Feature
$19M upgrade to preserve 200 jobs at Navistar foundry 7.7.11
INDIANAPOLIS STAR
Only last summer, the old Navistar foundry on Brookville Road was set to close, joining the other relics of Indianapolis' industrial age.
But a change of plans set in motion after foundry workers accepted pay cuts has spared the big Eastside iron plant.
Pure Power Technologies, a Navistar engine-parts venture, has taken control of the foundry.
Navistar, an engine and truck maker based in Warrenville, Ill., revealed the plans in a tax abatement request filed recently with the Metropolitan Development Commission.
Navistar will commit $19 million for new casting equipment, an upgrade that will preserve about 200 jobs and position the foundry to supply Navistar and eventually other manufacturers, company officials reported.
Upgrading the foundry alone can't reverse the city's manufacturing losses. About 80,000 factory jobs remain in the metro area, compared with 110,000 a decade ago.
It does assure, though, that the foundry continues to shore up a city tax base hit by industrial setbacks.
Two huge auto-parts plants run by General Motors and Ford have just wound down, following the earlier closing of Navistar's diesel engine assembly plant.
Closing the engine line put the foundry on the brink of shutting down. Then, foundry workers represented by United Auto Workers Local 226 agreed to a pay cut. Production workers accepted $17 per hour, down from about $25.
With the concessions in hand, Navistar announced the respite for the foundry in broad terms last summer and filled in the details this week.
"We'll bring the facility up to competitive standards," said Navistar spokeswoman Karen Denning, noting the update will conclude in 2013.
Until then, about 50 workers on the site will prepare the plant for the ramp up that will raise employment to 250. The UAW will continue to represent the workers. UAW officials could not be reached for comment.
"Pure Power is looking to grow its business with Navistar and eventually other customers," Denning said.
Pure Power, based in Columbia, S.C., originated in 1999 as a Navistar joint venture with a German partner to make fuel injectors for Navistar trucks.
Siemens VDO Automotive, the partner in the venture, and Navistar opened a $100 million plant at Blythewood, S.C. Within a few years, German automotive giant Continental AG acquired Siemens' share in the venture.
In 2008, Continental decided to close the Blythewood plant and consolidate work in Virginia. Navistar soon bought Continental's stake and focused on expansion.
Pure Power acquired the actuator and valve business of Holley, an auto-parts maker in Bowling Green, Ky.; took over the Navistar foundry at Waukesha, Wis.; and bought a stake in the fuel cell and exhaust after-treatment technology of a Danish company, Amminex. It also launched a $25 million upgrade of the research and development center at Columbia, S.C.
Folding in the Indianapolis foundry is the latest step by Pure Power, which is headed by Houman Kashanipour, a vice president reporting to Eric Tech, the senior executive in Navistar's engine division.
"Should we grow, we would love to put additional capacity there in Indianapolis," Denning said. "The quality and product from the Indianapolis team is exceptional. We are very optimistic about opportunities for future growth."
Navistar, which once employed more than 2,500 workers in the city, has no plans to reopen the engine plant next to the foundry on Brookville Road.
The engine plant was opened in 1937 by Navistar predecessor International Harvester. The plant assembled diesels for Ford pickup trucks from 1982 through 2008. After a price dispute, Ford shifted production to its own plant in Mexico.
For the new foundry equipment, Navistar asked for property tax abatement for seven years. This would reduce but not eliminate the tax.
Over the seven years, the company would save $897,712 in property taxes and pay $574,879. After seven years, the taxes would rise by $166,799 per year, according to an analysis by the Metropolitan Development Commission.
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