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The eBearing News
June 28, 2004
Federal-Mogul Greenville
Bearing Plant Will Stay Open
copyright © 2004 eBearing Inc.
Workers at Federal-Mogul Corporation's (USA) Greenville, Michigan engine bearing plant voted to accept
a wage and benefits concessions package worth over $5 million, capping a multi-pronged, five-month effort to
keep the Greenville plant open and save 310 badly-needed area jobs.
Just two weeks after learning it would lose 2,700 Electrolux refrigerator plant jobs to Mexico by
the end of 2004, Greenville was unprepared when Federal-Mogul notified employees in January that their
award-winning engine bearing plant was no longer competitive. F-M said unless a major $5+ million package of
wage and benefit concessions and incentives could be developed, Greenville would be shuttered and its
production shifted to other facilities.
Greenville is a town of 8,700 people, located northwest of Flint, and north of St. Johns, site of
Federal-Mogul's other area manufacturing plant.
Built in 1940, Greenville was only Federal-Mogul's fourth factory. It initially produced propellers
for PT boats but was later reconfigured to manufacture engine bearings.
After being expanded 17 times, the Powertrain Division's Greenville bearing plant now covers more
than 210,000 square feet. Running three shifts, its 310 workers manufacture original equipment and
replacement engine bearings, primarily for heavy-duty applications.
Key customers are Ford, Detroit Diesel, Caterpillar, Toyota and DaimlerChrysler. Through the years,
Greenville has won a wide array of customer quality and performance awards. Recently, Ford identified
it as a performance benchmark vendor facility, defining the upper end of quality and performance that could
be achieved in similar plants.
Although Greenville workers rejected the United Auto Workers in a 1942 organizing drive, they are now
represented by two UAW locals. Local 2017 represents approximately 240 production workers, while Local 1158
represents approximately 30 skilled trade employees. Local 2017's contract was set to expire July 28, 2004,
while Local 1158's contract expires in August 2004.
Federal-Mogul, operating under Chapter 11 bankruptcy protection since October 2001, did not dispute
workers' charge the plant and Powertrain Division have not only been profitable but in fact
Greenville has beaten its plan for each of the past seven years.
Yet, Federal-Mogul said, its engine bearing sales overall are down 33% since 1999. A January 27
package sent to union representatives indicated, "zero to little success," with concessions in the
upcoming contract negotiations, "will force a decision to close Greenville over time."
Hourly labor costs, including benefits, currently account for 43% of the Greenville plant's
total operating expenses.
On February 20, Greenville Plant Manager Mike Evans met with all three shifts, giving a PowerPoint
show, explaining the company's competitive and operating situation.
Many observers have suggested Federal-Mogul was irked by the extensive $48 million incentive package Michigan
state and local authorities developed in their failed attempt to keep Electrolux. Singling out the Michigan
bearing plants in Greenville and St. Johns, F-M spokeswoman Marie Remboulis said, "It is clear to us, without
lowering the cost base of these plants, they will not be competitive in the long run."
Michigan has lost over 150,000 manufacturing jobs since 2001; legislators are on a bipartisan crusade to save
every job they can. Responding quickly to Federal-Mogul's
move, Governor Jennifer Granholm launched a campaign to keep Greenville, and by association, St. Johns.
With over 800 jobs apparently at stake, she said, "We want to make sure we are doing everything we can to make it
competitive for them to stay."
Local authorities had little to offer; Federal-Mogul is already enjoying a 50% tax abatement at Greenville;
it now pays approximately $51,000 per year in property taxes. Its $129,000 yearly water bill is important
to keeping the city operating budget balanced.
Michigan had another possibility, using the Michigan Economic Growth Authority (MEGA) board.
MEGA had been chartered to grant tax breaks to large companies that create jobs or retain at least
500 jobs in single large facilities. Governor Granholm proposed changing its charter to fit Federal-Mogul
and offer incentives to companies that retain jobs in Michigan's smaller manufacturing locations.
On February 24, the Michigan House passed a bill changing the MEGA board's charter, specifically to address
the Federal-Mogul situation. MEGA is now allowed to offer tax credits to companies keeping at least
150 workers at any one facility and retaining at least 1,000 workers in the state. The same amendment gives
MEGA authority to ensure the promised jobs are kept in Michigan. In what amounted to a
legislative fast lane, the state Senate passed the MEGA change legislation on March 31, 2004.
