U.S. Army Ends Backpack Contract With New Bedford Factory03:22

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About 50 workers and their family members held signs and chanted outside of the U.S. Army Soldier Center in Natick on Wednesday.

"Save our jobs!" they shouted.

The workers — many of them immigrants from Portugal, Cape Verde, and Latin America — are scared about a future without the factory.

Maria Perez has worked at Eagle Industries for one year. "350 families!," she said in Spanish, referring to the number of people who would be affected by a shut-down. "What are they going to do, with the recession the way it is? They have bills and mortgages to pay."

This isn't just any factory. It's one of the largest employers in New Bedford, a city with a 14-percent unemployment rate. The factory made national headlines in 2007 when federal immigration authorities raided the building and detained 361 workers. The factory has changed hands twice since the raid, but it's still working on the same army contract to make backpacks.

Now, the most recent owner is shutting the factory at the end of this month and consolidating its operations in Puerto Rico, where it already has a plant. Workers, labor leaders and lawmakers have said this is about cheap labor and a punishment for union organizing at the New Bedford factory.

But the army has come forward with a different explanation. "We appreciate what these individuals did in New Bedford," Brigadier General Peter Fuller said. "But now we're at the point where, guess what, we're not going to buy as many anymore."

Anymore backpacks, that is. Fuller is in charge of developing and buying equipment for U.S. soldiers. He says factories like the one in New Bedford have already completed nearly all of the 900,000 backpacks ordered for the surge in Iraq.

"We're really waning down," he said. "We started six months ago and that's when we said we don't need the 20,000 a month, but we need 5,000 from each vendor."

Fuller said even the factory in Puerto Rico will stop making backpacks in the middle of August. So, as far as saving jobs goes, there really are no jobs to save.

The company that bought the New Bedford factory, Alliant Techsystems, bought it in April, after Fuller said it was clear the contract was winding down. No one from the company has ever publicly mentioned the contract ending, and spokeswoman Amanda Covington wouldn't comment on it Wednesday.

"We knew what current orders were in the factory," Covington said. "Now in terms of what the Army's saying in terms of the future, I won't speculate on what they're saying."

Congressman Barney Frank plans to meet with the company's CEO next week. "I think it looks now like they didn't make a very good buy," he said after hearing the contract wouldn't be renewed. "What we would rather do now is have this plant sold."

Frank said he wants a new company to take over, go after more government contracts and allow unions to organize on site, and — most importantly — keep jobs in New Bedford.

This program aired on July 2, 2009.