PADUCAH, Ky. — Despite continued stiff challenges from a weak economy and foreign competition, employment at VMV Enterprises is rising under new ownership seven months after the locomotive shop closed amid bankruptcy, the Paducah Sun reported.
“We’re at a little more than 90 employees, which is a far cry from the zero we started with,” said Jim Fisk, president of shop owner National Railway Equipment Co. in Dixmoor, Ill. “I can’t say enough about the work force and the economic development folks who helped us with the purchase.” VMV closed April 2, sending 228 workers home. Aided by nearly $8.5 million in state and federal incentives, National bought the shop in June for $4.95 million and reopened it July 1. The work force has roughly doubled since then.
Fisk said earlier that he hoped to employ 100 near-term and 261 within a year. On Wednesday, he said business growth will dictate how many more will be rehired.
“It should continue to increase,” he said. “As we keep getting more and more commitments from customers, we’ll keep adding to the work force.” Under previous ownership, the 75-year-old locomotive rebuilding factory flourished in the 1990s, with annual revenue peaking at more than $90 million and employment at more than 600. But a declining economy and rising competition, particularly from Mexico, caused a rapid drop in sales from 1999 through last spring.
Sales averaged only $3 million per month during the first two months of 2002. When the shop closed, it had about $26.4 million in assets and $30 million in debts.
Fisk said the issues that felled the previous ownership are still big hurdles for National. The economy is hurting shipping, so rail operators are trying to cut repair and rebuilding costs. National’s biggest competitor does all its rebuilding work at a plant in Mexico, where labor is much cheaper than in Paducah, Fisk said.
“We have to get more and more creative in what we do; it’s really that straightforward,” he said. “Our problem is that locomotives have wheels and our customers elect to send them to Mexico.”
Fisk said the problem affects not only employers but the trade unions that provide the workers. About 70 of the Paducah shop workers are members of the International Association of Machinists District 19. “Mexico is killing us,” said Bob Reynolds, District 19 president and general chairman. “The trade agreements are absolutely devastating. We’ve been working diligently, trying to get work for the shop.” There should be more hirings after Jan. 1 “if things fall into place,” he said. “But we’ve got to crawl back to an upright position on this thing.” Although labor and management officials blamed the North American Free Trade Agreement for much of VMV’s trouble, the machinists’ union failed to persuade the federal government to provide NAFTA relief to displaced workers. Reynolds said the Department of Labor ruled that shop workers were providing services rather than making components being lost to cheaper Mexican labor.
But the 2002 Trade Adjustment Assistance Reform Act, which takes effect Friday, makes it easier for laid-off factory workers to qualify for federal help. Reynolds said the union plans to apply again Monday for benefits under the new law.
“The new act will give us another bite at the apple,” he said. “There are no assurances. If we do succeed, the benefits for people would be basically the same as under the former law.”
Among other things, the reform:
Provides a maximum of 104 weeks of income support (including the normal 26 weeks of unemployment insurance) for displaced workers undergoing subsidized training.
Helps worker groups with a significant number of people 50 and older without easily transferable skills. Those hired elsewhere may opt, in lieu of other reform act benefits, to receive half the difference between their old and new pay for two years, up to $10,000, and may also get health-care assistance.
Makes health insurance available to three groups qualifying under federal displaced-worker assistance.
Sheila Clark, director of the Hopkinsville-based West Kentucky Workforce Investment Board, said state employment services personnel won’t know the true benefits of the changes until they receive training, which is just starting. She said the program will be implemented over two years. “It does have potentially greater benefits, but they may be spread out, so it might not necessarily mean direct dollars in workers’ pockets,” she said. She said the provisions could be particularly helpful to western Kentucky where there were “a significant number of mature workers” loyal to plants like VMV and Mattel in Murray. “We have trouble placing them with the same level of income,” she said.
Other information about the new act is available at www.doleta.gov.