NEW YORK As Toledo s largest firm tries to snare another $200 million from its car-making customers, a Dana Corp. executive yesterday asked a judge for labor and benefit concessions from its unions.
The firm, in a continuation of a trial in its ongoing U.S. Bankruptcy Court, said it would hire replacement workers if union members at its plant strike as threatened if wages and benefits are cut without their approval.
Ted Stenger, the Fortune 500 firm s chief restructuring officer, told the judge: We need structural change, and we need drastic change.
Dana plans to emerge from bankruptcy by the end of this year and will present a preliminary draft of its exit plan with the creditors committee and others next month, said Mr. Stenger. He was hired last year to help turn the firm around.
The company doesn t expect existing shareholders will get any money, he added.
Dana and its two main unions resumed their legal battle in bankruptcy court, about two weeks after the company said it reached an agreement to end health-care benefits for 9,700 nonunion retirees. The unions are the United Steelworkers and the United Auto Workers.
The company based on Dorr Street wants to scrap labor contracts and eliminate health care for union retirees, part of an overall plan to save $405 million to $540 million a year. More company officials are expected to testify today, with union experts on the docket tomorrow.
The unions have threatened to strike at Dana plants if Judge Burton Lifland allows the company to void labor contracts, a decision he has said he will make by the end of April.
While Dana executives and board members have not decided whether labor contracts and retiree benefits will be thrown out if court approval is received, they should, Mr. Stenger said.
The company plans to hire replacement workers if a strike occurs, he said. Automakers and other customers are worried about whether they will have an adequate supply of parts, he said.
During the first day of the hearing two weeks ago, the maker of axles, driveshafts, pickup frames, and other parts announced it had reached a settlement with a committee representing nonunion retirees in which Dana will contribute $78 million to a fund to provide some medical coverage. It also struck a deal with the International Association of Machinists, the smallest union at Dana.
Those agreements will contribute $30 million to the $70 million to $90 million Dana wants to save annually by eliminating retiree health care, Mr. Stenger said. Dana also will save $2 million through concessions from the IAM, he said.
Bruce Simon, an attorney for the unions, questioned why Dana on Saturday said the company could save $34 million from five factories at the crux of the dispute in Auburn Hills, Mich.; Fort Wayne and Marion, Ind.; Henderson, Ky., and Elizabethtown, Ky. but lowered the amount to $28 million a day later. Mr. Stenger said that first figure was an error.
That figure, meanwhile, would further be reduced to $18.4 million if Dana decides to close the Marion factory instead of one in Lima, Ohio, a determination that has not yet been made, he said.
Altogether, Dana wants to save $60 million to $90 million a year by reducing labor and benefit costs for employees, and at this point it will reach $5 million this year, he said.
Mr. Stenger said Dana needs North American operations but cannot continue to fund losses there through profits elsewhere worldwide. Dana has lost nearly $2.5 billion in North America in the last half dozen years, he said.
We could be at a distinct competitive disadvantage to the other global players, Mr. Stenger said.
Dave DeFrancesco was among a group of retirees from Dana s factory in Pottstown, Pa., who attended the hearing. So did Wayne Clark, an official with UAW 644 at the plant.
Those testifying for Dana have far less experience with the company than the assembled retirees do, and the actions of executives angling to eliminate retiree health care and labor contract changes will pay the price in their afterlives, Mr. DeFrancesco said.
Added Mr. Clark: We wonder if they really know what they re talking about.
Contact Julie M. McKinnon at:jmckinnon@theblade.comor 419-724-6087.
First Published March 27, 2007, 1:14 p.m.