Less than a week ago, Navistar International Corp. was hailing a set of agreements with the United Auto Workers as the beginning of a new age of cooperation and prosperity.
Monday, with one of the three contract proposals rejected by the union rank and file, the company declared there is “no deal.” What was not clear was whether the company faces a glitch or a major roadblock in its plans to make overall operations more efficient and allow it to launch a much-needed medium-duty truck line.
The three proposed contracts– a master contract covering all UAW workers and local proposals at the Springfield, Ohio, assembly plant and Indianapolis foundry–were a package deal, a Navistar spokesman said. The UAW understood that all three pieces had to be ratified, he said.
The Indianapolis foundry makes engine blocks. Last week, Navistar chief executive John Horne said the foundry makes a high-quality product, but the operation was too costly; wages and benefits account for 45 percent of the plant’s costs, he said.
Navistar was working on plans to close the foundry if an agreement was not reached to cut costs, he said.
In addition to voting down the proposed contract for that plant, the Indianapolis UAW local voted against the master contract as well. Neither the company nor the union gave the margin of defeat.
The master contract, which would have extended through 2002, was approved by 63 percent of the vote, the company said, while the proposal covering local issues at the Springfield plant was approved by “a wide margin.”
Horne hailed that agreement, as well as the one at the Springfield plant, as crucial to allowing the company to build a new medium-duty truck, which the company has dubbed NGT for next-generation truck.
Neither Navistar nor the UAW would discuss specifics of the three contract proposals.
But Navistar has made it clear that proceeding with the NGT would require cost-cutting, such as installing a new kind of assembly system at the Springfield plant. Analysts who have followed the contract negotiations speculated that the agreements would allow Navistar to move workers and probably to eliminate some jobs.
The Navistar spokesman said there is no direct link between the engine blocks produced in Indianapolis and the NGT planned for Springfield. “From a broad perspective, the issue we’re addressing is the company’s competitiveness,” he said. “That’s where the linkage is.”
The rejection in Indianapolis is a blow to the company, which had negotiated more than a year to get the tentative agreements. Company and union officials were meeting Monday to discuss the next step.
“We go back to where we started,” the Navistar spokesman said. “These items were linked initially.”
The union votes have no direct impact on the agreement announced last week with Ford Motor Co. Under that deal, which must be approved by the boards of both companies, Navistar will build diesel engines for some Ford vans and trucks through the year 2013.
Horne last week hailed that contract as an endorsement of the company’s future and commitment to keeping its products top-of-the-line.
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