Visteon restores glass operations to profitability

For all of Visteon Corp.'s struggles since its separation from Ford Motor Co. in 2000, the auto parts maker's glass operations appeared the most intractable.

High fixed costs, a bloated work force, diminished pricing power and steep competition produced $234 million in losses at Visteon's glass operations between 1997 and 2001. This year, though, the Dearborn company's glass works have managed to pull off a difficult hairpin turn.

The unit, with major plants in the United States and Mexico, has generated $18 million in profits despite a 4 percent drop in revenues through the first nine months of 2002. While that may be small change in the auto industry, it's been accomplished in large part by an unprecedented level of cooperation between the United Auto Workers union and Visteon management.

Faced with a possible shutdown or sale of the troubled unit, the UAW showed flexibility in agreeing to new work rules, lower employment levels and reduced compensation at a key glass plant in Nashville, Tenn. The concessions saved more than 800 union jobs -- at least temporarily -- that appeared headed for extinction. "With the companies under so much pressure, we have got to do things a little bit differently these days," said Gerald Bantom, a UAW vice president in charge of relations at Visteon and Ford. "This certainly won't be the last time we do something like this."

Among major North American automakers, only DaimlerChrysler AG's Chrysler unit still makes automotive glass, though the automaker plans to exit the business to focus on its core vehicle assembly, engine, transmission and stamping operations. For a time in 2000, Visteon was on the brink of selling its worldwide glass-making operations to Pilkington plc. However, the deal soured and Visteon was forced to take a $138 million charge to reflect the diminished market value of the unit.

With prospects of a turnaround dimming and few other suitors, Visteon was prepared to close parts of the business. The Nashville plant seemed particularly vulnerable because it was exempt from Ford's 1999 contract with the UAW that bars the automaker from closing or selling any plants until 2003. Under threat of a shutdown or sale, union leaders approached management in late 2001 with proposals to save jobs at the Nashville plant.

"They were looking into the abyss of closure or sale," said Bob Marcin, vice president in charge of human resources. "The UAW came to us and said, Let us take a crack at this.' They looked at the work practices. They looked at what they could change."

UAW President Ron Gettlefinger, then a vice-president, personally hammered out a compromise. The union's local chairman at the time, Johnny Martin, also played a key role in negotiating more flexible work rules. Martin headed the UAW's 1999 national contract talks with Ford and is considered influential in union circles.

"We knew Visteon was not going to continue to lose that type of money without eventually closing it down," Bantom said. "It was up to us to decide what we wanted to do."

The UAW approved plans to use early retirement buyouts for 245 hourly workers at the Nashville plant. Fifty additional employees were transferred to a Tulsa glass operation. The Nashville facility now employs 873 hourly workers and another 129 salaried employees.

"We were terribly overstaffed," Marcin said. "We had union people in their seventies still working. We had union labor cutting the grass."

600450 Visteon restores glass operations to profitability

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