Navistar Closing Nearly Done

By the end of December, Navistar International Corp. will have whittled its local workforce from about 1,400 two years ago to about 20.

That’s one remaining job for every 70 that existed in 2010.

The price tag on the company’s pullout could approach $75 million, according to a filing with the Securities and Exchange Commission.

Local workers were offered generous retention bonuses – $7,500 each for union members – to stay as long as the company needs them. But those who remain consider the promised money more like combat pay.

Hundreds of desks and chairs sit empty these days. Whole sections of the office are left dark, engineer Gayle Goodrich said.

“We all talk in the office about how depressing it is,” she said. “There’s a lot of junk, a lot of cleaning that needs to be done.”

Tying loose ends

Navistar makes commercial and military trucks, diesel engines, school and commercial buses, recreational vehicles, and chassis for motor homes and step vans. Step vans, which are boxy with a higher roof, are commonly used by delivery services, including FedEx.

Local workers designed and tested engines for the vehicles.

About 250 employees accepted transfers from Fort Wayne to the new Chicago-area complex, a Navistar spokesman said this month.

Many of the remaining 1,130 or so well-paid, white-collar workers have been thrust into unemployment or early retirement.

Navistar’s Fort Wayne phase-down has left mere remnants of the employer’s former presence, including a commercial real estate listing for its 345,000-square-foot engineering, research and development facility at 2911 Meyer Road. List price: $4.1 million.

About 175 salaried and union employees were still on Navistar’s local payroll as of mid-October. Company spokesman Steve Schrier said that workforce will shrink to 130 at the end of October.

The local Navistar workforce remaining after December will be 20 to 25 people manning the company’s test track on Oxford Street.

Schrier said the company “will continue to operate the test track in Fort Wayne into the future.”

Two years ago, Don Sharp, Navistar vice president and chief information officer, said the Fort Wayne test track doesn’t meet Navistar’s long-term needs anymore.

Sharp said then that the manufacturer intended to lease time on someone else’s test track because Navistar doesn’t use a test track often enough to justify building and maintaining its own.

Adding the costs

Navistar’s move hasn’t been easy or cheap.

In 2010, the company announced plans to invest $110 million to convert the former Alcatel-Lucent East campus in Lisle, Ill., into a new headquarters.

The 1.2 million-square-foot complex houses executive management, business operations and product development.

A second, nearby location in Melrose Park houses the company’s technology center. That renovation was estimated at $80 million.

The consolidation required more than money, however. Careful negotiations were needed to win Lisle’s approval.

The consolidation required permission from the village’s zoning board, and residents in the upscale Chicago suburb objected to the amount of noise a truck- and engine-testing center would create in the neighborhood, which includes a school for children with autism. They also objected to plans to store more than 150,000 gallons of fuel and other fluids in 15 aboveground tanks on the site.

The results were lawsuits, threatened lawsuits, subpoenas and depositions.

Navistar officials even feigned indifference for a time, saying they were stepping back to reassess options. Lisle officials approved the zoning request rather than lose the chance to land a significant employer.

Meanwhile in Indiana, Fort Wayne officials were fighting to keep Navistar. The company’s payroll generated an estimated $100 million for the local economy.

The Fort Wayne-Allen County Economic Development Alliance made wooing the company its top priority. The nonprofit organization doesn’t reveal details of failed bids.

Speaking at a downtown rally at Parkview Field, Mayor Tom Henry urged residents to bombard Navistar with emailed pleas to stay. He also hired a consulting firm, approving up to $95,000 in fees, to help Fort Wayne’s lobbying bid to keep the company.

The effort fizzled quickly, however, despite an independent 2009 report prepared by Ernst & Young that found it would cost Navistar $31 million less per year to do business in Fort Wayne than in Lisle.

Charging ahead

As of July 31, Navistar had recognized $34 million in restructuring charges related to winding down the Fort Wayne operation. The breakdown, according to an SEC filing:

•$13 million in personnel costs.

•$7 million in pension and other post-retirement benefits.

•$14 million in employee relocation costs.

“We anticipate additional engineering integration charges to range between $30 million and $40 million through 2013,” Navistar said in the filing.

The company is paying members of the United Auto Workers union $7,500 each to stay on the job until Navistar releases them.

Some UAW members will also qualify for early retirement, Goodrich said. The local engineer is the person who handles pension and insurance benefits for UAW Local 2911.

The union is paying members a $300 weekly supplement to unemployment insurance benefits for up to 78 weeks. The UAW also continues to pay for members’ health insurance coverage during that time.

“There is a very nice safety net to tide us over until the next job comes along,” Goodrich said.

Finding that next job could take awhile, especially for highly trained, highly paid engineers, she said. Goodrich plans to switch careers rather than fight for one of the elusive openings. She earned a master’s degree in sociology in May.

Goodrich doesn’t plan to apply for additional training, paid for by the federal Trade Adjustment Assistance program.

But many of her current and former co-workers are seeking TAA approval.

Goodrich has been meeting regularly with WorkOne staff, which administers the program, to track progress of Navistar workers’ training program requests after some were denied benefits. Union leaders met with state Department of Workforce Development officials to streamline the process.

“Since our meetings with the state, nothing that was submitted for TAA approval has been denied or indefinitely withdrawn,” she said in an email, adding that plans have been approved within a few days of arriving in Indianapolis, where decisions are made. “The plans do still take a considerable amount of research, but some of the busy work was eliminated.”

As of Oct. 15:

•11 training plans had been approved.

•One training plan was pending in Indianapolis.

•11 training plans were in development.

“Hundreds of former Navistar workers, which include contract and direct employees, may be eligible for TAA benefits,” Goodrich wrote. “The number of former employees taking advantage of these benefits is still very low.”