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Indy metal-stamping plant faces many hurdles

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Workers at General Motors' Indianapolis metal-stamping plant are finally casting ballots this week on a contract proposal from JD Norman Industries—and possibly paving the way to a change of ownership.

Persuading union labor to accept a pay cut would be a feat, but it won't be the last challenge that Norman Industries would face, said Jay Baron, director of the Center for Automotive Research in Michigan.

“Even [paying workers] $15 an hour, it’s not obvious to me somebody’s going to get rich" in the metal-stamping business, Baron said. “There's almost nobody in the world today making a lot of money in stamping.”

For three years, General Motors has planned to close or sell the 2-million-square-foot plant west of downtown by September 2011. The deal with Addison, Ill.-based Norman Industries looks like an ideal way to save hundreds of local jobs. UAW officials are even hoping to see their membership grow under Norman's ownership.

“What we’re hoping and we believe will be successful, [is that] Norman Industries takes this plant over and becomes profitable,” said Maurice “Mo” Davison, director of UAW's Region 3 office. At the end of the five-year contract, he said, “we can sit down and share in that.”

Norman Industries owner Justin Norman did not respond to a request for comment. He's said in the past that in additon to becoming a GM supplier, he hopes to win contracts from other manufacturers in the region.

Davison believes that under Norman's ownership, the plant could go from about 640 hourly workers to more than 2,000. Norman has also said he would look to keep the plant's engineers and other salaried employees.

Baron, who wasn't familiar with Norman Industries in particular, said that even after negotiating a lower pay structure, the company would have to overcome a “glut” of U.S. metal-stamping capacity. What's more, the Indianapolis plant was built under the auto industry's old model of forming sheet metal for multiple assembly lines from a central location. “There's just all kinds of inefficiencies,” he said.

The deal is fueled as much by GM's needs as by Norman's business plans. One retired GM executive in Indianapolis said closing the plant could cost GM at least $50 million, a figure that Baron said is plausible.

The whopping closure cost stems from the expense tied to removing and possibly relocating GM's massive presses and cutting dies, according to the retiree, who asked not to be identified. The presses are as much as three stories tall, and dies can be as large as 10 feet by 15 feet, depending on the size of the vehicle part they are used to make.

And GM, which has emerged from bankruptcy and is preparing for a public stock offering, might need the production capacity from the Indianapolis plant.

“They didn't lose as much market share as they thought they would in bankruptcy,” said Tracy Handler, a market analyst at IHS Global Insight in Detroit.

Metal stamping in particular has a long lead time. “It would be really hard to change suppliers mid-stream,” Handler said.

With the Indianapolis facility open but under new ownership, GM would get what it needs without the cost of long-term employees, Handler said. One other benefit is in public relations. If demand dries up in the future, GM wouldn't be the one to finally close the historic plant, Handler said. “It gets the negative publicity off GM.”

UAW Local 23 resisted negotiating with Norman Industries. The proposed base wage of $15.50 an hour for unskilled labor represents nearly a 50-percent cut. Norman's offer includes a host of incentives, including cash bonuses of up to $35,000 and preserving worker's right to transfer to other GM-owned plants, but local union leaders worry that the pay cut would ripple throughout GM.

Davison, who endorses Norman's offer, said that fear is unfounded. He said UAW negotiated the wage so it would be on par with second-tier wages already in place at GM plants. The regional office arranged for the vote to be held by mail-in ballot. The American Arbitration Association is overseeing the process. The deadline for receipt of ballots is Sept. 27.

While labor costs are an issue throughout the auto industry, Baron said it may be tougher for Local 23 to accept Norman's wage cut because of the nature of metal stamping. “They are amongst the toughest places in the auto industry to work,” he said. “Loud, dirty ... the fumes. The whole building's shaking. There's a lot of pressure to keep the machines running all the time. Those workers earn their pay.”

