Managers Accuse Tower of Changing Offer; Company Wants to Reduce Severance Deal, Group Says

Tower Automotive managers said Wednesday the company has broken its promise of offering up to six months' severance pay and medical insurance when the plant here closes and work is sent to Mexico. A group of about 13 managers says it was promised the pay and benefits in return for staying with the company until production at the Milwaukee operations ends this summer.

From The Milwaukee Journal Sentinel

MILWAUKEE — Tower Automotive managers said Wednesday the company has broken its promise of offering up to six months’ severance pay and medical insurance when the plant here closes and work is sent to Mexico.

A group of about 13 managers says it was promised the pay and benefits in return for staying with the company until production at the Milwaukee operations ends this summer.

Now, the managers say the company wants to cut their severance pay and benefits in half. Non-management, unionized workers also are worried whether they will receive severance compensation.

Tower has backed away from a long-standing policy of fair severance pay packages, said John Dwyer, a manager who has worked for the company 19 years.

Dwyer and other managers said they were afraid to speak out on the severance issue for fear of being fired before the plant closes. But they are especially angry, given that earlier this month Tower filed a request in U.S. Bankruptcy Court in New York asking the court to approve about $13 million in payments for 100 key employees.

Tower, based in Novi, Mich., wants to use the payments as incentives to retain certain employees as the company reorganizes under bankruptcy protection. The company has asked to pay semi- annual bonuses, totaling $1.79 million, to executives and senior management.

The 13 managers in Milwaukee are not included in the bonus program, Dwyer said.

The company never offered them a severance agreement in writing. But the managers said they were told orally that severance compensation would be based on what other managers had received when they left the company.

The managers said their severance benefits ought to be one week of pay for every year of service with the company, up to 26 weeks, plus medical insurance coverage during that period.

The managers aren’t asking for anything that wasn’t given to other supervisors whose jobs were eliminated in the past, Dwyer said.

Tower supplies truck frames and other vehicle parts for the auto industry. It once employed 2,800 in the city and envisioned adding more jobs. But when production of frames for the Dodge Ram trucks moves to Mexico, as few as 100 Tower employees will be working here.

The company filed for bankruptcy protection in February, saying it was overwhelmed by rising steel prices, slowing vehicle production and slim profit margins.

In its bankruptcy filing, Tower listed $1.31 billion in liabilities and $788 million in assets.

There were no severance agreements with the managers in Milwaukee, according to Chuck Whaley, a Tower human resources department spokesman here.

But severance packages that employees were accustomed to could be reduced because of the bankruptcy, Whaley said.

“I understand that people are disappointed,” he said. “But we don’t have the same autonomy that we had before the bankruptcy filing. We are doing everything we can to proceed through this bankruptcy process the way we are supposed to.”

Members of the Smith Steel Workers DALU 19806, the largest of Tower’s Milwaukee unions, also are worried about severance benefits, said Donald Schrauth, local union president.

The company might deny severance benefits altogether for about 375 of the union’s employees, Schrauth said.

“Negotiations are stalled at this point,” he said. “The company says it doesn’t have any money for our severance and that it would have to petition bankruptcy court to get it. We think that’s a bunch of baloney.”

The union’s severance pay issue is different from the managers’ situation, Whaley said.

“You can quickly get into issues that don’t have as much to do with severance as they do with interpretation of contract language,” he said.

Whaley would not confirm the managers’ claim that their severance pay will be cut 50 percent, in part because he said there were no severance agreements. But the managers have been told what to expect, he said.

The managers say their situation is similar to a case in which Beloit Corp. workers received only about 9 percent of the pay they expected when Beloit Corp. shut down in 2000.

Nearly five years later, the former Beloit Corp. workers are still awaiting the outcome of a court case that seeks $10 million in damages.

A court hearing in the Beloit Corp. case is scheduled for April 21, said Jerry Hancock, the lead attorney representing the workers in a complaint filed with the state Department of Workforce Development.

“We are not going to give up on this,” he said Wednesday.

The Tower managers said they’ve contacted the department to ask about severance rights. They are worried that their severance could be further reduced or even eliminated, Dwyer said.

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