Tres Cantos, Spain; and Singapore.

In 1996 the Reading Works' work force stood at 2,450 including AT&T Microelectronics and Bell Labs as it made the transition from AT&T into Lucent Technologies.^[14] The spin off of AT&T manufacturing units as Lucent Technologies became necessary as these units increasingly found that their prospective customers were AT&T competitors. The divestiture of the manufacturing units made them suppliers rather than competitors, opening up new markets to Lucent and to the Reading Works. At the same time it caused the anxiety that comes with change.^[15] On October 1, 1996, Lucent Technologies became independent of AT&T. The Reading Works became Lucent Technologies Reading Facility. It employed 2,177 people, down considerably from 4,900 in 1985.^[16] By the end of 1997, the Reading Facility workforce had declined and remained stable at 2,000.^[17] By the end of 1997, the Reading Facility workforce had declined and remained stable at 2,000.^[17] By the end of 1998, the Reading Facility workforce had rebounded to 2,177.^[4] In 1999 a pickup in Lightwave business caused expansion of both the Reading Facility and the Breinigsville plant.^[18]

[edit] 2000 - Lucent to Agere

The Reading Plant's heritage, combined with constant innovation and product quality, positioned the facility as one of the largest semiconductor companies in the world. In 2000, Lucent Microelectronics and Optoelectronics were reorganized as Agere Systems with the intention of spinning it off as an independent company. Agere Systems Inc. produced high-tech components such as opto-electronics products, which use light-wave technologies to transmit information, and integrated circuits, which are miniaturized chips used in computers and communications. The opto-electronics parts were used in systems such as submarine communication cables, cable transmitters, cable receivers, laser components, and network computing devices. The integrated circuits were found in a wide array of electronic products from modems and computers to cell phones and telephone offices to video equipment and digital television. After becoming Agere Systems, by the end of 2000, the Reading Facility became the Muhlenberg plant and had grown its workforce by 800 to 3,000 as the anticipated lightwave business materialized.^[19] In 2001, Agere's stock went public in late March. The spin-off was completed on June 1, 2002. By mid 2001, Agere cut 508 jobs at the Reading Works.^[20] These layoffs continued in waves as conditions in the semiconductor market deteriorated and by the end of the year only had a workforce of 1,546.^[21]

[edit] 2003 - From Agere to Closure

On January 24, 2002, Agere announced that it would be closing the 1,300,000 square feet (121,000 m²) Reading Works in 12 to 18 months. The planned changes involved closing the Breinigsville, Pennsylvania plant in Lehigh County, Pennsylvania, which was opened in 1988;^[22] selling the Orlando plant in Florida; and consolidating several locations in New Jersey. All operations were consolidated at the Allentown, Pennsylvania, headquarters location and the New Jersey locations. About 1,500 workers were transferred from Reading to Allentown where 3,200 workers were employed prior to the relocation. As Agere was leaving, Legerity, Inc., assumed some of the operations formerly done by the Muhlenberg plant in the old Building 10 on North 13th Street. In this facility Legerity assembled 40 former Agere circuit-design, physical-design, application-design and process development engineers to support the analog line card integrated circuit business it purchased from Agere. Legerity is a design facility that uses other companies foundries to manufacture its products.^[23] In May 2003, Agere Systems Inc. ended all manufacturing and began decommissioning its Muhlenberg Township plant. The last 346 manufacturing employees were laid off. About 50 employees — mostly maintenance — remained at the plant until a buyer was found.^[24]

Agere built a $165 million World Headquarters building in Hanover Township, Lehigh County, Pennsylvania. This building was started in 2001 and completed in 2003. It brought together research and development facilities from Breinigsville and Muhlenberg Township. It absorbed about 2,000 workers from these two facilities.^[25] Agere tried unsuccessfully to sell its Union Boulevard plant in Allentown, where the first commercial production line for transistors was set up in 1951. Agere demolished the manufacturing part of the Union Boulevard facility. The company continues to use the offices and wet labs in the remaining part of the building. Its headquarters building is nearby in Hanover Township, Pennsylvania. In 2003, Agere sold the chip plant and research center in Breinigsville to TriQuint Semiconductor, which also bought the company's fiber-optic components division. The facility, now under different ownership, is a multi-tenant technology park.^[8]