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  • Good place to work for JD NORMAN
    I just wanted to let all of you to know, in the pass our Company was under chapter eleven, but JD NORMAN came in and acquired our Company over three years ago we're increased our Bussinees up to 60% and we're healthy Company keep continouis growth daily basis and its a very good place to work with.
    Sorry for all the people was voted no for this offered from JD NORMAN INDUSTRIES.
  • Wrong Again
    No, you we will not be in the unemployment line together.My collective bargaining agreement stipulates that I will receive pay for two years while waiting for another GM plant to pick me up. I'll be on vacation.
  • In the Same Unemployment Line
    If you really think your strength-in-numbers and collective bargaining agreement keeps you from being out on a limb like myself then I think you'll soon find out otherwise when you and your union brothers vote yourselves out of a job.

    I wasn't arguing who is smarter than who. EVERYONE is exposed to the same realities of today's marketplace. As a result, we'll both be in the unemployment line together.
    • Because Stupid
      Why am I so special? Because there is strength in numbers. Collective bargaining assures me that I am not out on a limb like you. You see, I got a union job and then went to college, so I don't have any loans. Get the picture? You thought you were special, and well, you are not. I am because I am a part of something greater than myself. Too bad you were not smart enough to do the same.
    • Be Grateful
      Labor rates are dictated by the market. Unless you are willing to pay more for your vehicle, don't blame the owner for trying to be competitive to win business. The going rate is really in the 2nd tier around $10.00 not $15.00.
    • No Sympathy
      For all you union workers who are upset with this situation, sympathy won't be coming from me anytime soon.

      I am a marketing professional with a college degree who was laid off in June making a six figure annual salary. I had not had a raise in two and a half years, got no severance benefits or mid five-figure "buyout" and saw my cost of health insurance more than double as a result of my layoff. Now my family can't even go to the doctor anyway because we can't afford the deductibles and co-pays! So just like all of you, I may have to move elsewhere to find my next job.

      Unions have no monopoly on misery in the U.S. job market these days. I went to college for five years and paid back student loans for several years thereafter to try to make a better life and future for myself. There are no guarantees for me. Why are you so special?
      • Not happening
        The fact is that high wages for unskilled work have pushed the business elsewhere. People with little to no education are performing these jobs over seas for lower pay. That isn't going to change in the near future. people in this country want to pay as little as possible for everything. Guess what! Products cost more if the labor force is highly paid and has above average benefits. Because of this people just won't buy those high priced items in large numbers. The majority feels the workers get paid too much and are not willing to pay for items they feel reflect that pay. If you want the good ole days back you have to convince the consumer you are worth the pay you get. Not happening any time soon either. If it were me I would be asking that my union dues go to campaign for public support of the pay scales you have. Instead they just pay for the union officials and to lobby congress. By the way the lobby crap just makes people dislike unions as much as they dislike the big companies. My 2 cents. Oh yeah and i grew up in a factory town where everyone worked in the many factories. Best jobs that could be had and now they are all gone. Just a bunch of good people left over with no skills besides pulling levers and pushing buttons. Too bad really. Hopefully this industry can make the correction and gain enough support to stay alive. We need manufacturing in this country, but it is gonna have to be more like it was prior to the glory days.
      • ?
        You must not work in a manufacturing plant. It is extremely difficult labor, and i'm sorry to read you think that that type of pay is too much. We union members believe that you are paid too little.
      • Livin' in the past
        $15/hr for unskilled labor sounds fair. Clearly those with more experience and skills are paid more. You all have been living in a dream and it is now time to wake up.
      • ghhffd
        the rate of pay is too low. the buyout money is to low . if jd wants us to vote yes and pass this . things will have to change. we are paying more at doctor visits , and no vision or dental at all. we will have to make more than 15 dollars an hour to survive. 18 to 21 dollars an hour is more like it. and a buyout of 60,000 to 70,000 is more realistic. i know for a fact it would pass then. i have talked to many workers ( 150) here that have said they would vote that kind of proposal in. but not the current one.

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