A Steelworkers official called the company's demand 'outrageous.'
By DON SHILLING
VINDICATOR BUSINESS EDITOR
NILES -- A Kentucky company said it will shut down its Niles aluminum casting plant if hourly workers don't accept a 20 percent pay cut.
Ohio Valley Aluminum Co. said labor costs at the plant are higher than its other three plants. The average pay is 15.80 an hour, plus incentives.
Despite recent productivity improvements, the Niles plant can't be run profitably without wage cuts, the company said. The plant's poor performance cost all of the company's employees an annual bonus for the 2005-06 fiscal year, the company said.
The plant's 77 hourly workers, who are members of United Steelworkers of America Local 4965, have been called to a meeting Thursday afternoon. Kirk Davies, a Steelworkers staff representative, said he will inform the workers about the company's demand.
"I think it's outrageous," he said.
He said he doesn't plan to call for a vote on the demand but added that he will listen to the workers' wishes. The company has asked for a response to its demand by Friday.
Must give notice
Theresa Thomas, Ohio Valley's vice president of human resources, said a 60-day plant closing notice will be issued if the wage cut isn't approved. Federal law requires the plant to give the notice.
Davies said the union approved a three-year contract in early 2005 that provided wage increases. The company didn't say anything about financial problems at the time, he said.
Ohio Valley acquired the plant in 2004 from Indalex Aluminum Solutions. Before that, the plant was owned by Easco Corp.
Davies said the company approached the union about concessions in June. He said he asked for financial reports on the company, but none were given.
He received the financial reports with the latest demand for wage cuts, however, and that information has been forwarded to union experts for review.
The company said the plant faces great difficulties because it has "antiquated" equipment. Its smelters are inefficient in consuming energy, making products expensive, the company said.
Investing in plant
With lower labor costs, Ohio Valley said it would be able to invest in the plant to make it more competitive.
The plant melts scrap to make aluminum billets and logs that are sent to aluminum extruders.
Ohio Valley also said that its operating costs in Niles have been higher than expected. It cited changes in Ohio tax law, high property taxes and scrap costs that have risen because of increased demand from China.
Ohio Valley also owns casting plants in Shelbyville, Ky., where its headquarters is located, and Boonville, Ind. It also owns an extrusion plant in Jeffersonville, Ind. It employs 400 overall. Two of its other plants are unionized, and workers at the third just voted to form a union but don't have a contract yet.
The company said that it acquired the Boonville plant a year ago and can meet its customers' needs without the Niles plant.