Updated: 9:30 a.m. Friday, June 27, 2014 | Posted: 11:00 p.m. Thursday, June 26, 2014

Navistar, union negotiations crucial for Springfield plant



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Navistar, union negotiations crucial for Springfield plant photo
Workers at Navistar drop an engine onto a chassis on the assembly line at the Springfield assembly plant. Bill Lackey/Staff

By Matt Sanctis

Staff Writer

Navistar opened negotiations with members of the United Auto Workers Local 402 this week, kicking off a weeks-long process that the union and local officials described as crucial to the future of the Springfield plant.

The truckmaker has long played an important role in the region’s economy and is one of the county’s largest employers with more than 1,100 employees, including 900 union workers, and thousands of retirees in the area.

The local negotiations are important because it could decide what role the Springfield facility plays in Navistar’s future, said Jason Barlow, president of UAW Local 402.

“The local negotiations have more impact because we control the future of Springfield,” he said.

The manufacturer is working to make a comeback after struggling with an engine technology in recent years that failed to meet carbon emission standards set by the Environmental Protection Agency. However, the Springfield facility has benefited as the company restructured to become more efficient and cut costs.

The UAW’s national contract with Navistar expires on Oct. 1, and addresses issues like wages and retirement benefits, with those negotiations beginning in late August or early September.

The local unit’s negotiations that start this week will tackle issues such as work rules, safety conditions and scheduling.

The Springfield plant faced an uncertain future just a few years ago, Barlow said. In 2010, the Springfield plant had as few as 300 employees, but has since grown to more than 900 workers. Navistar also invested close to $30 million in the plant for infrastructure and improvements at the paint facility.

In 2013, Troy Clarke took over as president and CEO at Navistar, and the company also hired Anthony Alferio as the Springfield plant manager.

Since then, the company has also instituted a lean manufacturing initiative to work more closely with the union to improve product quality and efficiency. The goal is to reach an agreement that allows those improvements to continue, said Steve Schrier, a spokesman for Navistar.

“Our goals for Springfield negotiations are to work with the UAW-represented employees to make competitive improvements that will help Navistar succeed in the long term,” Schrier said. “We’ve just scratched the surface with introducing lean manufacturing principles at Springfield.”

The agreement will have to serve long-time workers and new hires, Barlow said, but he is optimistic a deal can be reached that benefits both the manufacturer and the union. He declined to discuss what specific items the UAW might seek.

“Obviously you’re going into negotiations and both sides want different things for their constituents,” Barlow said. “At the end of the day it comes down to a compromise.”

The pace and frequency of negotiations will be set by local Navistar and UAW teams, Schrier said. Typically, negotiations can last from five to seven weeks, Barlow said.

Navistar has far fewer employees than at its peak, but it is still one of the region’s largest employers and its reach stretches beyond just the workers and their families, said Tom Franzen, assistant city manager and director of economic development for Springfield. The company also has thousands of retirees who are impacted by negotiations at the local facility.

“It certainly impacts the existing employees, as well as the suppliers,” Franzen said. “I think also it sometimes impacts the buying habits of the existing retirees who still live in our community.”

The negotiations will also be important to ensure the local facility is competitive as the truck manufacturing industry rebounds from the Great Recession, said John Detrick, Clark County commissioner.

“We are hoping both sides can work out an amicable agreement and the local plant can start to grow,” Detrick said.

The company reported a loss of $297 million in its second quarter this year, but there were encouraging signs in that report, said Vicki Bryan, an analyst at Gimme Credit, who tracks the company.

Navistar’s recovery could still take years, she said, but she credited Clarke and the company’s leadership with making changes to get the firm on stabler ground. Negotiations with employees will play an important role in keeping the company competitive, she said.

“Clearly Navistar’s employees play a critical role in its still fragile future, and they also have borne the brunt of substantial cost cutting necessary to sustain the company until it can successfully navigate a difficult turnaround against stronger and more financially sound competitors with proven products who have no intention of giving ground,” Bryan said.

The most important difference between now and two years ago is that Navistar now has substantially more capable and credible management in place, she said, and has formed key technology partnerships with well-regarded Cummins, restoring confidence in the company’s future.

The agreement must be approved by membership, Barlow said, and it’s likely neither the company nor union will get everything they want.

“We want something that represents the entire membership and benefits each and every one of us,” Barlow said.


Staying with the story

The Springfield News-Sun will continue to provide unmatched coverage of Navistar, one of Clark County’s largest employers. The newspaper spoke to officials from the local UAW, the company and elected officials to explain why this latest round of union negotiations is important to the local facility’s future.

By the numbers:

1,100 — Approximate number of total employees at Navistar now

900 — Approximate number of union workers at Navistar

300 — Approximate number of employees at Navistar in 2010

$30 million — Navistar’s recent investments in the Springfield facility

$297 million — Navistar’s estimated losses in most recent fiscal quarter

 
 

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