Training, transitions underway as workers prep for plant closure

 

By Emery Styron
news@corridorbusiness.com

The global marketplace applies both to goods and labor – a fact employees at Modine Manufacturing in Washington, Iowa, know all too well.

The 140 remaining workers at the cooling equipment plant have been helping train Modine employees based in Nuevo Laredo, Mexico to take over their jobs as the Washington plant prepares to shut down later this year.

A federal Worker Adjustment and Retraining Notification (WARN) Act notice dated May 13 confirmed the termination of 60 hourly workers between July 15 and July 29. The plant is shifting the bulk of its production lines to Mexico, with about 15 percent of capacity being divided between remaining plants in Joplin and Jefferson City, Missouri. About 40 percent of production equipment has already been moved, said plant manager Rudy Franco.

Modine has seen its workforce shrink from 245 employees since announcing plans to close the plant last April. Workers who stay until terminated by the shutdown will receive trade adjustment assistance – but no severance package.

The company said it had charged $2 million against earnings in the first quarter of last year for the plant shutdown, with most of that allocated for severance payments, but severance agreement talks between the company and Local 359 of the Glass, Molders, Pottery, Plastics & Allied Workers International Union broke down last fall.

Modine offered half a week’s pay per year of service, capped at 26 years. The employees’ committee held out for 30 hours of pay per year of service, capped at 30 years, and would not accept Modine’s demands for waivers of seniority and grievance rights, and the shift of all health insurance costs to employees after termination, according to two members on the committee.

Shop Chair Don Dameron said the international union office received complaints from some employees after news broke of the impasse. The international representative advised taking a vote.

“We were making a $9,000 decision for the people,” Mr. Dameron said. Workers backed their negotiating committee, turning down Modine’s offer 71-10.

Committee member John Carr said a company representative was “flabbergasted” because similar agreements had been accepted when other Modine plants were closed. In November, the company angered some employees with the offer of a $250 Christmas bonus if they accepted the severance offer, Mr. Carr said. Two who voted for the package told him they would vote “no” if it came up again. It hasn’t.

“One of the hardest things I have to do is walk out of there,” said Mr. Carr, 55, who has lined up a job a Procter & Gamble in Iowa City. “Not having a severance made it awfully easy to start applying.”

“I think I’ll be there until the end. Some of the TAA [Trade Adjustment Act] benefits will work out well for me,” said Mr. Dameron, who started at the plant in 1978. “I have been there so long it seems fitting to ride it out.”

“Riding it out” includes being closely observed by visiting Modine workers from Mexico. Mr. Carr said there have been some tensions between the visiting workers and the local workforce, but employees recognize “they’re also in a difficult situation.”

“I am impressed with the level of professionalism our people have shown,” said Mr. Franco. “Modine very much appreciates the efforts of its Washington workforce.”

Modine still needs experienced workers to maintain production during the transition and has benefitted from the promise of TAA benefits, especially in the absence of a severance package, Mr. Dameron said.

Modine plant interior

A Modine worker assembles a piece of heat transfer equipment in a 2014 photo. PHOTO/Emery Styron

“If we didn’t have TAA, people would be bolting,” he added.

 

The federal benefits for workers of firms hurt by foreign trade allow affected employees to attend a trade school or community college for retraining for up to two years while drawing unemployment compensation. It provides reimbursement for such costs as mileage and tool purchases, as well as a percentage of moving expenses for workers who relocate to take new jobs. Workers over 50 who take a lower-paying job can also draw replacement income for up to two years.

Carla Andorf, director of the Skills to Employment unit at IowaWORKS, said the Dislocated Worker Program is available to help workers search and apply for jobs, and can help cover expenses not covered by TAA, financial aid or other programs. Those can include tuition for credit and non-credit programming, books, classroom supplies, transportation, child care and other expenses.

Another service is career coaching, to help workers decide whether to retrain or seek a similar job to the one they lost.

“Quite a few Modine workers have been reaching out to us,” Ms. Andorf said.

Mr. Franco said the company “is continuously evaluating the quantity and timetable for future WARN notices” but could not predict when the next round of terminations would occur. Total shutdown is expected by year-end.

 

Bouncing back

The reason for Modine’s closure in Washington boils down to the fact that the company could not get unit costs low enough at the Iowa plant to compete in the global marketplace. The cost of wages and benefits at the company’s Nuevo Laredo plant is just $3.51 per hour, compared $26.81 per hour here. About 15 percent of the company’s Iowa production is also being transferred to Missouri plants.

So how can small cities like Washington respond to competition for jobs from both foreign countries and neighboring states? Not by sitting around moping, said Ed Raber, executive director for the Washington Economic Development Group.

“We’re developing a new industrial park,” he said. “That’s how we’re responding.”

Because of Washington’s history of growing small, family-owned and ag-related startups into bigger businesses, the new industrial park has been platted into smaller lots.

“We don’t want anyone leaving Washington because there was no place to grow,” Mr. Raber said.

He’s sympathetic to employees displaced by Modine’s shutdown, but doesn’t see Modine’s decision, or the threat of global competition, as a death knell for Corridor communities. For example, when Washington’s 200,000-square-foot calendar factory closed a few years ago, a company bought the vacant plant to expand, Bazooka Farmstar moved into its former space and Ace Hardware moved into the building vacated by Bazooka.

Looking at the bigger picture, Mr. Raber sees the entire region as “an entrepreneur-nurturing community.”

“I think the Corridor has done a good job of looking at itself and saying, ‘Let’s help the people trying to grow business here. Let’s give them the tools,” he said. Those tools can include funding, but also connections and technical assistance through organizations like the John Pappajohn Entrepreneurial Center at the University of Iowa and the Small Business Development Center at Kirkwood Community College.

Mark Nolte, president of the Iowa City Area Development Group, is equally optimistic about the region’s prospects despite the decline in manufacturing jobs.

“Iowa can’t and shouldn’t try to compete on labor price,” Mr. Nolte said. “Where we can differentiate ourselves is on the quality of the workforce, their skills and innovative problem-solving abilities. The work being done by Kirkwood at their Regional Centers is helping build a new generation of talented workers who will help us compete to keep and attract advanced manufacturing companies in our region.”

As the region becomes more widely known for its prepared workforce and innovative spirit, the Corridor will continue sustainable growth that attracts people and business, he said.