Mexitowoc

Cold As Ice: Despite profits, Manitowoc Company to ship 176 longtime IAM jobs to Mexico; more at risk

By Kathy Wilkes
Special to Union Labor News

MANITOWOC, WI—Decades of loyal and productive service for Manitowoc Company (MC) just wasn’t enough, members of International Association of Machinists (IAM) Local Lodge 516 learned recently, as they got the bad news that 176 of their jobs are going to vanish with the transfer of a major product line to Mexico.

“They announced it last month,” said Gary Dworak, looking as glum as anyone at the April 10 meeting of the Local here in Manitowoc, a modest, working-class town hugging the shores of Lake Michigan in northeast Wisconsin and home to the company that has borne its name since it opened in 1902.

“They said the stockholders demanded it,” Dworak continued. “Our major product line will be gone. We feel that in a year or two, they will all be gone.” And IAM jobs with them.

Dworak pulls double duty as Local secretary-treasurer and chair of the negotiating committee representing MC’s food service division, which is nicknamed “Ice” for its popular ice machines and other commercial equipment that can be found in hotels and restaurants around the world. MC is offshoring its top “Indigo” ice machine line, leaving just a mere quarter of the workforce to push out three other models that are “low margin and low volume,” according to Steve Garber, Local president and Ice negotiating committee member.

MC is already manufacturing some low cost machines overseas, but those factories “haven’t perfected them in 20 years,” Dworak said. The Mexico plant, Garber noted, produced 1200 machines but sold only120 in seven months. “And we’re still reworking them here.”

IAM’s Ice bargaining unit is in its third, tough round of contract talks. That MC has insisted on one-year contracts each time underscores its aversion to a long-term commitment. With mass layoffs looming, “The first thing we asked was if there was anything we could do to save those jobs,” Garber said. “The answer was no.”

MC says that the transfer of work will enable the company to better serve its market in Latin America. There are other factors as well. “The workers in Mexico get $2.85 an hour,” Garber said. “They told us that in negotiations,” Dworak added. “They are looking for warehouses in the southwest for major markets in Florida, Texas and California.”

But for the North American Free Trade Agreement (NAFTA) implemented 20 years ago, MC’s flight across the border might not be feasible. Easing trade restrictions among the U.S., Canada and Mexico, NAFTA is estimated to have cost some 700,000 American jobs, mostly in manufacturing. Like other American companies, MC may manufacture products in Mexico and bring them into the U.S. where they can be warehoused and sold tariff-free. MC will also enjoy a substantial tax break for offshoring operations thanks to provisions in the federal tax code that Senate Republicans blocked Democrats from repealing in 2010 and 2012.

IAM’s Ice unit will shrink from 233 in production and 13 in maintenance to 57 and 3 respectively. Some 225-250 office workers should not be affected. Workers desiring and eligible for early retirement must notify the company of their intentions in July and must be at least 53 years old with 15 years’ seniority to get retirement insurance. “The average shop age is in the 50s,” Garber said. Many have worked 25 years or more.

After early retirements are exhausted, layoffs will be targeted for May 2015. There will be some payoff of vacation time but no special severance package. “Loyalty yields nothing,” Dworak remarked.

The job losses represent about 40 percent of Local 516’s membership, which includes bargaining units at Brillion Iron Works, Kahlenberg Brothers, Kaufmann Manufacturing, and Wisconsin Aluminum Foundry as well as MC’s crane division.

“Cranes” got its reputation as MC’s redheaded stepchild early in 2012 when, after decades of normal labor relations, the company struck at the heart of the union with demands to make union dues voluntary and eliminate dues deductions from workers’ paychecks. The dispute erupted into a 10-week strike and ended with the union conceding to an “annual opt out” as MC threatened strikers with “permanent replacements.”

Seen as a union-busting measure emulating Gov. Scott Walker’s controversial 2011 attack on public sector unions, MC’s strategy, however, hasn’t paid off. Cranes chair Scott Rosinsky reported that only 16 workers have opted out of paying dues, and the Local has signed up a number of newhires—even though the company subjects them to a “full court blitz” to persuade them otherwise. Union members are proud of their accomplishment and solidarity, but hard feelings linger between dues-paying members who endured the strike and those who crossed picket lines and opted out.

MC’s 2012 hammering of Cranes signaled a new era in its relationship with IAM. While Cranes ultimately agreed to one three-year contract sans a union shop but with an eight percent pay hike, Ice has since grappled with three one-year contracts, low or no wage increases, and now a major loss of jobs to Mexico.

Economic hardship doesn’t seem to be MC’s motivating factor. MC reported that sales and net income went up in 2013 and that both Ice and Cranes are expected to see growth in 2014. Stock analysts branded MC a “top pick” in early April and a “solid choice” for potential investors. MC paid its top five executives more than $15 million in 2013—up 250 percent in just four years. CEO and President Glen Tellock got the lion’s share, about $6.5 million.

“Compare that with our $25 an hour,” said Dworak. “Our last raise—that 1.1 percent—was a kick in the face to everyone.”

“It’s the 50^th anniversary of Manitowoc Ice this year,” Garber added, a tinge of irony and sadness in his voice. “After they move the jobs to Mexico, the number one American-made ice machine will be Hoshizaki, a Japanese company with a plant in Georgia.”

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