At the end of 1999 shares of Lucent stock hit a high of nearly $80. After spinning off Agere, Lucent shares dropped to around $4.50 and later dropped to $0.55 in October 2002. After being spun off, Agere shares were about $4 and dropped to a low of $0.50 in October 2002. Agere started 2000 with 18,000 employees. By the end of the year it had only 10,000 employees. By the end of 2001 the number of employees had dropped to about 7,000. The last wafer starts at the Reading Works were scheduled for April, 2003 and the last shipments were scheduled for May, 2003. The doors locked on May 16, 2003. Starting May 17, the Reading work force consisted of 100 employees who cleaned up the facility and disposed of equipment. In July the work force was down to 50 maintenance employees who manned the 1,300,000-square-foot (121,000 m²) facility while an attempts were made to sell it or at least rent or lease it. On December 13, 2005, it was announced that Agere had signed a sales agreement with a Montgomery County, Pennsylvania, developer to sell the 133-acre (0.5 km²) Agere Systems Inc. property in Muhlenberg Township, Pennsylvania, and projects the return of 1,000 jobs to the site within 18 months, with more jobs to follow.

[edit] 2005 - From the USA

The last USA based Agere manufacturing plant in Orlando, Florida, which once employed 1,800, was closed on September 30, 2005, after 20 years of semiconductors manufacture^[26] and sold in 2007. The company has plants in Singapore and Thailand, and operated 22 sales offices and 16 research and development facilities throughout the world. Its key centers are in Ascot, U.K.; Bangalore, India; San Jose, CA, U.S.; Shanghai, China; and Singapore as well as the world headquarters in Lehigh Valley, PA.

Agere still maintained its position as a key chip supplier for cell phones and hard disk drives. However, the chips it supplied were purchased from outside chip foundries or made offshore rather than made locally. In 2003, 3,000 of the best jobs in town disappeared when Agere Systems closed the Reading Works. But the jobs won't come back when the economy does; like many other high-tech companies, Agere moved production overseas.

Outsourcing is a new name for a long-standing phenomenon: the movement of jobs from the USA to countries where wages, benefits and the cost of living are much lower. In the 1970s and 1980s, heavy manufacturing jobs went to other countries by the tens of thousands. The result was cheaper goods for U.S. consumers and less pollution in many of the nation's industrial cities. Economists who backed the trend envisioned a new "knowledge economy" in which well-trained Americans would become the world's designers, innovators and administrators. The dirty work would be sent overseas.

Not to take advantage of those countries' pools of highly educated, relatively low-wage workers would be foolish, Agere officials said. "Our customers are very demanding," says John Harris, an engineer and marketing manager at Agere's Allentown, Pennsylvania, headquarters. "They're under intense pressure to deliver extremely high quality at extremely low cost. That pressure comes right back on us."

On December 4, 2006, Agere's President and CEO, Rick Clemmer, announced that it would be bought by LSI Logic Corporation of Milpitas, California in an all-stock transaction. On March 29, 2007, this merger was approved by shareholders of both companies, making it official.^[27] The companies together own a patent portfolio consisting of more than 10,000 issued and pending U.S. patents.^[28] Spun off by Lucent Technologies in 2001, Agere was the creation of a corporate behemoth, while LSI was born 25 years ago as a tiny startup. LSI Logic already has decided to dump the Agere name, which once symbolized the Lehigh Valley's aspirations to become a technology hub. Compared to Agere, LSI Logic has run a tight ship. It generates roughly 20 percent more revenue — $2 billion — with fewer employees worldwide: 3,900, compared to Agere's 5,300. LSI Logic will use the Agere facilities as the center of its research operations, but the combined company's headquarters will be in Milpitas, California.^[8]

LSI Logic has come a long way since 1981, when Wilfred Corrigan founded the company with $6 million of venture capital. Corrigan, a native of Liverpool, England, moved to the United States to pursue a career in electronics. He climbed the ladder at Motorola in Phoenix, Arizona, before becoming CEO of Fairchild Semiconductor in Mountain View, California, in the mid-1970s. The launch of LSI Logic marked his transition to entrepreneur. The company went public in 1983. By the mid-1990s, LSI Logic was selling chips to Sony for its PlayStation video game machine. And in 2001, it made its first major acquisition, C-Cube Microsystems, in a stock deal valued at $851 million.^[8]

In recent times, LSI Logic has followed a strategy similar to Agere. This year, the company sold an Oregon semiconductor manufacturing facility and acquired two smaller companies, in Israel and India. Now it's swallowing up Agere, which is nearly its equal, in terms of revenue but not productivity. Hence ends the saga of the semiconductor plant that was built in Reading in 1952.^[8]

