For 81 days, Electrolux’s 2,700 employees and the little burg of Greenville have been hanging by a thread.
Thursday night, they saw it start to unravel when the company said incentives to stay in Greenville were still too small, but it also said it would string out the decision for another week.
“At this time, the current proposals from the union, the community and state still fall substantially short of eliminating Electrolux’s $81 million annual cost disadvantage” over moving work to Mexico, the company said in a news release.
The wild card is labor. Union negotiators for 2,300 hourly employees face demands for substantial layoffs and wage cuts before the Swedish appliance maker, AB Electrolux, will agree to continue producing refrigerators in Greenville.
Talks have been intense, continuing through late Thursday and leading the company to extend its self-imposed deadline. Union and company officials today refused to discuss details.
The task force plans to meet again today with state and union representatives.
This morning, employees at the plant were angry with the corporation and had little sympathy for major concessions.
Night-shift electrician Ray Smith, 58, said he was frustrated by the delay. “We went through the contract, concessions, and now they want us to wait,” the 20-year employee said.
Many workers believe corporate greed, rather than economic necessity, is behind the proposed move to Mexico, Smith said.
“If the company is hurting, you give concessions,” Smith said. “But they’re not hurting. Where do you draw the line on profits?”
In October, Electrolux posted strong sales growth and higher income for its appliances and outdoor products in North America, but the company said it can’t compete with other refrigerator manufacturers that have moved to lower-wage plants in Mexico and lowered their prices.
The intense effort by the city, state and United Auto Workers to offer a mountain of perks hasn’t yet succeeded, although spokesman Tim Wondergem said the delay works to the advantage of the Electrolux Task Force.
“The easiest thing for them would be to have found our proposal completely unacceptable,” Wondergem said. “While there’s no indication of the rationale behind the decision, it’s only to our advantage to have additional time.”
“They say the decision is going to be made by Electrolux North America,” said Greenville Mayor Lloyd Walker. “In a way, these are fellow Americans making the decision. The pressure on them is maybe worse than it is on me.”
“Boy, this is their job they’re talking about, if they make the wrong decision.”
The union holds the key, and a small sampling of its membership shows waning patience.
Carol Chaffins, 47, of Orleans, and said many of her co-workers were disappointed that the waiting game continues.
“It’s nothing new. We learned yesterday afternoon that we wouldn’t have a (union) meeting today,” Chaffins said.
She praised the efforts by the community to put together a fair deal. “I think they’ve done all they can,” Chaffins said.
Officials also are hailing the Herculean effort from a small town. The Electrolux Task Force is vowing to carry on.
“We think we got one heck of a good proposal,” city manager George Bosanic said.
A hefty packet of perks melded 20-year property-tax forgiveness with free land for a new plant, a publicly built parking lot and significant concessions proposed by the United Auto Workers.
Wage cuts and layoffs are reportedly part of the package still being negotiated,, but its provisions face a vote by the membership. Details have not been released.
Over the past 12 years, Michigan has given Electrolux $8.7 million for infrastructure improvements and job training programs.
Elements of the plan include:
Potential wage concessions.
A campus, with a new Electrolux plant at its center, surrounded by all of its suppliers “within forklift distance,” Walker said.
Electrolux has told the town it wants to own its building, but it may qualify for low-interest financing or a sale-and-lease-back plan. The land, worth $500,000, would be donated and the city would install the plant’s parking lot, then lease it to the company.
Tax forgiveness for state and local bills, up to 20 years
Job training and other grants from the state.
Cost-savings from a smaller, highly automated plant, requiring fewer workers. The existing 100-year-old plant is 1.5 million square feet, but the proposed design would be 800,000 square feet.
“They still have the option of staying in the old facility, but they wouldn’t get near the savings,” Walker said.
The current plant is shaped like an “H,” with two long buildings connected at the midpoint.
“It’s in three floors, and their line has to go around corners and up and down,” Walker said. The new plant is a long, narrow building design with extensions on both sides, and places where suppliers could bring in just-in-time deliveries.”
The task force is trying to persuade all major Electrolux suppliers to build plants around the perimeter of the proposed factory.
“I think there are four or five factories in Greenville supplying them,” Walker said. “We do not have all the suppliers here. That could be one way of replacing some of the jobs.”
Closing the plant would cost about $154 million; half for severance and half to write off its property here. That doesn’t include the cost of a new factory in Mexico.
Electrolux already owns a Eureka vacuum cleaner plant in Juarez, Mexico. Last fall, Hans Straberg, chief executive officer of Electrolux, talked with Mexico’s president, Vincente Fox, who was recruiting foreign investment.
Refrigerators built in Greenville provide 15 percent of U.S. sales of Electrolux’s consumer appliances, including dishwashers, string trimmers and lawn mowers.
The Greenville plant makes all of Frigidaire’s side-by-side refrigerators, plus many of its top-freezer models. The plant also produces refrigerators for Kenmore, White-Westinghouse, Gibson, and Kelvinator. Its start-up of the side-by-side refrigerators was a troubled one, though.
In 2001, a $100 million modernization was plagued with delivery failures, additional personnel, and overtime. By the time the process was complete, it cost the company $140 million. Now, Straberg told analysts in October, the plant is under-performing and should be closed, but he left the final decision up to his subordinates in the U.S. organization.
Last year, Electrolux closed an air conditioner plant in New Jersey, laying off 1,350 employees and moving the product line to Brazil and outside suppliers.
The cost of a shutdown to the region would be staggering, according to Evert Van Der Heide, economics professor at Calvin College. He estimates that for each Electrolux job, another 1.12 jobs will evaporate. Those include 1,226 from suppliers who lose Electrolux contracts, and another 1,785 among clerks, cashiers, waitresses, and other service-related jobs.
Wages of the plant’s employees, which run $13 to $15 an hour, would drop by nearly $606 million. Almost $38 million could be lost in wholesale trade and $15.5 million in transportation and communication. In total, Van Der Heide said, the region faces an $883.5 million hit.
On Oct. 21, Straberg told analysts the company was considering closing the Greenville plant and joining competitors who were already making refrigerators in Mexico, at one-tenth the labor cost.
Since 2000, more than 30,000 manufacturing jobs have evaporated from the Grand Rapids area, and many blame globalization and the North American Free Trade Agreement, or NAFTA.
From mlive.com