MAHONING VALLEY Packard will invest but still cut force
Packard will spend $35 million to upgrade area plants, just like last year.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
Big investments in new equipment continue to make Delphi Packard Electric Systems more efficient, more productive and less in need of workers.
Cuts in the local work force of 5,600 hourly and salaried workers will continue even as Packard invests $35 million this year to improve its Mahoning Valley plants, which is the same amount spent last year, said John Sefcik, director of U.S. operations.
Hundreds of hourly workers are expected to retire in April, the only time in the next four years that workers can leave with a company-paid incentive.
Just like the 450 workers who retired last year, those who leave in 2004 will not be replaced, Sefcik said.
A labor contract calls for workers with 30 years of service who retire in April to receive $40,000 on top of their normal pension. Workers at least 55 years old who have at least 10 years of service would receive $20,000 if they retire.
Eligible for incentive
About 1,600 of the 4,200 hourly Packard workers in this area are eligible for the incentive. Sefcik declined to estimate the number who would take it, but about 600 workers have told Packard they are interested, said Gary Reiser, president of Local 717 of the International Union of Electrical Workers.
In 1995, Packard had 8,600 hourly workers. Packard has been slashing jobs in recent years as new equipment allows workers to be more productive and some operations are sent to other areas, such as Mexico.
Warren-based Packard has about 85,000 employees worldwide. It is a division of Michigan-based Delphi Corp.
Sefcik said no minimum number exists for local employees because competition is constantly changing. Packard's main business, providing wiring harnesses and related components for vehicles, is always being evaluated, he said.
Until orders pick up, area plants have about 400 workers who are on some form of layoff or nonproduction duties for which they are being paid.
Reiser said it's clear the employment numbers will continue to fall for now but he hopes that can be reversed.
"I'd like to see the number of employees grow, but it's hard to compete with wages of 27 cents an hour in China," he said.
A sign of security
On the other hand, Packard's investments in local plants indicate the operations are secure, he said.
Sefcik said executives are quite pleased with plants that have been upgraded recently.
Quality and productivity are up significantly at Packard's plastic molding operations since production has been moved from an old plant on Dana Street in Warren to a remodeled $42 million plant in Cortland and new $58 million plant in Vienna, he said.
The rejection rate for defective parts on Dana Street was hundreds of parts per million. The Cortland plant, which opened four years ago, has a rejection rate of about three parts per million. The Vienna plant, which opened last September, has a rate of less than one part per million.
The two new plants, which employ about 290 total, pump out plastic pieces at a rate of 1.1 billion a year. That's double the rate of the Dana Street plant, which has allowed Packard to bring back molding work that had been done by suppliers.
Packard also is in the midst of a $15 million upgrade of its metal stamping operations on North River Road. Older presses are being improved, and new ones are being installed.
Sefcik said the number of presses is being reduced from 64 to 48, although production is being kept the same. The operation churns out about 9.7 billion pieces a year.
The reduction in presses will allow some reduction in the work force in the plant, but it also will allow some workers to be assigned to build parts for dies that are now being bought, Sefcik said.
Besides equipment upgrades, Packard has continued to look for other improvements in productivity, he said. Production methods are constantly evaluated, and workers have formed teams to look for solutions for problems that slow output, he said.
The number of managers also has been reduced as they are given more responsibilities, he said. Plant managers, for example, used to oversee one plant, but now are in charge of two or three, he said.
Packard has cut 500 salaried jobs in the past two years.
Overall, Packard must continue to reduce operational costs and improve quality as much as it can, he said. Customers are demanding perfect quality and annual price reductions, he said.
"Every year, you take a snapshot and make sure you are moving faster than your competitors are," he said.