Ford and Lawsuits and Law and Manufacturing & Technology

Ex-workers sue Navistar, charge plant closing violated contract

September 5, 2009

Forty-three former employees of Navistar Inc.’s shuttered diesel engine plant have sued the company, claiming it breached their collective bargaining agreement by moving plant work in recent years to non-union facilities.

The plaintiffs, mainly skilled tradesmen, have the ambitious goal of reversing the plant’s closure and getting reinstated to their old jobs. They’re also seeking damages, including lost retirement, life insurance and health insurance benefits.

Navistar closed the plant at 5565 Brookville Road last month, ending seven decades of production at the site and wiping out 700 jobs.

“Don’t look at this as just a labor/management dispute. This is about a lot of citizens of this area who have a contract with an international corporation,” said attorney Michael Kendall, a Carmel attorney who represents the plaintiffs. “And instead of getting more pay in the contract, they got more rights, like a right to be recalled if you had work, or a right not to be laid off and work subcontracted to somebody else.

“A contract that says, under the law, you can’t avoid or evade the contract by moving the work elsewhere and then saying, ‘Oops, we don’t have any work for you,’” Kendall continued.

Navistar limited its response to a single statement.

“It’s totally without merit and we’ll defend vigorously in court,” said Roy Wiley, spokesman for Warrenville, Ill.-based Navistar.

Workers filed the lawsuit in late July, six months after Navistar announced plans to close the sprawling, 1.1-million-square-foot plant.

For most of its history, the factory operated under the name International Harvester and built a range of products, from farm implements to refrigerators. In recent years, it made only diesel engines—a booming business before the recession set in.

Just four years ago, the plant had 1,100 employees working two shifts, rolling out 280,000 engines annually. That year, Navistar invested more than $300 million to upgrade the facility to meet new federal Environmental Protection Agency diesel guidelines. Its main customer was Ford Motor Co., which bought the engines for its F-series pickup trucks.

But according to Kendall, Navistar had been quietly subcontracting aspects of its operation for years to non-union facilities, a process he claims the company accelerated as the economic downturn worsened.

Kendall said the plant’s collective bargaining agreement prohibits elimination of jobs, via either layoff or attrition, if the result simply shifts production elsewhere.

Some of workers’ concerns date back a decade, Kendall said. He said United Auto Workers stewards have documented hundreds of unresolved grievances over Navistar’s improper subcontracting and subsequent layoff and recall procedures.

Further, Kendall argues, Navistar bungled the plant’s closure. He said the employees’ contract should have given them the opportunity to negotiate other outcomes. And the lawsuit will explore whether the plant, which is still fully equipped, could begin production again.

Navistar has blamed the plant’s closing on losing a diesel supply contract with Ford, the plant’s primary customer. Ford had bought engines from the company for 30 years.

It seems highly unlikely that Navistar would reconsider its decision or that a court would order it to reopen the plant, said Ed Roberts, the Indiana Manufacturers Association’s vice president of human resources, labor, legal and political matters.

“It’s sort of like saying, ‘You folks got this divorce, but what we want is for you to get married again,’” he said. “They’re asking the court to run the place into the ground.”

Kendall conceded the odds are long. But he said he was confident he can show Navistar breached the collective bargaining agreement, and that could lead to a better outcome for former employees, such as new jobs elsewhere within Navistar, or full retirement and health benefits.•

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