When plant gates close. Business and labor dispute value of advance notice
When Ore-Ida Foods announced it was closing its potato processing plant in Grand Rapids, Mich., in December 1986, it voluntarily gave workers almost five months' notice. The company set up a job-search program, talking to nearly 1,000 area employers, who hired 340 of Ore-Ida's 550 workers. But when the Boise Cascade Company closed its siding plant in International Falls, Minn., in December 1984, it announced the closing the same day it shut the gates.Skip to next paragraph
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``We felt it was the most decent and responsible thing to do to close immediately so the workers could get on with finding new jobs,'' says Robert Hayes, director of corporate communications at Boise Cascade. He notes that the company provided generous severance pay and benefits after the closure and helped workers find new jobs.
The Senate is expected to follow the House today in passing a trade bill that includes a mandatory advance notice of plant closings nationwide. This is the main reason President Reagan promises to veto the legislation, which is expected to reach his desk this week.
The administration acknowledges that the issue will emerge again next year if Congress is unable to override the President's veto. And the chances are good it will become law if Gov. Michael Dukakis, the Democratic front-runner, is elected, since he is on the record as favoring the legislation.
The President's backers insist he is not interested in seeing workers summarily tossed out of factories. Rather, he believes it is a labor issue that should be negotiated between management and workers, without the interference of the federal government.
``He is adamant about this. It goes back to his Hollywood days when he was active in his own union,'' United States Trade Representative Clayton Yeutter says.
For the most part, the business community is lining up solidly behind the President. Jerry Jasinowski, executive vice-president of the National Association of Manufacturers (NAM), calls the plant closing provision a ``complicated, unclear law that would hobble American competitiveness and result in an explosion of new litigation.'' He claims the language of the proposed law is so unclear that ``even the courts will have trouble deciding cases.''
And the US Chamber of Commerce calls the bill ``an unprecedented government intrusion into the most fundamental decisionmaking process of employers.''
``Financially troubled businesses need more, not less, flexibility,'' says Mark DeBernardo, special counsel to the chamber.
Mr. Jasinowski says the plant closing provision would hurt companies that are in the process of restructuring to become more competitive by making them wait to close down unprofitable operations. The NAM cites a study by Robert R. Nathan Associates that concludes the provision would cost employers $1.8 billion annually.
Susan Goguen, head of the National Center on Occupational Readjustment, points to the adverse effect laws have had overseas. In France many companies will not hire more than 49 workers, the cutoff point for notifying workers of a prospective plant closing. ``It inhibits growth,'' she says.
But proponents of the bill argue that companies operating abroad have had no trouble complying with such laws. ``Almost all these companies opposed to the legislation live with it overseas,'' says Markley Roberts, an AFL-CIO economist. Among the major countries with mandatory plant closing rules are Canada, West Germany, Britain, France, Sweden, and Japan.
Six states already have some form of mandatory plant closing law and 10 more have proposals under consideration. Mr. Roberts says, however, that ``most of these laws are not worth a damn.''
Mr. Roberts and others maintain that the state laws don't have enough teeth to make them enforceable. There is some truth to their criticism. Since 1980, Maine's Department of Labor reports, 14 companies have given the mandatory 60 days' notice, while 20 have not. But now Maine is on the offensive. The state is suing Health-Tex, a New York company that shut down three plants last year, giving employees less than a week notice. Health-Tex maintains that a collective-bargaining agreement with its employees relieves it from abiding by the state law.
The law can work if companies are interested, says Stephanie Locke, a training program coordinator with the Maine state AFL-CIO. She points to the example of Bendy Shoe Company, which closed in Bangor in 1985. Bendy's 200 workers received 60 days' notice - enough time to get them into a job training program. Because they were promised severance pay, the workers stayed on until the plant closed, countering the argument that workers will leave once they find out a plant is closing.
In fact, many companies are now voluntarily giving workers advance notice. After helping the Ore-Ida workers find new jobs, Gene Beaulieu, former head of personnel, formed his own management consulting firm, Management 1 Consultants, which is now trying to find jobs for 1,200 workers who will be laid off from a White Consolidated Industries plant in Grand Rapids. Mr. Beaulieu says advance notice gives the company time to form a committee to help the workers. ``Many of these people have not searched for jobs in years,'' he says.
Advance notice proponents say communities can be devastated if they are not forewarned about plant closings. When the Boise Cascade plant closed, Bob Walls, the local union business agent, recalls, ``People went into hysterics. The secretaries even walked away screaming.''
Such problems continue today. Last month, J. Melvin Freed Inc. closed its glass micro-slide operations in Perkasie, Pa., giving the workers 30 minutes' notice. The workers received no severance pay and little support from the company. Marie Kline says her husband came home in shock. ``This is a close-knit community, and that kind of thing hurts the whole town,'' she says.
Intern Roberta Schur contributed to this report.