Navistar International Corp.’s Springfield plant could see more work and jobs here from the closure of its Garland, Texas, facility.
The truck manufacturer is expected to start moving production to other plants by January. Navistar spokesman Steve Schrier said the work will either go to Springfield’s plant, which employs more than 850 people locally, or a plant in Escobedo, Mexico.
Neither Navistar nor union officials had a timeline for the decision or would say how many jobs could come to Springfield.
If Springfield gets any of that work, the company would likely have to hire additional workers, said Jason Barlow, president of United Auto Workers Local 402, which represents Navistar employees.
In 2010, when the local plant fell to all-time low levels of less than 300 employees, the union negotiated a contract that allowed for a more flexible manufacturing strategy and for Springfield to be more competitive cost- and quality-wise.
The plant hired for the first time in more than a decade this year and has grown to close to 850 employees.
“We felt that we had, over the past few years, worked out flexibility issues within the plant and we’re just as cost competitive as non-union facilities now,” Barlow said.
Navistar announced late Tuesday it would close its Texas plant, which employs 900 people, as part of its efforts to reduce costs and become profitable again in 18 months. The company has already cut 700 employees at the corporate level through buyouts and layoffs this year as part of this strategy.
According to a news release, the closing of Garland’s plant will save $25 million to $35 million annually.
“Closing a facility is always difficult because of its impact on the many great people who’ve been part of our company,” said Troy Clarke, Navistar president and COO in a statement. “But the fact is that Navistar has too much manufacturing capacity in North America and we must take quick action to improve our business and position the company for long-term success.”
Auto industry analyst Dave Cole said companies must change to a more flexible strategy because of the intensity of competition between manufacturers and the economy.
“If you’re not operating the facility at a reasonably high level of capacity, you’re in trouble,” he said. “Manufacturing is very financially dense in terms of machinery, tools and die, where you have a very high fixed cost. If you’re operating at 60 percent of capacity, you’re losing a ton of money.”
Navistar may have to make additional cuts in the future, Schrier said.
“Everything is on the table for review,” he said. “While we’ve not yet made any decisions, there could be additional plant facility closures or sales if we determine those actions will aid Navistar’s return to profitability.”
Navistar needs to make cuts to make up the serious losses it had this year stemming from issues with engine technology that didn’t meet 2010 carbon emissions standards. The company has decided to forgo its own technology and use the engine technology used by competitors, starting in 2013.
But the damage has been done. The company lost $153 million in the first quarter of this year and $172 million in the second quarter. Navistar made no income gains until a third quarter income gain of $84 million.
Cole believes Navistar will manage to prevail.
“Navistar is a terrific company that made a couple of bad bets,” Cole said. “They’ve lived through it and have to deal with hostile investors and that’s gonna be a little sport, but you wouldn’t see people interested if the company didn’t have a lot of potential and they do.”
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