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February 5, 2001 My fellow workers, As many of you may already be aware, at last Thursday’s Plant Council meeting the Company informed us of their plans to implement a series of “cost reduction measures.” That’s their way of saying that they’re taking a significant portion of our work and having it done on the outside. Now it’s bad enough that they plan to pull this work from our plant, but I don’t want the situation made even worse by misinformation generated on the rumor-mill. I want to make sure everyone has access to the facts and fully understands what’s going on. Here’s a brief summary of what the Company intends to do, along with some of their reasons why: Industrial Product The Company has determined that our industrial-product is turning operation has a negative margin and has therefore decided that beginning immediately all industrial components will be turned on the outside. We will no longer manufacture any industrial components in our plant. Chinese Rings The Company has expressed a general need to decrease production costs along with a number of concerns regarding projected retirements, lost time due to health issues and inconsistent workflow into the channels - up to 10% of our grind-downtime can be directly attributed to a lack of work. They’ve therefore decided to “supplement our production” with partially finished rings purchased from China. The part numbers involved include: 8623-1R, 8623C, 8621C, 8614R, 7316C, 7314C, 8638R, 9041C, 8641C, 8628R and 7330C. These rings are for our SKF product, run primarily on channels 1 & 2. They will arrive already turned, heat-treated, surfaced and OD ground. The first delivery of Chinese rings is scheduled for August 2001. Small Air-frame Product The Company reminded us that the air-frame bearing market is extremely competitive, and then informed us that while we currently manufacture our small air-frame product for a sale price of approximately $4.07 per bearing, it actually costs about $4.30 per bearing to produce. Reducing our assembly costs for this product (currently $1.33 per bearing) would both make it profitable and allow us to be more competitive. They've also determined RBC Mexico can assemble these bearings for $0.35 per bearing. As a result, our plant will continue to run our small air-frame product through the notch-grind operation, but beginning in April assembly of this product will be moved to Mexico. Needless to say, this is very upsetting news. I don’t think the fact that this is going to have a direct impact on the size of our workforce is lost on anyone. Equally disturbing is the fact that the Company saw fit to wait until after they’d made these arrangements to talk to us. Once again the notion of working together on issues affecting our entire facility appears to have fallen victim to their paradigm of convenience. For our part, we’ve already contacted our USWA staff representative to fill him in on the situation and have scheduled a meeting with him for next Sunday. At that time we’ll discuss what rights, if any, we have regarding all of this, and explore our options. Until then, if you have questions about any this please don’t trust rumors on the shop floor, talk to Jim Asher, Sharon Miller or me. Any one of us will be glad to answer your questions and help you understand exactly what’s happening. In solidarity,
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