[edit] 2006 - Greater Reading Expo Center

Audubon Land Development of Oaks, Montgomery County, Pennsylvania, bought the old Reading Works in December 2005 for an undisclosed amount. Agere spokesman Glen Haley confirmed the deal. Agere had been asking for $8 million for the property, but Haley and Call declined to disclose the purchase price. The assessment of the property was lowered to $9.5 million from $26.3 million after Agere appealed. On Tuesday, March 14, 2006, Urban Expositions, a Georgia-based trade show company, announced it would hold the 10th annual Philadelphia Gift Show at the Reading center July 23-26, 2006. The facility is being called the Greater Reading Expo Center. A company press release calls the event, with an expected 1,400 booths, the largest regional gift show in the country. Gene Call, an Audubon spokesman, said Audubon's subsidiary, Stonepoint Management Corp., which is leasing the 1,000,000-square-foot (93,000 m²) Agere building, would run the exposition center. Stonepoint would use 350,000 square feet (33,000 m²), he said. Stonepoint is exploring other uses but has not made firm plans, he said.^[8]

Crystal Seitz, president of the Greater Reading Convention & Visitors Bureau, said a typical convention center with a steady stream of shows generates about $150 million for a local economy, including money spent for lodging and meals. Jon C. Scott, president of the Berks Economic Partnership, said he has met several times with Audubon officials and is excited about the prospects for the center. “It opens up the type of exhibits that would never have been available before,” Scott said. “It leads to other intriguing possibilities.” Some of the shows scheduled for the facility included: Philadelphia Gift Show which includes Birdwatch America-Philadelphia, Great Train Expo, Bead Fest Philadelphia, Greater Philadelphia Pet Expo, Great American Guitar Show, Sports Card & Memorabilia Show,^[29] Home & Garden Show,^[30] and The Greater Reading Sport, Travel & Outdoors Show.^[8]

Success of the Expo Center is in part due to the closing of the Fort Washington Exposition Center in Montgomery County and the Pennsylvania Expo Center in Lehigh County and in part due to the 250,000 square feet (23,000 m²) of inside space, several auditoriums, numerous meeting rooms, 13 loading docks, ample parking and a full-service cafeteria among its amenities, the expo center.^[31] Muhlenberg Township waived the 10% amusement tax on admission to the expo center from January through September of 2007. This was an attempt to allow the Expo Center to become better established. The township estimates future revenues at $50,000 per year.^[32]

The Pennsylvania Department of Community and Economic Development included the StonePointe Center, the former Agere complex in Muhlenberg Township, which includes the Greater Reading Expo Center, as part of the Greater Reading Keystone Innovation Zone and invested $235,000 to fund its operations. Also included in this zone is TEK Park, the former home of Lucent/Agere Optoelectronics in Breinigsville, Lehigh County, which houses a number of industrial tenants and the Kutztown University Innovation Center.^[33] Building 30 is now called the "Flex Building" and building 20 is the "Office Building". They are keeping their options open. Here is what they say: "Imagine a state of the art business center, with more than one million square feet of available space for office, manufacturing and distribution; a facility with high-tech infrastructure and easy access to transportation. Imagine a convenient location near Reading, Pennsylvania, with professional on-site management to support your business. Imagine your business at StonePointe Center." ^[8] The Expo Center is the latest in venues that mark a renaissance in Reading. It started with the opening of the Sovereign Center and its sister the Sovereign Performing Arts Center. Now it includes the Goggle-Works Center for the Arts, and the Greater Reading Expo Center.^[34]

[edit] Berks County on the Rebound

In a community like Reading, Pennsylvania, the pain is far more apparent than the progress. Back when the big telecom factory was owned by Western Electric, Sally Quick became its third female technician. "I loved that job," she says. She worked on switching systems for transoceanic phone calls. She knows how to weld with a laser. But today, Quick is training for a job in tourism because she can't find one in telecommunications. In Muhlenberg Township, Pennsylvania, where the Agere plant was, the average annual salary dropped from $42,000 to $31,000 during the two years after the Reading Works closed, township manager Randall Boone said. The local school board, which faced the loss of nearly $500,000 a year in property taxes, sued to keep Agere from having the mothballed plant reassessed. "I'm not the one who caused the value to go down," says school board president Mark Nelson, a former Agere engineer. The current assessment for the buildings and 133.57 acres (540,500 m²) is $9,500,000. The selling price registered with the recorder of deeds was $1,700,000. The Berks County Parcel Identity Number is 66531813241892.^[35]