State Senate leader Ken Sikkema said, "Protecting and growing jobs is not a Democratic or Republican issue;
it's a Michigan issue. When it comes to making sure families have good-paying jobs, it's all hands on deck.
We are going to do whatever it takes to keep those jobs in Michigan."
In a ceremony at Greenville, Governor Granholm signed the legislation into
law on April 21, 2004.
With state incentives in place, Federal-Mogul still needed significant wage and benefits concessions
from Greenville employees, targeting a total of $5 million over the next five years.
Negotiations were an uphill battle; many employees believed they were being unfairly penalized with
concessions when their own operation was profitable while others were not. And at a base of $17.50 to $18.00
per hour before benefits, they did not feel they were being overpaid. Finally, some workers were loathe to
consider any givebacks, believing F-M would close Greenville and St. Johns, "no matter what we do."
By June 3, F-M and Local 2017 reached a tentative agreement. The agreement called for a wage cut of
$1.19 per hour over the next four years, cutting four paid holidays per year, and increasing the employee's
portion of health insurance costs.
Workers received the detailed preliminary agreement on June 9, and a vote was taken June 13.
Prior to that formal vote, eBearing was told there was concern some "really torqued-off" workers were
predisposed to making a "statement" by rejecting the pact and then forcing a strike, assuming they had
nothing to lose with their jobs already lost.
The June 13 vote failed. Local 2017 had 182 workers voting; 160 against, 22 in favor.
However, Local 2017 President Jeff Davis immediately came under fire. The vote had been taken
as a "stand up vote," while a contentious contract vote is normally taken via secret ballot.
UAW District 1D Regional Director Dan Oetman reportedly expressed concern about the vote's validity,
citing concerns about peer pressure and intimidation, and saying a secret ballot would be more appropriate.
Mr. Davis refused to back down, saying the international had to prove the vote was invalid
before he would agree to a secret ballot.
Mr. Davis told the Grand Rapids Press, "One way or the other, we'll go back to the bargaining table,
whether it's to talk about a closure agreement or another contract."
Local 1158 President, Gary Christensen, told the Detroit Free Press, "Sometimes, you just have
to take a stand."
The following day, Federal-Mogul issued a statement saying, "It is with regret that we will now need
to begin negotiations of a plant closing agreement. Many people on both sides of the table put a lot
of hard work into creating a package that would keep Greenville working. It is disappointing that all
that hard work was thwarted."
Told of the vote, Governor Granholm's spokeswoman said, "We are extremely disappointed," but that
the Governor immediately began working the phones to broker an agreement.
By June 17th, union and management representatives had agreed to modify the rejected contract,
altering the timing of the concessions and a few other details.
Local 2017 met again on June 19th, this time voting by secret ballot. Of 242 eligible, 192 voted.
The contract passed: 103 for, 89 against.
The revised four-year contract still has the $1.19 per hour wage cut over four years, but it will now
start in the second year. A new prescription drug plan also goes into effect during the contract's
second year, and medical co-pays increase across the board. Paid holidays are still cut by four.
The medical co-pay will rise by $15 over the final
three years. A $10 prescription co-pay becomes $20, while the mail-in co-pay goes from $15 to $30.
And workers must pay 10% of all major medical procedures, with a $1,500 cap.
It is assumed, but not assured, that Local 1158's skilled trade workers will negotiate and accept
a similar set of givebacks in their new contract, due up in August.
Federal-Mogul is still likely to move lower-margin automotive bearing production out of Greenville, with
a corresponding loss of 70 to 90 jobs over the next five years.
But most see the agreement as a victory for both sides, especially in light of the need to keep not only
Greenville but the larger St. Johns plant operating and in Michigan.
Federal-Mogul Powertrain Group HR Director Scott Pepin said, "This is a testament to our employees'
understanding of the challenging situation at the Greenville facility and the ability of Federal-Mogul
and our employees to come together and reach a mutually beneficial agreement."
Governor Granholm's spokeswoman, Liz Boyd, said, "The Governor could not be happier."
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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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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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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