Sudden Midwest closure leaves employees scrambling
Walking into work the day before New Year’s Eve, Dave Hobbs didn’t bother to stop and check the bulletin board. Usually the board had simple announcements, some safety tips and occasionally a calendar of upcoming events. This morning — the morning of Dec. 30, 2009 — there was only one bulletin that mattered at the Midwest Manufacturing plant in Kellogg: a piece of paper telling every employee they were out of a job, effective immediately.
“They waited until our shift left the day before, and then they posted it that evening,” said Hobbs, an employee at Midwest for more than 32 years. “We was pretty-well ticked off, but we knew it was coming … just a matter of time.”
A native of Newton and Kellogg all his life, aside from a stint in Vietnam, Hobbs, 62, speaks in an understated drawl. He is angry and resigned. He feels betrayed but admits only a fool didn’t know the score. He is the American automotive laborer.
Over the last six months, orders for materials at Midwest began to dwindle. With less and less work to be done for the roughly 20 employees, the writing was on the wall. Midwest was going out of business, and fast.
“We knew it was coming in pretty quick because steel wasn’t coming, and things like that,” said Todd Van Wyk, a non-unionized supervisor at Midwest for eight years.
A company union meeting two weeks before the closure hinted to those in attendance that Midwest was on the verge of closing. Still, the announcement took most workers by surprise.
“A lot of people were on vacation,” said Carlo Supino, a ring-gear finisher who worked for Midwest for 32 years. “I was. Someone had to call me.”
What makes the sudden shuttering of Midwest’s doors more alarming to workers than just being another piece of tumbleweed in the American manufacturing landscape is the decision by Midwest, and by proxy, parent company Amtek Group, to allegedly disregard a contract signed between unionized employees and Midwest in 2008.
According to GMP International Staff Representative Dale Jeter, that contract guaranteed Midwest’s unionized employees 120 days notice of a plant closure, severance pay in the case of a closure, and a company match in 401K retirement funds. Four weeks later, Jeter said none of those guarantees have been met.
“It would be the union’s contention, on the behalf of the employees, somebody — including the parent company — owes the people of Kellogg, even if it has to come out of the owner’s pocket,” he said. “If that owner is still in business, somebody should have to pay.”
Jeter went on to detail how GMP International has filed a grievance through Midwest, requesting that it be advanced immediately to arbitration, as well as an unfair labor practice charge with the National Labor Relations Board.
While the closing of Midwest hasn’t come as a shock — it had been letting employees go steadily over the last few years and the company’s Bay City, Mich. plant was closed several years ago — the manner in which it was handled has surprised some. People within the company, as well as several outside observers, believe management purposefully waited until the very last moment to notify employees.
“I would classify it as unusual and very cold,” said Craig Hamilton, director of Jasper County Economic Development Corporation.
Midwest CEO Henry Rouse declined to comment on the situation. An employee who answered the phone at Midwest’s sole remaining plant in the US, which is located in Stanberry, MO, declined to give his name or comment on the situation in Kellogg.
The parting out of the American automotive industry has been taking place for decades, and Midwest isn’t likely to be the last company to be stripped bare by a foreign corporation, Hamilton said. But the actions of Amtek, a conglomerate that began as a simple Indian auto parts outfit created by Arvind Dham in 1985, seem to actually fall in line with the most successful models of American capitalism — sometimes cruel but always efficient, ever-focused on the bottom line.
A 2007 article in Forbes Asia titled “Playing the part” describes Dham’s business model for Amtek:
When he finally got a call in 2002 to buy a moneylosing [sic] auto parts maker, Dham’s initial reaction was, “Do you think I am a fool? I don’t have that kind of money.” It would be his biggest deal, but not by much — some $2.5 million, plus $3 million in liabilities, for Smith Jones, an Iowa supplier of flywheel ring gears and flex assemblies to big automakers. He revived Smith Jones in a year by moving low-value production to India. Since buying another Western supplier, he’s become the world’s biggest ring-gear maker, meeting a third of world demand. “Our advantage lies in arbitraging labor costs,” says Chief Financial Officer Santosh Singhi.
The article goes on to state in detail how Dham targeted companies that already had a presence in the US and European markets but weren’t financially sound. The purchases were a way of getting a foot in the door in foreign markets. In addition to increasing manufacturing scale, companies like Midwest offered Amtek brand names that potential partners would feel more comfortable with, not to mention an address in the Western Hemisphere. Meanwhile, labor costs would gradually be decreased by moving manufacturing to India.
“I pass on 10 percent of the savings to my customers and keep the rest,” Dham said in the article.
Jeter said he and the union sent a letter to Dham earlier this month requesting Amtek fulfill the promises made by its subsidiary, Midwest, if the American counterpart reneges on the contract it signed with the union. Not long afterward, the union received a response from Dham’s attorneys stating all future communication should go through the CEO’s legal counsel.
Until a decision is made in response to the grievance filed by former Midwest employees, a group of laborers are left to wonder where they fit in to the future of American manufacturing.
“Whether you send the jobs to Mexico or overseas or wherever, sending all
these good jobs away, we gotta come up with something better than that,” Supino said. “These are the middle class jobs. If you get rid of them, what do you got left?”
Hobbs said he’ll be searching for whatever else is left.
“I’m going to unemployment,” he said, “start looking for jobs that’s pretty scarce.”
