Freightliner wins wage cuts before announcing closure

A week after union workers at Portland's Freightliner Corp. voted to accept company demands for pay cuts and co-payments for health insurance, the Germany-based company surprised them by announcing it would close its parts plant by the middle of next year, putting some 280 union members out of work.

"We are quite shocked, to say the least," said Bob Petroff, directing business representative of Machinists District Lodge 24, which represents about 900 employees at the parts and manufacturing plants on Swan Island and will take the biggest hit. "It was my understanding that if we granted the concessions, the Portland plants would be spared this time around, which they weren't."

In addition to the Machinists Union, Freightliner workers are members of Sign Painters and Paint Makers Local 1094, Teamsters Local 305 and Service Employees Local 49.

The vote to accept the concessions package was 762-227.

Just four months ago those same employees overwhelmingly ratified a new three-year collective bargaining agreement that provided signing bonuses, annual bonuses, wage increases and full maintenance of benefits. Now, many of them are looking at the unemployment line.

Freightliner reportedly is suffering from declining truck orders and an unprofitable used-truck buyback program. Stark's Internet News Service reported the company expects to lose $1.2 billion this year.

The company announced its restructuring plan at a press conference in Portland Oct. 12. In addition to the parts plant closure, Freightliner will shut down its Woodstock, Ontario, school bus assembly plant by the end of the year and its Western Star trucks assembly plant in Kelowna, British Columbia, by the third quarter of 2002.

Work at the Kelowna plant will be moved to Portland, but there was no indication of how many jobs that would create here.

Stan Deuel, assistant business manager of Portland-based Painters District Council 5, said the Kelowna plant operates only three days a week and produces only three or four Western Star trucks a day.

Workers there are represented by the Machinists Union.

Freightliner will maintain its headquarters at Swan Island in Portland, but said it will reduce its entire non-union salaried workforce by 1,100 employees. Salaried workers will take a 5 percent wage cut, lose all bonuses and start paying for part of their health insurance starting Jan. 6, 2002.

Since 1999, Freightliner has reduced its workforce by 9,000 employees - from a peak of 25,000. With the most recent announcement of 2,700 additional layoffs, the overall reduction will total 11,700. Approximately 1,800 union workers in Portland have received pink slips during that time, with graveyard and swing shifts shuttered and truck production dwindling from 112 a day to under 35.

According to Stark's News Service, Freightliner has been shopping for a buyer of its Portland parts plant since last August. The company showcased the facility to a potential buyer last month but failed to close the deal. Stark's reported that Freightliner will retain the operation "until the upside of a new business cycle occurs and the asset becomes marketable."

Deuel said workers have heard rumors for months that the parts plant was for sale. Prior to the vote to accept concessions, union officials were told the parts and manufacturing plants would be dealt with separately, Deuel told the Northwest Labor Press.

"It was still a surprise when they announced the closure," he said.

With the wage cuts, workers will make $19.05 an hour. They will receive no wage increases for the next two years and, starting Jan. 6, they must pay for a portion of their health insurance - ranging from $40 a month for a single to $130 a month for three or more; and pay more for prescription drugs (from $1 to $10 for generic drugs and $15 for name brands).

At Mt. Holly, N.C., the United Auto Workers Union, which represents about 850 workers at a truck manufacturing plant there, is being asked to open a contract ratified last December so that wage cuts and insurance co-payments can be implemented.

"They told us everyone will bleed a little, and everyone is," Deuel said.

Freightliner has scheduled shutdowns at Swan Island the week of Oct. 22 and Nov. 19.

October 19, 2001 issue

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