Xerox Cancels Factory Closure After Union Agrees to 20% Pay Cut

Xerox Corp. has called off plans to close an El Segundo manufacturing plant after a union reversed itself and agreed to accept a 20% pay cut.

Union members voted 206 to 139 on Sunday and Monday to accept a new contract that includes a freeze on wages for seven years and an elimination of some perks.

“It really is good news,” said Frank Nicholas, western regional manager and vice president of the Amalgamated Clothing and Textile Workers Union, which represents the assembly workers. “We very seldom get a chance to save a facility.”

Late last month, union workers rejected a similar package by almost the same margin. Soon, Xerox officials began drawing up a timetable for shutting the Utah Avenue facility, where circuit boards and chips are assembled for printers and copiers.

At stake were 400 union assembly jobs as well as 300 non-union positions. After the initial vote, the non-union workers, who include office and clerical workers, petitioned Xerox executives and agreed to take pay cuts if it meant the plant could be saved.

The contract “makes good sense, just as it did a few weeks ago, for all the parties concerned,” Xerox spokesman Jeff Simek said from Rochester, N.Y. “This is a very skilled work force and a valuable asset to the company, one that we are very pleased to preserve.”

Under the terms of the seven-year contract, Xerox will reimburse workers for the pay cuts should it decide to close the facility, union officials said. The contract also retains current benefits, and workers will be able to share in profits if the factory meets productivity goals.

In January, Xerox officials told the union that it planned to shut down the factory as part of an overall reduction in the Xerox work force that began in 1993.

After union leaders pressed the company to reverse its decision, Xerox, which was in the midst of restructuring, agreed to keep the plant open only if workers ratified a new contract.

In the first vote in April, they turned it down. At the time, some employees complained that they didn’t have enough time to ponder the new pay package, given its drastic reductions in pay and elimination of even a paid five minutes at the end of the day to wash up. Many workers thought the company was bluffing.

Xerox management was “honest with us,” Nicholas said. “They told everyone up front that they weren’t going to play any games. They said, ‘If you don’t take it, fine. But the next thing we will be doing is negotiating a closure agreement.’ True to form, it’s exactly what they did.”

Xerox officials announced last week that the plant would go dark on Dec. 31.

In the course of negotiating a closure agreement, union officials got the company to make some adjustments to the contract offer. Pay cuts will be made only after workers get one final cost-of-living adjustment that was due Monday.

The original contract offer also required all the workers to take a skills test, a provision that many workers resented because they took a voluntary skills test two years ago. Under the contract that workers accepted, the test will be required only of workers who haven’t taken it. About 20 to 30 workers will be affected, Nicholas said.

When union members accepted the contract, Xerox Chief Executive Paul Allaire agreed to keep the factory open during a routine meeting with the union’s national leaders on Tuesday.