Layoffs and Manufacturers and Navistar and Manufacturing & Technology

Union says Navistar foundry closing a surprise

January 28, 2009

United Auto Workers officials are hoping to find a way to keep open the foundry that has been associated with an east-side engine plant for 70 years, despite Navistar International Corp.'s plans to close both facilities by July 31.

Illinois-based Navistar said yesterday it would close the 1.1 million-square-foot plant and the adjacent Indianapolis Casting Corp. foundry, costing about 700 employees their jobs.

The engine plant was expected to close after Navistar agreed to stop making diesel engines for Ford Motor Co. - its only customer.

"They had met with us a couple of weeks ago and said the engine plant probably was going to close," UAW Region 3 Director Maurice "Mo" Davison told IBJ yesterday. "The foundry caught us totally by surprise."

ICC, which employs about 500, had been somewhat insulated from earlier layoffs because it makes engine blocks for the whole company, not just the neighboring plant.

After meeting with a Navistar representative yesterday, Davison reported, "They're not sure where they're going to produce this motor block."

As recently as 2005, the east-side plant was thriving, with 1,100 union workers on its assembly line and another 550 at the foundry.

Things started to change in January 2007, when Ford sued Navistar, complaining that its supplier wasn't sharing in warranty costs on its engines and had raised prices "without adequate explanation or support for its actions."

The dispute was resolved this month, but the result did not bode well for Indianapolis as Ford and Navistar said the supply contract would end Dec. 31.

While executives were wrangling in court, demand for pickup trucks plummeted. In May 2008, Navistar laid off about 500 local assembly workers because of low demand. Spokesman Roy Wiley said layoffs in Indianapolis amounted to about 1,000 for the year.

While the assembly line still employs about 100 people and the plant has another 100 working in engineering, clerical and other jobs, Wiley said it has not produced a single engine since May.

Severance packages are still to be negotiated. Davison said the UAW would be trying to land benefits for the hundreds of represented workers who were laid off in 2008, as well as the 700 people affected by the closing.

Davison said he's asking for a meeting with Navistar to reopen the UAW's latest agreement and try to lower costs. At the same time, he said UAW officials in Detroit would try to put forward an offer to Ford, matching or beating whatever deal the company inks with a new supplier.

"We're going to do everything we can possibly do to keep that foundry open, as well as keep the engine plant open," he said.

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