From Detroit Free Press
SOUTHFIELD, MI — Federal-Mogul Corp., in a move that counters the trend of U.S. companies sending manufacturing jobs overseas, has decided to keep nearly 800 Michigan jobs from heading to Mexico.
Gov. Jennifer Granholm and the Michigan Economic Development Corp. (MEDC) announced the approval of a Single Business Tax incentive Tuesday worth more than $65 million to keep Federal-Mogul from moving 790 jobs abroad. Meanwhile, the Southfield, Mich.-based auto parts maker said it would invest $6 million of its own money in the operations.
Federal-Mogul previously announced plans to move the jobs to Mexico. The affected plants are in Greenville, St. Johns and Sparta, Mich.
The about-face comes as a pleasant surprise for Federal-Mogul employees as well as the Michigan economy. In recent months, concern over the loss of jobs to neighboring states and foreign countries has ignited a frenzy of talks among Granholm, several Michigan legislators, auto manufacturers and suppliers to stop the bleeding. Michigan’s unemployment rate in October — the most recent data available — was 6.6 percent, compared with the national average of 5.5 percent.
“It is always good news when our facilities — especially those in our world headquarters state — can be successful in this increasingly competitive global industry,” said Richard Randazzo, a spokesman for Federal-Mogul.
Federal-Mogul, which employs more than 1,800 workers in Michigan, employs more than 45,000 people in 29 countries.
For the third quarter ended Sept. 30, Federal-Mogul reported a net loss of $34.2 million compared with a net loss of $29.5 million in the same period a year earlier. Revenue for the company rose to $1.51 billion during the quarter compared with revenue of $1.34 billion in the same period a year ago.
In October 2001, Federal-Mogul was forced to file for Chapter 11 bankruptcy protection after thousands of asbestos lawsuits were filed against one of the company’s subsidiaries.
Negotiations to keep the Federal-Mogul plants open began in January and involved Granholm, the United Auto Workers union and MEDC, Randazzo said.
In June, Federal-Mogul warned state officials and investors it planned to shutter both the St. Johns and Greenville plants, which employ 450 and 230 workers, respectively. The St. Johns facility, whose largest customers include General Motors Corp., Ford Motor Co. and DaimlerChrysler AG, makes engine bearings, bushings and washers. The Greenville assembly plant also makes engine bearings for Ford, John Deere & Co. and others. The Sparta plant, which is a foundry for piston rings, has 113 employees.
The company had said it would close the plants because it was unable to get concessions on worker wages, vacations and health care during its contract negotiations with the United Auto Workers. UAW Local 2017 rejected proposed cuts of around $5.4 million in benefits.
Eventually, everyone involved in the negotiations worked out a satisfactory deal.
Federal-Mogul said it signed a four-year labor agreement with the union and achieved some concessions that along with the funding from the state, made it easier to keep the jobs in Michigan.
“The combination of support from the state plus what we project the contract bargaining will yield, the facilities in question will remain here for a minimum of the full term of the contract,” Randazzo said.
Federal-Mogul officials say they will save about $9 million over the life of the contract. In addition, the company will get $3 million annually in the form of tax credits from the MEDC.
Calls to the UAW weren’t immediately returned.
“In a global market, we have to fight for jobs and make a strong business case that our companies can and will grow here,” Granholm said in a statement.
The Federal-Mogul deal is part of a larger economic development program that is expected to create and retain nearly 10,000 jobs in Michigan. This year, the state has announced the creation or retention of close to 54,000 jobs as a result of assistance by the MEDC.
The city of Greenville, already reeling from the loss of more than 2,000 due to Swedish refrigerator maker Electrolux AB sending jobs to Mexico in October, offered property tax abatements for 12 years valued at $140,000 to sweeten the deal. St. Johns will offer 6-year tax credits totaling $186,000.
Copyright 2004 Detroit Free Press. All Rights Reserved.
Click here to view the rest of today’s headlines.