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The eBearing News
June 21, 2004
Timken and USWA Meet to Discuss
Canton-area Bearing Plant Closings
copyright © 2004 eBearing Inc.
The Timken Company (USA) and the United Steelworkers of America (USWA) met last week to discuss
the announced Canton-area bearing manufacturing plant closings, potentially involving up to 1,300 lost jobs.
Proposals to close the three bearing plants were publicly revealed by Timken on May 14, after it says the
union was making it impossible to proceed with negotiations which might possibly lead to making them
viable once again.
• article: Timken proposes closing three Canton-area bearing plants
A statement by Timken said the company, "met yesterday to begin the effects bargaining process involving the Canton
bearing plants."
Effects Bargaining is a term used to describe the process under which employers are required to
negotiate in good faith with the union bargaining unit regarding the effects of a decision to close a
plant, sell it off
or in the event of an ownership change. The National Labor Relations Board can and will sanction
a company if it fails to engage in effects bargaining over issues which normally involve
severance, pensions and benefits for the displaced workers.
But what actually came out of the meeting was not so clear-cut. The USWA said, "the parties reached an
understanding to
suspend discussions related to 'effects bargaining' and direct our efforts to a more constructive discussion
and to pursue opportunities which could lead to traditional bargaining for a new labor agreement."
Although the union's statement seemed to allude to the possibility of re-opening the contract now
slated to run through late 2005, Timken released a statement which seemed to take a harder line.
The company said, "The meeting was productive" and
they, "met yesterday to begin the effects bargaining process involving the Canton bearing plants."
While it initially appeared both sides might talk themselves into negotiating corners, the sheer volume
of rhetoric fell off sharply after the initial volleys, even as outside commentators, would-be politicians
and other hangers-on continued to fan the flames to further their own agendas.
A key sticking point is obviously the makeup of the USWA's Canton-area Timken bargaining unit. The same USWA
contract covers workers at Timken's steelmaking operations and in the local bearing manufacturing plants.
Timken alluded to the issue in its effects bargaining statement, saying, "In tandem with this process, the
parties agreed over the next few weeks to explore the possibility of opening formal negotiations over the current
labor contract."
The USWA's later statement seemed calculated to send a message to Timken discouraging that tack, as it said
it is committed to, "the saving of bearing jobs and our effort to attain a contract that provides long-term
security for our members in both the bearing and steel divisions."
A labor economist eBearing interviewed said Timken made, "a blunder," years ago by allowing the bargaining
unit to cover such dissimilar working populations. "At one time, overly-rich contracts were commonplace in
the U.S. steel industry, contributing mightily to its demise. That same contract, with the idea that it should
be applied to a bearing plant simply out of geographic convenience, is very much out of place today."
Splitting the bearing and steel contracts, however, is apparently not on the table as far as the USWA is concerned.
David McCall, USWA District 1 Director, said, "It's one contract. We're certified as one bargaining unit."
Some fundamental operating truths, on the other hand, might be outside the sphere of union-company negotiations.
The facts remain, for example, that the three facilities targeted by Timken are antiquated, and physically
older plants often have constraints poorly suited to the needs of modern manufacturing processes.
Canton Bearing was built in 1901, following the company's move from St. Louis, and was Timken's first
dedicated bearing plant. The Gambrinus facilities, about two miles away, date from 1929.
And sales are soft. As Timken said in its May announcement, sales are down more than 27% since 1999,
and the number of workers is down to 1,300 today from its recent high of 2,100. All this is in top
of approximately $100 million of capital investments Timken says it has made in the facilities.
Timken released figures indicating employees at the three plants earned an average of $26.50 per hour,
including overtime and incentive pay, in 2003; company-paid benefits added $17,000 per worker.
That total, which eBearing calculates at approximately $35.00 per hour based on a 2,000 hour year
(26.50 + 8.50), ranks
among the world's highest outside Germany and the U.K., where, saddled with higher overhead
and fewer working hours per year, there are few cost-competitive bearing manufacturing operations.
According to eBearing's own comparison calculations, normalizing to a 2,000 hour year, $35.00 an hour
is somewhat higher to much higher than Timken's competitors pay in plants producing fundamentally similar
products with similar production processes and in-house operations.
Timken suggests its Canton-area bearing plants have labor costs more than double that of their
unionized competitors. eBearing estimates that may overstate the discrepancy in most cases, but
perhaps not by much.
Going unmentioned by both sides is what the future will inevitably bring.
Coming years will see increased competition by offshore competitors for the specialty bearings
produced by Timken's Canton-area plants. Nonunion, with radically lower cost structures, few of those
future competitors or their facilities are in any position to successfully compete
head-to-head against Timken today. But bearing manufacturing technology is advancing
rapidly in every corner of the world, as is all-important access to high quality raw materials.
Gradually, those competitors will begin targeting Timken's Canton bearing plant products and customers.
According to eBearing's sources, no further negotiations are currently scheduled.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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