Closing Time

It was an ominous clause for a labour contract. The two-year collective bargaining agreement ratified in July by workers at Navistar International’s truck plant in Chatham, Ont., guarantees that the factory will stay open until next June. And that, the company announced last month, is exactly what is going to happen. Next summer, Navistar says it will close the plant and shift production of its 9000i series highway tractors to Escobedo, Mexico, near Monterrey.

Steve Keate, president of Navistar’s International Truck & Engine group, told plant workers the decision was “irreversible . . . The decision has been made. I never say never, but I wouldn’t consider it an option.”

The announcement knocked the wind out of the city of Chatham, where the loss of jobs for 1,003 active employees and nearly 1,200 others on layoff directly accounts for nearly 5 per cent of the local workforce. But Navistar, which has been making vehicles in Chatham for 93 years, says it could not continue to operate the plant at a loss, especially when it had a more modern, underutilized alternative in Mexico where an assembly worker earns the equivalent of $4 US per hour, including benefits, compared with $33 US for a worker at Chatham. Opened in 1998, the Escobedo plant currently produces 9000i tractors, 4000-series vehicles, and medium-duty trucks for the company’s Blue Diamond joint-venture with Ford Motor Co. When CAW workers in Chatham went on a six-week strike last summer, the Escobedo facility ramped up 9000i production to pick up the slack.

According to Navistar spokesman Roy Wiley, the new labour agreement did little to chip away at the $14 million US a year the company claims it needed to save in order to make the plant viable in the long term. The contract does give Navistar more flexibility with workers’ schedules, including mandatory overtime, but Wiley says the additional productivity is not enough to sustain the plant.

“This decision boils down to costs,” he says. “Read nothing more into it. This is a very difficult market right now, and it’s not getting better soon.”

With class-8 sales slumping in advance of tougher diesel engine emissions rules that took effect Oct. 1, the Chatham plant has been building 59 trucks a day, one-third of its capacity.

Wiley is quick to say that Navistar has spread its job cuts across the board, with 860 workers recently laid off at its Springfield, Ohio, truck plant, and 300 more at an engine facility in Indianapolis.

“They build a great truck in Chatham,” Wiley says. “But they also make a quality truck in Mexico. We have two lines down there, and 9000i trucks are being made right now, and have been for a long time.”

Navistar is the latest in a procession of vehicle manufacturers that have either pulled out of Canada or announced plans to do so, following Freightliner LLC in Kelowna, B.C., General Motors in Ste-Therese, Que., Ford in Oakville, Ont., and DaimlerChrysler in Windsor, Ont.

“That’s five car or heavy-truck plants facing the axe in a period of less than two years,” says Canadian Auto Workers president Buzz Hargrove. “It’s easy to blame unions, but when you’re competing with $4 an hour — which is an insult to people, it really is — it seems to me that the only way we’re ever going to maintain an auto industry in Canada is through government policy.”

Hargrove laments the demise of the Canada-U.S. Auto Pact last year. He says without a policy requiring companies to build vehicles in Canada in order to sell them here without paying duties, the federal government is showing a reckless indifference to vehicle manufacturing jobs in this country.

“The duty was about 6.1 per cent, which on a $120,000 or $180,000 truck is a lot of money,” he says. “Now that the Auto Pact is gone, there’s no rules,” he says. “You can build those trucks anywhere and sell them in Canada so long as they have 62.5-per-cent North American content. That includes Mexico.”

Hargrove says the CAW will lobby Ottawa for trade sanctions against Navistar. “If you move our work out of Canada to a third-world country where you’re going to pay slave-labour wages and benefits, and arrogantly say you’re going to keep selling that truck in Canada, we’re telling government to say no to your products,” he says. “This is the time to take a stand for Canadian workers. Navistar should not be allowed to sell that truck here.”

Only two other companies still produce heavy trucks in Canada: PACCAR and Freightliner.

“Those companies have significant investments in Canada,” Hargrove says. “They have a commitment to this market, they have invested in jobs. They should have the market.”

PACCAR builds Kenworth and Peterbilt trucks in Ste-Therese, Que., where a soft market and a lengthy strike prompted the company to mothball the facility in 1996. At the time it closed, the plant was considered to be one of the least efficient truck assembly operations in North America.

Enticed by a $100-million package of incentives that included a $24-million loan from the federal and Quebec governments, PACCAR refurbished the plant and reopened it in 1999 as its primary North American medium-duty truck facility.

Freightliner’s Sterling Trucks division builds trucks in St. Thomas, Ont. It’s a place the CAW knows well: on Oct. 7, the Ontario Labour Relations Board certified the union as the bargaining agent for 1,100 plant employees there, a little more than a week before Navistar said it was pulling up stakes in Chatham.