Navistar’s new four-year contract will provide job security in Springfield, and could eventually lead to more work at the facility as the company tries to regain profitability, local officials said Monday.
Union employees ratified both local and national agreements with Navistar Sunday, providing four years of job stability for about 1,300 United Auto Workers workers at the Springfield truck assembly plant. Thousands of Navistar retirees also live in the area. The contract will be in effect until Oct. 18, 2018.
“I believe that we’re set for future growth here,” Jason Barlow, president of the UAW Local 402, said of the new contract.
Locally, the UAW Local 402 represents the majority of Springfield’s employees, while the UAW Local 658 represents about 90 clerical workers. About 65 percent of local UAW workers approved the local contract, which focuses on work rules. About 71 percent of local workers voted to ratify the national contract, which passed with about 75 percent overall across the UAW company-wide, Barlow said.
Among its key provisions, the contract guarantees the Springfield facility will build a minimum of 75 trucks a day, although Barlow said employees now produce about 83 trucks every day. The previous contract only guaranteed 50 trucks per day.
The company is also in-sourcing about 100 forklift and line side material delivery jobs that are currently being provided by an outside contractor, Barlow said. Those workers will also become members of the UAW Local 402. That provision, along with the truck production guarantee, will effectively prevent layoffs until the contract expires, Barlow said.
“One of the biggest benefits here is that we’re basically guaranteed job security,” Barlow said. “We haven’t had that in this local before.”
The contract also contains a promise from Navistar not to close, sell or consolidate the Springfield facility on Urbana Road, where workers build medium- and heavy-duty trucks. It also includes language that if Navistar is ever sold, the buyer must assume the current UAW contract as part of the agreement. A boost in pay for new hires, a $1,000 signing bonus for ratifying the contract and a $1,000 profit-sharing payout each year of the deal that Navistar sees a profit were also included.
“We came out ahead in this contract,” Barlow said. “It’s one of the better contracts I’ve seen here in my 20 years at Navistar.”
The deal was critical because it secures the future of one of the area’s largest employers, said Clark County Commissioner John Detrick.
“This is a real shot in the arm and an opportunity for growth with the expansion of the truck lines here now that the company knows they have a stable contract,” Detrick said.
Navistar officials said Monday the deal will allow them to continue to embrace lean manufacturing principals, which are designed to improve product quality and make the manufacturing process more efficient.
“The new contract will help our UAW-represented facilities embrace lean principles, which will allow them to remain competitive in today’s business environment,” said Troy Clarke, Navistar president and CEO in a press release. “The contract also helps our UAW-represented employees and retirees maintain a good standard of living.”
Late last week, company officials told investors they would focus on improving quality to keep trucks on the road longer as a way to set Navistar apart from its competition.
In return, language in the contract will require UAW workers to become more flexible with their job responsibilities, among other issues, Barlow said. Workers currently do not have to agree to change jobs within the company, but the new contract requires workers to train to learn responsibilities for a second job within 18 months.
Workers could also be asked to work more overtime or weekend shifts if Navistar launches a new product or makes major upgrades to a current vehicle.
“Those were two of the big ones that we had to work around, but the ability to make more money and the ability to get new product in the plant obviously are good things, too,” Barlow said.
The company is trying to become more financially stable after Navistar struggled with an engine technology for heavy-duty trucks that failed to meet emissions standards set by the Environmental Protection Agency. Navistar abandoned that technology in 2012, despite records that show the company spent about $700 million on the system.
Navistar had as few as 300 workers in Springfield as recently as 2010, but those numbers spiked as the truck maker restructured and shuttered other facilities to cut costs and become more efficient. Barlow estimated there are now between 1,400 and 1,500 workers overall at the Springfield plant, including management and contractors.
In recent years, Navistar has also invested about $30 million into the Springfield plant for infrastructure upgrades and improvements at the paint facility.
While he wasn’t familiar with the details of the contract, the deal is a good step for the company because it provides stability, said Stephen Volkmann, an analyst from Jefferies Equity Research, which follows Navistar.
Despite years of turmoil, the company has been able to stabilize some of its finances recently and refinance some of its debt obligations, Volkmann said.
“They can really focus on the core business, which is getting back out there and trying to get back some of their market share with their new products,” Volkmann said. “It seems like it’s headed in the right direction. It’s been sort of three yards and a cloud of dust to be honest.
“It’s been a slow process, but I think each one of these steps is a move in the right direction.”