The Canadian Auto Workers union, representing about 900 employees at Navistar International's Chatham, Ontario, assembly plant, received a letter from company president Steve Keate stating that the truck maker is considering closure of the plant.
if it fails to cut another $14 million in costs.
The facility is International's premium assembler of heavy-duty highway tractors.
International's goal was to cut about $28 million in fixed costs, but says it has only achieved about half that target to date, and the company continues to operate at a loss. As part of the Collective Bargaining Agreement dated June 7, 1999, International, which already let go about 1300 employees in 1999, is required to issue a one-year notice of any plant closure. All employees would be affected.
"I want to stress that this notice only indicates a consideration of closure. No decision has been made," said Dave Boland, manager of the Chatham plant. "It doesn't even mean that if they don't meet the target it would necessarily close."
Boland couldn't comment on the likelihood of the closure, but did admit much of the decision hinders on upcoming bargaining talks with employees. The current labour contracts -- which were ratified in 1999 and included a $500 signing bonus, an average 1.25% increase in wages, and a 3% annual increase in pensions over the three years - expires on June 1. Negotiations are scheduled to begin this week. "It's possible (the closure) can happen if we don't work together as a team," Boland says.
Rumors of a plant closure or severe output cutbacks also swirled during the last round of labor negotiations in 1999. During that time there were reports that in the event of a closure in Chatham, production would move to International's year-old plant in Escobedo, Mexico, which is underutilized.