Workers Accept Pay Cuts in Bid to Buy Plant
Oct. 07, 1985
MOUNT VERNON, Ill. (AP) _ Nearly 250 General Radiator employees have agreed to take $3-an-hour pay cuts in exchange for time to develop a plan to buy the Chromalloy American Corp. subsidiary, a union official said Monday.
The workers now have until the end of the month to buy the operation. If they can't manage the purchase, the plant will be sold to a Canadian competitor and closed, said Dave Garner, regional representative for the Machinists union.
Members of Machinists Local 1417 overwhelmingly approved the pay cuts and changes in contract language Sunday after Chromalloy sought concessions to keep the plant open while it considered an employee stock ownership plan, Garner said.
Hourly wage rates were not immediately available, but Garner said the plant has a monthly payroll of $350,000.
The parent company, based at Clayton, Mo., announced last month that it had signed a letter of intent to sell General Radiator to Long Manufacturing Ltd. of Oakville, Ontario, for an undisclosed price.
However, Garner said company officials agreed at a meeting with the union and Illinois Department of Commerce and Community Affairs to give workers 30 days in which to incorporate, raise money and present their own buyout plan.
He made no mention of a purchase price, but said workers would try to sell $250,000 worth of stock and, pending the outcome of a feasibility study, seek more money from the Illinois Developmental Finance Authority.
''We'll hit them for $300,000,'' Garner said.
The Commerce Department suggested further funding might be available through the Community Development Action Program, Small Business Revolving Loan Fund and the Urban Development Action Grant program, Garner said.
''There was feeling on their part that if the feasibility study is positive, these (the stock and state development money) are a reasonable amount of funds,'' he said.
Civic leaders in Mount Vernon, which is trying to attract new industry to combat a 13.6 percent unemployment rate, have endorsed the buyout and pledged their support.
On Saturday, the city council voted unanimously to contribute $7,500 toward the feasibility study, and Mayor Rolland Lewis said he expected the Jefferson County Board to contribute a like amount.
Garner said state and federal funding depends upon whether the study shows a long-range market for General Radiator products.
When Chromalloy announced plans to sell the plant, Executive Vice President Geoffrey Phillips said the Missouri company felt its market had disappeared. General Radiator makes radiators for heavy industrial equipment.
''It will be a difficult time for the new company,'' Garner said. ''The market out there has shrunk dramatically. We'll have to go for more than our share.''
But he said the union already has met with marketing experts and believes an aggressive sales team can improve the market.
Expressing confidence in the buyout, Garner said expects the sale of the stock in the new company to begin sometime before the end of the week.
''Business people in this community whose livelihood depends'' on the plant also will be asked to buy stock, Garner said. ''Some of them better be looking at buying 10 or 20 or 50 shares to get this thing off the ground.''