Brace for impact: Tower Automotive asks judge to pull plug on union contract

From the "No Flinching Allowed" department: ailing parts supplier Tower Automotive has asked its bankruptcy judge to cancel its labor contract. Last month, Tower's unionized employees voted to strike if such action is taken, so the gun was already loaded and waiting for Tower to pull the trigger. The company also announced that it would move to close its facility in Greenville, MI, where it was founded over 130 years ago. The company had just submitted a new labor proposal last Friday, amending a previous offer that would have cut the average wage (somewhere between $13 and $17.58, depending who one believes) by $2-3, frozen the pension plan, and transferred additional health-care costs to the workers.

While the impact of a strike at Tower Automotive is a bit difficult to ascertain at this time, it can probably be said that Ford and Chrysler would take the brunt of the hit. GM and Nissan are also customers, and it's important to keep in mind that a shortage of even the most minor of components can shut down an assembly line. One can also safely assume that there are contingency plans in place, although it can also be said that some of those plans make the Katrina response look stellar in comparison. Assessing the impact of a Tower work stoppage probably won't be possible until it actually happens, at which point some of the industry's most powerful people will likely be in a position where they can only sit back and enjoy the ride.

Share This Photo X