Workers at AMC Reject Concessions : UAW Suggests More Talks on Company’s Threat to Close Plants

Unionized workers at financially ailing American Motors’ auto assembly plant in Kenosha, Wis., voted overwhelmingly Thursday to reject a company ultimatum that they grant contract concessions in order to keep the aging plant open, union officials announced Friday.

The announcement followed AMC’s threat, made last week, that it will close the Kenosha plant and a smaller facility in Milwaukee if the United Auto Workers doesn’t grant the company contract concessions by May 24.

AMC claims that its labor costs at the two plants are higher than those paid by General Motors, Ford and Chrysler, and so the company is unable to compete effectively with its American and Japanese rivals.

Union officials at both facilities have told AMC that, while they reject the company’s demands for non-negotiable concessions, they are still willing to open early negotiations on a new labor agreement to replace an existing contract scheduled to expire in September.

4,451-910 Vote Against

In the Kenosha vote Thursday, the workers rejected the company’s ultimatum, 4,451 to 910, but also authorized the local union leadership to open talks with AMC in order to hammer out a compromise.

“The vote shouldn’t be interpreted as a rejection of concessions or a rejection of the bargaining process,” said Rudy Kuzel, president of UAW Local 72, which represents Kenosha’s workers. “If they don’t (resume negotiations), shame on them.”

But, so far, the company says it is not willing to alter its demands. In a statement released Friday afternoon, Richard A. Calmes, AMC’s vice president-personnel and industrial relations, said the union’s willingness to negotiate was “encouraging.” But an AMC spokesman added that the company is sticking to its threat to announce shutdowns at Kenosha and Milwaukee next Friday if its demands aren’t met.

AMC says that it will close the Milwaukee plant (which supplies parts to Kenosha) in September and the Kenosha complex in July, 1986, but that it will announce the shutdowns ahead of time to comply with a Wisconsin law requiring that state and local officials be notified of future plant closings.

The closing of its Kenosha operation would bring an end to U.S. passenger car production for AMC and would leave its Jeep plant in Toledo as its only domestic vehicle facility.

AMC produces its Renault Alliance and Encore subcompacts in Kenosha, while its Eagle utility vehicle is built in Canada.

Company officials say that, if AMC closes the Kenosha plant, it could either import its Alliance-Encore models from its French partner, Renault, or build them in Canada, where it plans to open a new assembly plant by 1987.

AMC, which lost $29 million in the first quarter, is the smallest and financially the weakest of the U.S.-based auto makers. Unlike GM, Ford and Chrysler, AMC only sells small passenger cars, and so is more vulnerable to competition from Japanese imports.

That competition, which has dramatically reduced AMC’s market share, has been bad news for the Kenosha and Milwaukee plants and their nearly 6,000 workers. After some initial success in the marketplace, sales of the Alliance-Encore models have plummeted 31.5% so far this year, and AMC dealers have more than 100 days’ worth of Alliance and Encore models sitting unsold on their lots.