Union givebacks don't guarantee new business
June 11, 2007 - 1:00 am
Chrysler is planning 3 plants for a next generation of fuel-efficient V-6 engines, code-named Phoenix. They will replace most of Chrysler's current V-6 technology. Two of 3 sites have been selected: Trenton (Mich.) Engine and Saltillo, Mexico. Kenosha (Wis.) Engine and Toledo (Ohio) Machining are competing for the final pick. Here are some factory details.
- Engine capacity per plant: 440,000 annually
- Employees needed per plant: 485
- First production: 2009 A year ago, Paul Lambrecht tried to warn his co-workers at Toledo Machining in Ohio that work rule concessions wouldn't win them a new Chrysler group engine plant.
He hopes he is wrong. But Chrysler has designated Trenton Engine in Michigan and Saltillo, Mexico, for two of the three plants it intends to build for a new family of fuel-efficient V-6 engines, code-named Phoenix, the company is rolling out in 2009.
That leaves Toledo Machining in a battle with Kenosha Engine in Wisconsin for the last of the three engine plants, says Lambrecht, a councilman in the Toledo suburb of Oregon, Ohio. And because Toledo Machining has never made engines - it makes steering columns and transmission parts - odds are not good that the plant will get the nod over Kenosha, he says.
An announcement on the winner could come as early as this week.
"I never once believed that if we took concessions that an engine plant would come to Toledo Machining," says Lambrecht, 40.
The situation underscores how automakers demand work rule concessions from local unions in exchange for the promise of new plants and expansion. But there are no guarantees of new business for approving these money-saving pacts. It's just the price for getting in the game.
Chrysler says the upcoming announcement will clarify the situations at Kenosha and Toledo Machining, in Perrysburg, Ohio.
Asked last week whether Toledo Machining can expect new investment if Kenosha gets the final Phoenix engine plant, Chrysler manufacturing chief Frank Ewasyshyn answered, "Stay tuned." A source this month said Chrysler assured Kenosha officials recently that they would get a Phoenix plant.
Chrysler is pursuing a major powertrain buildup even as it is being sold by DaimlerChrysler AG to private equity fund Cerberus Capital Management LP.
Chrysler says it will spend $3 billion in the coming years to improve the technology and fuel efficiency of its engines, transmissions and drivetrains. In the past month alone, the automaker has announced a $730 million Phoenix engine plant in Trenton, Mich.; a $570 million plant for the same program in Mexico; and a $700 million axle plant in Marysville, Mich., to replace its Detroit Axle plant.
Ewasyshyn said the $160 million cost disparity between the Mexican and U.S. Phoenix engine plants is due in part to lower labor costs and the need for less construction materials in Mexico. Each plant will be capable of producing 440,000 engines annually and employ 485.
Lambrecht says union workers made a mistake to accept work rule concessions at Toledo Machining with no guarantees for additional investment.
The work rule changes, adopted a year ago, eliminate most job classifications, permit using a swing shift and allow for production cuts without reopening the agreement, he says.
Business could dwindle
The Toledo Machining workers were told the changes would give them a shot at the engine plant. Failure to approve them meant that business inevitably would dwindle at the plant, Lambrecht says.
He says the UAW pitched the changes on a Monday and held a vote two days later. The plant employs about 1,400.
"I've been in politics long enough to know that you push things through fast when you don't want people to really know what's going on," he says.
Lambrecht says neither the union nor plant management would estimate the cost savings from the work rule changes. But they can be substantial. The UAW declined to comment.
General Motors, for example, hopes to save about $54 million a year from proposed work rule changes, including the outsourcing of some subassembly jobs, at its Fairfax assembly plant in Kansas. The 2,500 UAW workers at the plant have balked at the demands, as have 2,600 workers at GM's Lordstown, Ohio, assembly plant.
But looser work rules are becoming commonplace at Ford Motor Co. and Chrysler. Last month, manufacturing consultant Ron Harbour said workers who refuse the changes perpetuate a significant cost disadvantage that the Detroit 3 have with the Japanese automakers.
"It's very shortsighted," he said of workers' rejecting work rule changes.
Lambrecht's future with Chrysler also is up in the air. He was terminated from his job as a grinder at Toledo Machining about a month after speaking out against the concessions. He says that although he was on medical leave at the time, plant management said he failed to provide a timely medical update.
Lambrecht says he is trying to be reinstated through the union grievance process.
"You know, I don't philosophically disagree with the changes that we've made toward a team-concept way of production," he says. "What I do object to is the way it was shoved down our throat."