A planned $40 million upgrade of Mapleton facility would outsource union positions to Mexico; some workers will move to other area plants
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December 3, 2004
PEORIA - Caterpillar Inc. announced Thursday it will invest $40 million in its Mapleton foundry to keep operations there alive, but a restructuring plan will cost that plant more than 500 jobs.
Those jobs - about 560 hourly, union-represented positions - will be outsourced to a joint venture Caterpillar plans to form with a Mexico-based company, a fact that rankles the United Auto Workers union.
The jobs will be relocated to a foundry that will be built in northern Mexico, if the joint venture is approved by the directors of Caterpillar and Grupo Industrial Saltillo, which would be the majority owner of the joint venture.
That would leave about 200 positions, including salaried and management, at Mapleton once the investment of new equipment is completed, said spokesman Rusty Dunn.
To the company, Dunn said, the key part of Thursday's announcement is the investment and the fact it will enable Caterpillar to continue operating the foundry to produce large castings and liners for its larger engines, which he called a proven strength for the company.
Without the joint venture enabling Caterpillar to rid itself of the noncompetitive manufacture of small, high-volume engine castings, the foundry could close altogether, he said.
"While the initial news (about the jobs being outsourced) may be daunting, we see it as a positive in the long run for the area," Dunn said.
The United Auto Workers, which represents hourly employees at Mapleton, doesn't see it that way. In fact, said Rick Doty, executive vice president of UAW Local 974, the union views it as another example that Caterpillar has little interest in keeping jobs in the Peoria area.
"We're not happy. We're doing everything we can to make the company money and they keep giving away jobs. They tell us they need us to pay more for health care than we believe we should and to accept two-tiered wages in order to be able to keep jobs in the area, then they do this anyway," Doty said.
He was referring to health care and wage demands Caterpillar has put in its latest offer to the UAW, which has been working without a signed contract since April 25. While the full bargaining committees for the two sides haven't met since August, there were a couple of meetings of smaller groups of officials from the UAW and Caterpillar in November, with more scheduled during December, Doty said.
He said he didn't know how Thursday's announcement, which was made to the UAW in the form of a letter, would affect those meetings.
Caterpillar said it hopes to finalize the joint venture agreement by early February and have the new Mexico foundry operating sometime in 2007, with the Mapleton jobs moved by 2008.
Dunn said the plan must be approved by the boards of the two companies, but also is subject to bargaining with the UAW since the affected jobs are represented by the union.
Doty, however, disputed the "bargaining" part of that statement. "In our previous contract there is language that the company must give us 60 days notice if it plans to outsource more than 50 jobs. That's notice from the company, not bargaining," he said.
And while Caterpillar said it does not anticipate full-time employees being laid off, but rather shifted to other positions or employment adjustments being made through attrition, Doty said that does not include the 100 or so supplemental employees at Mapleton who do not enjoy "by-name" job security even though they are represented by the union.
Nor does it protect supplemental employees who may be displaced when the company moves protected full-time hourly workers to other Peoria-area plants, he said.
But Dunn said Caterpillar has been hiring - including about 1,500 manufacturing jobs in Illinois in the past year (Local 974 membership is up to about 5,400 now) - and likely will continue doing so because of strong demand for its products.
And investing in new equipment at Mapleton to replace that which is more than 30 years old and no longer efficient will help that plant become more globally competitive, with future growth possible, he said.
Under the plan, the Mapleton plant would remain the base of Caterpillar's foundry business, but it would have minority ownership in the joint venture and be responsible for casting design, quality control and engineering. Grupo Industrial would manage operations of the new foundry and would supply engine blocks and heads used at Caterpillar plants in Mossville and in Greenville, S.C.
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