Kongsberg Automotive: Greed is Thy Name

By Uniongal (aka Bendygirl)

crossposted on uniongal

I know this is coming as a SHOCK to everyone here, but Kongsberg has decide to CLOSE another plant. This one is in Sweden, again. Wonder if they’re moving those operations to the new Polish plant or somewhere with even fewer environmental laws and lower taxes. But hey, don’t take my word for it, take a read of ABN:

Kongsberg, Norway, April 23, 2008 - Kongsberg Power Products Systems AS, which is a subsidiary of Kongsberg Automotive Holding ASA, has declared it is considering proposals regarding closing the factory in Märsta, Sweden and intends commencing negotiations with the Unions. The factory in Marsta has 54 employees, and the workforce will be informed at meetings today. The facility today produces heavy duty cables, pedals, hand controls, hydraulic valves and electrical components to the Commercial Vehicle and off-highway vehicle market. The potential closure of the factory may lead to a transfer of production in Märsta to existing Kongsberg Automotive locations within Europe. Kongsberg Power Products Systems AB will continue to service its customers through its operations in Ljungsarp, Sweden. The potential closure is due to the company's need for realizing cost savings in order to improve overall competitiveness. "To Kongsberg Automotive, it is decisive that we find ways to optimize our production in order to stay competitive in an ever increasingly competitive global market. The potential transfer of business from Märsta will better align us to market needs and restore profitability for the Division to an acceptable level", says President for Power Products Systems, Jim Ryan.

I want you to take a look at the emphasized text. I bolded it for one reason, this is the theme for Kongsberg.

Closure of plants despite profitability in hopes for greater profitability down the road. Basically, it’s Greed for Greed sake.

So, I look to the locked out workers in Van Wert and I have to say, I’m not sure why I’d ever take a reduction in income to work for a company that treats it’s works like they’re disposable.

The profitability of any company is based on the production and frequently also the quality of work that is done on that company’s behalf. Well, all except Wal-Mart who seems to think they can do anything without recourse, but I digress.

Kongsberg Automotive seems to be of the mind that being profitable isn’t enough, they must better align to market needs so as to bring each Division up to their acceptable level for profitability. I wonder what that level is? And why it is that the people who helped to make the company profitable in the first place are the people reduced to nothing in the hunt for greater profits down the road, somewhere else.

Kongsberg Automotive seems hell bent on adding to their history of greed.

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Kongsberg to Steelworkers: Kiss Half Your Paycheck Goodbye

By Bendygirl
crossposted on Uniongal

That's what United Steelworkers were told in Van Wert Ohio nearly 5 weeks ago. Give it up or the company would lock them out.

So, guess what happened?

Yep, they locked them out.

A local Van Wert blogger summed it up last week:

A lot of why American companies can’t compete on a global market is because of lazy incompetent company managers from CEO on down. It’s pretty brainless to simply market your product via production by sweat shop laborers. From a market standpoint people will always prefer quality to quantity. I am using China as an example but there are many more foreign companies buying up top of the line U.S. companies that run them into the ground. Look at the stuff we buy in stores today and compare it to stuff we bought 20-30 years ago. From a quality standpoint its probably 50% less then it was back when we bought from our neighbors. Remember the day? I sure do!

It's a pretty good summary, but try this one on for size :

Peter Spencer, the Group Executive and President of the Kongsberg Driveline Systems, sat inside the offices and calmly discussed the labor situation between United Steel Worker employees and Kongsberg Automotive. In a nutshell, he explained the current situation is a confluence of the global economy and the woes of the automotive industry. United States manufacturers are no longer bidding against other United States manufacturers. They are in competition with suppliers from all over the world.

"We're in a situation here with our driveline section, my intention is to make this business profitable and sustainable," Spencer said. "From the business point of view, we're going to stay on the right side of the ethical line and the legal line. That's our commitment to all of our employees and I think that we take that very seriously.

"However, we are where we are and, as of today, we've got a very large opportunity on the table from a global customer, $30 million as it happens, but I need to quote them and the bottom line is the customer has told me very simply that if you quote this at fifteen bucks an hour, you haven't got it. If you quote this at $9 an hour, you've got a good chance."

Hey, but don't worry, Spencer has all the answers:

"So there is only one outcome to this and that's closure (without the wage concessions)," he said. "You have to ask if you want a factory here for the next 12 months or the next ten years."

Yum, did you catch that? Oh,wait, I hadn't told you yet, this is Kongsberg's history , closing plants. And wait, closing profitable plants, like the Amotfors seat heating system plant in Sweden.

The reorganisation reflects persistent margin pressure in the European automotive industry, Kongsberg Automotive said.

"We are one of the world's leading suppliers of seat heating systems for cars. To maintain this position we must adapt our production costs to a level which yield acceptable earnings also in future," said Olav Volldal, CEO of Kongsberg Automotive.

"The potential closure is not because our employees have not performed. It is due to the significant cost gap between high cost and low cost countries," Volldal added.

Sweet, huh?

So, that had me thinking. They were willing to close a profitable plant on the hopes that they'll be even more profitable when they pay lower wages and move out of high environmental standard Sweden and into low environmental standard Polland. But best of all is probably the line form their Fourth Quarter 2005 annual report where they noted:

The Group is reporting a tax cost percentage of 26 % in 2005. The tax cost is around 28 % for all the countries where Kongsberg Automotive operates, except for Poland where the tax rate is 19 % and the USA where the tax rate is around 33 %. There are no taxes payable for the Norwegian operations due to significant tax loss carryforward related to the Raufoss acquisition.

Do you see the tax base numbers? 33% for the US and 19% when they do business in Poland. So, how long will it be before they move the Van Wert Teleflex operations to Poland?

Sure seems as if this is their kind of business model...acquire patent technologies and then burn the communities where these items are made as they move to less taxing, less environmental standard countries. I really doubt this lock out has anything to do with the workers and everything to do with the way Kongsberg sees the US, as 33% tax. Looks as if they just want to lower the tax rate, costs for doing business and of course labor costs to that of Poland. Come on Poland, what happened to Solidarity?

Nothing more has changed in the lock out since I wrote on it just last week. Well, one thing has changed,

Locked out Kongsberg Automotive workers wait in a hallway at Trinity Friends Church for the opportunity to shop at the church's food pantry. Carolyn Garwood of Trinity Friends reported that the pantry was opened to the workers for three hours Friday morning and that 90 families were helped through the effort.

The thing that's changed is these families are now finding that their community supports them. No one outside of Van Wert Ohio seems to be talking about this Norwegian company and their desire to close plants to "pass the savings on to their customers". I wonder how much Spencer and Volldal are spending on groceries right now. Somehow, I think it's more than what their employees are. Seems like the Van Wert local blogger called it...this is what's wrong with our country and after 8 years of this, it's time we say to hell with this bullshit.

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