Portland truck plant layoffs put Machinists pension in danger


Daimler’s Portland truck plant set a new record this summer: Fewest manufacturing jobs ever. The plant, which entered the 21st century with about 3,000 production workers, today has 570. That’s after the most recent round of 170 layoffs in June. Remaining at the plant are about 350 members of Machinists Local 1005, 85 members of Teamsters Local 305, 50 members of Sign Painters and Paint Makers Local 1094, and 18 members of Service Employees Local 49.

The Daimler layoffs won’t just hurt Daimler workers: Machinists District Lodge W24 Business Rep Joe Kear says the latest downsizing will push the multi-employer Automotive Machinists Pension Plan toward insolvency within 20 years.

The Seattle-based pension plan, founded in 1958, is responsible for the retirement benefits of 8,416 current and former employees of firms that have had contracts with the Machinists union. But the pension plan has been severely weakened by job losses at participating union employers: As of the end of 2014, the pension was paying benefits to 4,137 retirees, while taking in employer contributions for just 1,605 active workers. (And another 2,674 former employees are entitled to benefits in the future.) That “upside down” structure makes it difficult or impossible for the fund to recover from investment losses in the 2008 financial crash. As of the end of 2014, the pension plan had an estimated $1.5 billion in future liabilities, and $717 million in current assets.

Daimler — the pension plan’s largest employer — is currently paying $10.62 an hour into the pension, of which $6.15 is a surcharge to make up for the plan’s funding shortfall. That surcharge was part of a rehabilitation plan designed to help the pension plan recover, but thanks to the newest layoffs, it won’t be enough. Looming insolvency could even lead pension plan trustees to seek government permission to reduce current retiree benefits, which they’re allowed to do under a controversial law passed in 2014.

What to do about the Machinists pension will be a big part of the next joint union contract negotiations with Daimler, which are set to begin Sept. 20. The current contracts covering members of the four unions expire on Oct. 28. Three years ago, Machinists and Painters struck for 23 days before the current Daimler deal was reached.

Ultimately, unions say U.S. trade policy—especially the North American Free Trade Agreement—is largely to blame for the long-term decline in jobs at Daimler’s Portland plant. Portland is where Freightliner was born, but Daimler gradually shifted its production to Mexico, then stopped its Portland production altogether in 2007. Since that time, the Portland plant has produced Western Star trucks. [Daimler bought Western Star in 2000, and closed the Kelowna, British Columbia, plant where that truck originated.]

A federal government program called Trade Adjustment Assistance (TAA) provides extra benefits to manufacturing workers who lose their jobs because of trade. Even though there were 270 layoffs at a Daimler plant in Mexico too, the Oregon Employment Department has asked the U.S. Department of Labor (DOL) to approve TAA benefits for the latest layoffs. The state’s petition to the DOL cited reports that Portland work is being moved to Mexico and India.


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