AMC Threatens Union With Plant Shutdowns
American Motors has warned union leaders at its two Wisconsin auto plants that it will close both facilities and eliminate about 6,000 jobs if they don’t agree to grant the company contract concessions by May 24, company officials said Wednesday.
If AMC follows through with its threat, made in a letter to United Auto Workers union officials last Friday, the company will end domestic passenger car production at its Kenosha, Wis., assembly plant and close a stamping operation in Milwaukee. That would leave AMC’s Jeep plant in Toledo, Ohio, as its only American vehicle production facility.
The Kenosha plant produces AMC’s Renault Alliance and Encore subcompacts, the only passenger cars that AMC builds in the United States.
AMC spokesman Jerry Sloan said Wednesday that, if the company closes the Kenosha facility, it would either import subcompacts from Renault, the French auto maker that controls AMC, or build Alliance and Encore models in a Canadian plant where it now makes Eagle utility vehicles.
Commitment Demanded
“We’ve told the union that, if we don’t get a commitment (about concessions) by the 24th, we’ll start taking these steps,” Sloan said. AMC said it will close the Milwaukee plant in September and the Kenosha plant in July, 1986, if it doesn’t win the concessions.
The existing labor agreements at both plants expire in September, but contract talks were not scheduled to start until midsummer, according to union officials, who said they were surprised by the company’s ultimatum. The two sides have not yet met to discuss the company’s demands, they said.
AMC, which lost $29 million in the first quarter, argues that union wages at the Kenosha and Milwaukee plants are higher than those paid by General Motors and other domestic auto makers and need to be reduced to make AMC more competitive. (A new, separate contract covering AMC’s Toledo workers went into effect Feb. 1.) The company says its wages, plus cost-of-living benefits, at the two plants average $13.44 per hour, compared to an average hourly wage plus cost-of-living allowance of $13.07 at GM. AMC is asking for wage cuts of 37 cents per hour so that its costs match those of GM.
Profit Sharing Sought
At the same time, the company is demanding that the union agree to reduce the amount of money that the company has to pay back to its workers in Kenosha, Milwaukee and Toledo for concessions that they agreed to in 1982. AMC has told the union that it must agree to repayment in the form of employee profit sharing, rather than a more expensive alternative repayment plan, or the company will shut its Wisconsin plants. The union has accepted repayment in the form of 25% of AMC’s 1984 automotive profits for the first year of the repayment plan but not for the rest of the program through 1988.
AMC’s workers have balked at profit sharing because of the company’s weak financial performance over the past few years. AMC reported a profit last year, its first in the 1980s, of just $15.47 million, after losses of $146.7 million in 1983 and $153.47 million in 1982.
