Freightliner laying off 1,500 in June
Published 12:00 am Wednesday, December 2, 2009
By Paris Goodnight and Mark Wineka
CLEVELAND ó Freightliner announced plans Thursday to cut approximately 1,500 workers at its truck manufacturing plant in Cleveland.
The layoffs will happen June 6, effectively eliminating the plant’s second shift.
The job cuts also will reduce employment at the unionized plant by more than half. Company officials put the current employment at 2,900 workers.
“Of course, it’s a difficult time for everyone,” United Auto Workers Local 3520 President George Drexel IV said of the employees’ reaction Thursday.
Last April, Freightliner laid off 1,180 workers, getting rid of the third shift.
A second big layoff was averted in the summer when Freightliner and the union agreed that workers on the first and second shifts could share the time available and keep everyone employed.
It was an especially big sacrifice by the more senior employees who were not scheduled to be laid off.
Drexel expressed gratitude Thursday to those senior employees and said everyone was “real thankful they gave up work as long as they did.” He also credited Freightliner with carrying considerable costs “to keep everybody on board.”
Company officials continue to cite slow truck sales for the worker cutbacks. Freightliner blames “reduced demand as customers responded to the cost impact of Environmental Protection Agency diesel engine emissions regulations and a weakening economy.”
Layoffs of this many people will take millions out of the local economy, Cleveland Mayor James Brown said.
“Man, that affects Rowan County pretty severely and that affects other counties, too,” Brown said, noting how numerous people commute long distances to the plant.
Brown said Cleveland restaurants and businesses will suffer. He guessed about a half-dozen citizens within the town limits will lose their Freightliner jobs.
The loss of an entire shift at the Cleveland plant might cut water usage by 25 to 30 percent, he estimated.
Brown said that the truck-building industry historically has its ups and downs, often connected with new environmental standards. The current downturn, if it is connected to new EPA standards, also has higher gas prices and an overall struggling economy on top of it, Brown said.
“It cycles,” he added.
Drexel, the union local president, agreed that the whole truck industry is suffering and demand is “very small.”
Freightliner left open a slight possibility that it could cancel the Cleveland layoffs.
“Although the industry slowdown in truck orders is projected to continue through the first half of this year, (Thursday’s) WARN Act notification affecting the Cleveland Plant will be rescinded if market recovery sufficient to support two shifts occurs prior to June 6,” according to a release from Freightliner headquarters in Portland, Ore.
WARN refers to the Worker Adjustment and Retraining Notification Act.
A company has to file a WARN notice with the N.C. Department of Commerce, giving the state a required 60-day notice of a pending “mass layoff.”
The notification is required if there’s to be a mass layoff that doesn’t result in a plant’s closing but could mean an employment loss during any 30-day period of 500 or more workers.
The mass layoff notice also is required if an employer expects to lay off 50 to 499 employees who make up at least 33 percent of the active workforce.
The Cleveland plant has been operating on a “periodic shutdown basis” with staggered worker schedules since April 2, 2007.
After announcing in April it would lay off 1,180 workers, Freightliner announced in May that it would lay off up to 1,528 more at the Cleveland plant by July 10.
Members of UAW Local 3520 staved off the mass layoff by voting to alternate lay-off weeks between the first and second shifts.
Some 89 percent of the membership voted “yes” for the proposal last June, as senior employees opted to share the limited work time available, and the company agreed.
The agreement also enabled all workers to maintain full benefits.
Drexel said that arrangement was supposed to go only through October 2007, when demand for trucks was expected to pick up again. But the market didn’t recover, and the company held off the layoffs as long as possible.
Drexel said one benefit of union membership is that laid-off employees will continue to have full medical benefits for six months after they leave. The union contract also gives them the guarantee to be called back to Freightliner if the company starts rehiring.
The call-backs would be based on seniority.
If the layoffs follow the plan outlined by the company last year, employees would stay or go based on a date-of-employment benchmark. According to the benchmark proposed in 2007, anyone hired Aug. 19, 1996, or later would have been cut.
The Cleveland plant ó once tabbed as the country’s largest Class 8 truck manufacturing facility ó started production of a new model, the Cascadia, last August. Unveiled to much fanfare in 2007, the Cascadia is designed to meet the tightened emission standards and is adaptable to those going into effect in 2010.
The plant also makes the Columbia and Century models.
Robert Van Geons, executive director of the Salisbury-Rowan Economic Development Commission, said any time a person in Rowan County loses a job, “we are concerned for that individual.”
“We are obviously in a transient state in our national economy,” Van Geons said. “While we hoped the county would not have to suffer such occurrences, it’s hard not to be surprised.”
The EDC in general hopes it’s a cyclical part of Freightliner’s business and that laid-off employees will eventually return to the plant, Van Geons said.
Meanwhile, the EDC and community will try to offer support to both the workers and Freightliner, he added.
Rowan County’s unemployment rate in February was 5.6 percent ó the most recent month for which state figures were available.
In August 2006, Freightliner was listed by the Rowan County Chamber of Commerce as Rowan’s biggest employer with an estimated workforce of 4,500.
That number was down to 3,000 in the Chamber’s compilation for 2007, and has continued to drop since then. Contact Mark Wineka at 704-797-4263, or firstname.lastname@example.org.