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The eBearing News
April 11, 2006
Federal-Mogul Closing St. Johns Plant
copyright © 2006 eBearing Inc.
Federal-Mogul Corp. (USA; OTC BB:
FDMLQ;
operating under Chapter 11 bankruptcy protection since
October 2001) announced it will be closing its St. Johns, Michigan engine bearing plant.
The closing is part of a new, three-year, global manufacturing restructuring plan announced
earlier this year. The plan will result in approximately 4,500 jobs lost and 25 plants closed.
The first layoffs at St. Johns are due to come in July of this year, while the plant will be phased down
and largely closed by the end of 2006. Apparently to meet the letter of its obligations, F-M said it
will then keep a skeleton staff on until October 2008, when the current UAW contract expires.
Built in 1945, St. Johns produces engine and transmission bearings, bushings and washers,
primarily for the North American auto
industry. Saddled with excess plain bearing manufacturing capacity, F-M said St. Johns' work
will be split among
plants in Greenville, Michigan; Blacksburg, Virginia;
Puebla, Mexico; and Shanghai, China.
By the end of 2006, approximately 300 of St. Johns' 420 workers will be laid off. Another 100
will be let go by the end of 2007, and the final crew will be out no later than October 2008.
Reports indicate as many as 100 workers may be given the option to transfer to Greenville.
Many workers at the plant said they knew long ago it was closing, despite several
efforts since 2004 by state and local officials to give Federal-Mogul tax breaks and a cornucopia of other
incentives to keep St. Johns open and critical auto industry jobs in Michigan.
St. Johns has reportedly been building to inventory for some time, fueling expectations there
would be a closing announcement coming soon.
One worker told eBearing, "Everyone knows you don't build to inventory these days unless you're
expecting a strike, a lockout or a shutdown."
In 2004, F-M wrested a long series of abatements and concessions by threatening to close St. Johns.
Among them are a six-year tax abatement from St. Johns, based on a promised F-M investment of at
least $5 million in new equipment, worth $225,000 the first year. The state of Michigan set up a
package of more then $65 million in tax benefits to keep F-M jobs in the state.
Three of the tax cuts were Public Act 79, Public Act 80, and Public Act 81.
• Public Act 79
[2003 HB 4472]
• Public Act 80
[2004 HB 5445]
• Public Act 81
[2003 SB 824]
Seeking that government aid and union concessions in 2004, F-M said sales of products produced at St.
Johns dropped by $20 million between 2000 and 2003, even as direct labor costs and overhead
increased. In August 2004, F-M said St. Johns earned just $66,000 on sales of
over $6 million. Cost controls are needed, said Federal-Mogul, to offset the higher costs
of raw materials and yearly price reductions demanded by its automotive OEM contracts.
The United Auto Workers hammered out an agreement with F-M for a wage and benefits concession
package worth $9 million over the course of the contract through November 2008.
Despite the programs and concessions, in early 2005, Federal-Mogul began moving some
production from St. Johns to Puebla.
A spokesman for the Michigan Economic Development Corporation said F-M stands to lose the
tax advantages and credits, and the state will be reviewing the programs involved.
related articles on eBearing.com:
Jun. 2004 F-M Greenville bearing plant will stay open
Sep. 2004 F-M threatens St. Johns plant shutdown
Nov. 2004 F-M St. Johns plant will stay open
Dec. 2004 F-M lands Michigan job retention incentives
In a statement, Federal-Mogul said, "The action today is a result of the
difficult business challenges and the need to
improve global competitiveness. This is in no way a reflection on the commitment of the
St. Johns employees."
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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
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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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