Reading's civic leaders did everything they could to nurture their piece of the high-tech economy. In 2001, Agere's production lines were so overtaxed that three community colleges won a $250,000 state grant and developed a special curriculum just to train people for Agere jobs. Today, Reading is trying to recover. In 2002, Cabela's, an outdoors outfitter, put a 250,000-square-foot (23,000 m²) store in Hamburg, Pennsylvania, near Reading, that employs nearly 650. And there are home-grown examples of companies that have innovated their way out of obsolescence: Arrow International, a medical-equipment manufacturer that employs 700 in Reading, grew out of a textile company that began refining its needles for surgical use.^[36]

The most successful company in Berks County, Pennsylvania, is East Penn Manufacturing Company, known by locals as Deka Battery. In 1946, DeLight Breidegam Jr., a young Air Force veteran, started the battery business with his father. The war made materials for new batteries scarce, but there was a great demand for rebuilt batteries to allow the returning GIs to get all those mothballed cars and trucks started. DeLight and his dad filled that need collecting old batteries and rebuilding them into new. The company began to build new batteries as materials became available, and a new plant was built in Lyons, Pennsylvania. By 1971 the company had grown to 350 employees, a number that would double in the next five years. The company is now the largest manufacturing employer in Berks County. Currently, East Penn has a 490+ acre plant site, the largest in its industry, and over two million square feet under roof.^[37] Today, Deka is the counties largest employer with over 4,000 employees.^[38] In 2006, East Penn Manufacturing was selected on of the best employers in the USA. It ranked 79th of all companies in the USA and the 31st of all midsized companies. What makes it so great? Fortune Magazine concluded it's a company of lifers. This maker of Deka batteries is still run by its founder, DeLight Breidegam. The top ten senior employees have 419 years of combined service; the staff includes 246 married couples. They have about 200 applicants for every opening. Their engineers make about $57,000 and their line workers average $40,000. They recently celebrated their 60th anniversary.^[39]

The Reading Works had a peak employment of 4,900. The Reading Works facility was permanently shutdown on, Thursday, March 31, 2005, at approximately 9 AM. The building has gone "cold".^[8]

[edit] References

• Prescott C. Mabon (1975). Mission Communications: The Story of Bell Laboratories; Murray Hill (NJ), US; Bell Laboratories.
• Bell Telephone Laboratories Incorporated (1977). Engineering and Operations in the Bell System; Murray Hill (NJ), US; Bell Telephone Laboratories LCCN 77-84418.
• Western Electric Pamphlet (1983) Reading Works; 20 Pages, Public Relations Department, Western Electric Reading Works; Reading (PA), US
• North American Company Profiles 1996 Pages 189-194
• North American Company Profiles 1997 Pages 205-210
• William F. Brinkman, William W. Troutman (1997). Key Steps to the Integrated Circuit; Bell Labs Technical Journal, Volume 2, Issue 4, Pages 15 - 28.
• Michael Riordan and Lillian Hoddeson (1997).Crystal Fire: The Invention of the Transistor and the Birth of the Information Age. New York: Norton. ISBN 0-393-31851-6
• Melliar-Smith, C.M.; Borrus, M.G.; Haggan, D.E.; Lowrey, T.; Vincentelli, A.S.G.; Troutman, W.W. (1998) The transistor: an invention becomes a big business; Proceedings of the IEEE, Volume 86, Issue 1, Jan 1998 Page(s):86-110.
• Reading Eagle Company (1999). Reading Towne: 1748-1998; Reading (PA), US; Reading Eagle Press.
• Stephen B. Adams and Orville R. Butler (1999). Manufacturing the Future: A History of Western Electric; Cambridge, UK; Cambridge University Press ISBN 0-521-65118-2.
• Reading Eagle Company (2000). A 20th Century Journey: 1990-1999; Reading (PA), US; Reading Eagle Press.
• T. R. Reid (2001). The Chip: How Two Americans Invented the Microchip and Launched a Revolution; New York; Random House ISBN 0-375-75828-3.
• Lillian Hoddeson and Vicki Daitch (2002). True Genius: The life and Science of John Bardeen; Washington, DC; Joseph Henry Press ISBN 0-309-08408-3.
• International Economic Development Council
• SEC filings of AT&T Corp.
• SEC filings of Lucent Technologies Inc.
• SEC filings of Agere Systems Inc.
• SEC filings of LSI Logic Corp.
• The Reading Eagle 12/31/06 A Time of CHANGE: 2006 the Year in Business by the Reading Eagle
• East Penn Manufacturing Company
• Bell System Memorial Home Page
• Reading Works History Database

[edit] Notes