Local employees of FreightCar America received some unwelcome news on Saturday.
“We just got WARN Act letters,” said Bob Buford, a 17-year FreightCar employee and member of United Auto Workers 2419, Saturday.
According to Buford, the letter states the rail car assembly plant at 2313 Cannon St., “anticipates changes and when finalized, could be permanent.”
The changes are expected to take effect sometime between April 23 and April 29. Various dates are given in the WARN Act letter depending on where a worker is positioned on the production line.
“Everybody knew it was coming,” said Monty Ollis, who has worked at the facility nearly 16 years and is a UAW 2419 member. “The management got the WARN letter on Friday and told the rest of us to expect ours in the mail on Saturday.”
The letter was issued in accordance with the Illinois Worker Adjustment and Retraining Notification (WARN) Act, which requires employers to provide 60 days advance notice of pending plant closures or mass layoffs. The law applies to businesses with 75 or more employees, excluding part-time employees.
FreightCar America employs about 250 people in Danville. The company and UAW 2419 agreed in October to a one-year extension of the union’s contract.
On Monday, Deanna Johnson, human resources director at the FreightCar location in Danville, said she had “no comment” when asked about the WARN Act letters and deferred questions to senior vice president of human resources Tom McCarthy at FreightCar America’s corporate headquarters in Chicago.
McCarthy said, “We’ve notified all employees of the scheduled layoff.”
McCarthy acknowledged FreightCar America has had situations in the past in which a downturn in new rail car orders slowed production and prompted short-term layoffs. But this time different factors are at play.
“The coal market is down, primarily due to the economy and competition from natural gas, and it’s impacting the (production) schedule at the Danville site.
“We’re working hard to get orders for the plant, but right now we don’t have orders past mid- to late April,” he said. “We’re actively pursuing new orders.”
Ollis said the Danville facility builds two other types of rail cars in addition to coal cars.
“I’m hoping there will be new orders that will come in by April. People have got families and the job market isn’t too good right now,” he said.
Vicki Haugen, president and CEO of Vermilion Advantage, said she has not received any information the Danville facility will close but instead believes there might be a downturn in production, which is normal for the rail car manufacturing industry.
“We have a good relationship with FreightCar and I’ve been given no indication that any plant closure is imminent,” Haugen said. “I don’t have any indication that it’s anything more than the economic cycle that they go through.”
In October 2007, 313 FreightCar employees received WARN Act letters, giving them 60 days’ notice of possible layoffs as required by state law. But a new order of rail cars from overseas allowed workers to be called back within two weeks of the initial layoff.
In February 2009, 195 out of 252 FreightCar employees received WARN notices because of a lack of new orders.
The longest stretch of layoffs came in December 2010 when the Danville site sat idle until July 2011.
Buford worries that might be the situation again.
“It was like the scenario we’re in now,” he said, referring to the eight-month layoff. “We were waiting on new orders and new parts to come in.”
FreightCar America, however, expanded during the recession, acquiring DTE Rail Services in 2010. As part of that acquisition, FreightCar America took over four rail car repair shops, including one in Clinton, Ind.
FreightCar America, Inc. manufactures coal-carrying railcars. It supplies railcar parts, leases freight cars through its JAIX Leasing Co. subsidiary and provides railcar maintenance and repairs through its FreightCar Rail Services, LLC subsidiary.
In addition to coal cars, FreightCar America designs and builds bulk commodity cars, flat cars, mill gondola cars, intermodal cars, coil steel cars and motor vehicle carriers. It is headquartered in Chicago and has facilities in Danville; Clinton, Ind.; Grand Island, Neb.; Hastings, Neb.; Johnstown, Pa.; Lakewood, Colo.; and Roanoke, Va.