Komatsu Shutters Plant as Sluggish Mining Industry Spurs 3-Month Closing, Massive Layoffs

Wed March 05, 2003 - National Edition

Komatsu America Corp. announced Wednesday, Feb. 26, 2003. it will shut its Peoria, IL, plant for a minimum of three months beginning April 14.

Lack of business in the mining industry caused the shutdown, the company said.

"When you don’t get any orders, it’s tough to keep operating. We hate that this has to happen," said Dave Nardo, vice president and general counsel.

The shutdown will idle about 310 employees of the Komatsu mining systems plant in Peoria, including the termination of 50 salaried employees and 15 temporary workers, the company said.

The remaining workers, hourly employees represented by Boilermakers Local 158, will be laid off. They join several hundred hourly workers already laid off from the plant at 2300 NE Adams St.

Another 40 to 50 Komatsu America employees at other locations also will be laid off if their work is related to mining systems, the company said.

About 200 employees will remain, including engineering, accounting, human resources and customer support staff. It will include about 25 hourly workers to fill parts orders and support other continuing operations, said Pamela Slaby, human resources manager at the Peoria plant.

The company informed the union and employees Wednesday morning. Under federal law, companies are required to give 60 days notice of mass layoffs or shutdowns of significant duration.

"We sincerely regret the negative impact these actions will have on our employees and would not take such action were it not essential to the long-term stability of our business," the company said in a news release. "During the three-month shutdown, further analysis will be made to establish a longer-term plan for our worldwide mining business."

Company officials said they do not believe the three-month shutdown is a precursor to a permanent closure of the Peoria plant. "We hope it’s short term, of course, but who knows? We hope it comes back soon. In looking at our markets, we believe it will be 90 days. I don’t think this will lead to a permanent shutdown," said Gary Aubrey, vice president of human resources.

Officials said they hope the shutdown can be shorter or somehow avoided altogether, if orders for mining equipment pick up sooner than expected. "Nothing would make us happier than to not have to go through with this," Slaby said.

Kevin Kocher, president of Boilermakers Local 158, said the union was surprised by the announcement. "We didn’t see this coming at all. We’ve never had this kind of massive shutdown here. It’s upsetting and disappointing," he said.

Local 158 membership once numbered more than 1,000 during the 1980s, before a recession caused Dresser Industries, the owner of the plant at that time, to contemplate closing. But the union agreed to concessions in 1986, helping save the plant, Kocher said.

After that the number of hourly workers dwindled, hovering around 500 in the 1990s and down to about 250 now, he said.

"They told us they’re just not getting any orders for mining products. We hope this isn’t a precursor to closure," Kocher said.

In September 2000, Local 158 members ratified a three-year contract that didn’t include wage increases and allowed the company to force six-day work weeks after the it threatened to lock out workers if the contract was not accepted.

Since then, the company has laid off workers and in January 2002 closed the Peoria plant’s machine shop, outsourcing the work elsewhere and laying off about 100 workers. The union has filed an unfair labor practice charge with the National Labor Relations Board, which is still pending.

Employees were informed of the shutdown starting with the first shift. Employees on that shift declined to discuss the shutdown as they left the plant Wednesday.