Since a deal with glass maker Pilkington PLC soured nearly a year ago, Visteon leaders have been set on shedding the troubled unit.
But few companies have been interested, and the market for mergers and acquisitions is going from bad to worse. With no negotiations under way for divesting the money-losing operation, Pestillo said it may stay in the Visteon portfolio.
"I've told the people if we find some way to make it make sense, I'll keep it," Pestillo said at the Frankfurt auto show in September.
Pestillo may have no other option, one analyst said.
"Let's be honest. They were going to give the glass asset away, and they couldn't give it away," Salomon Smith Barney analyst Matthew Stover said. "So things have to change."
Visteon managers and union leaders have worked to improve the business and its primary plants in Nashville, Tenn., and Tulsa, Okla., since the Pilkington deal collapsed in November 2000. Visteon wrote down the value of the glass assets by $138 million in December 2000, and the UAW agreed to a new labor pact this year.
The changes led to continuous shift patterns at the plants, improved productivity and less overtime. Production was shifted between the plants, and some outsourced work was brought in. Retirement and transfer incentives have been offered at Nashville, the most troubled plant.
In July, 47 workers moved to Tulsa, a Tulsa labor official said. Another 35 to 50 are ready to go, and as many as 200 may be transferred, Pestillo said. The Nashville work force could eventually drop from about 1,250 early this year to 700, union and company officials have said. So far, 250 hourly positions have been eliminated through retirement and other options, a company spokeswoman said.
The changes have taken $30 million in overtime alone out of Nashville, Pestillo said.
"We've got that business almost at breakeven, with more efficiencies coming," he said.
One of two furnaces in Nashville has been idled. Both had been slated for expensive relinings, the first in June 2001. Those upgrades typically cost $40 million to $50 million, and Visteon leaders previously maintained they wouldn't put that kind of money into the glass business. Pestillo now says the relining decisions can be delayed until sometime in 2002.
The long haul
UAW leaders intend to prove glass making is a viable business before contract negotiations begin in early 2003. The contract expires in September 2003, said Wade McCaleb, secretary-
treasurer of UAW Local 1895 in Tulsa.
"If you're going into negotiations showing a profit, it's a lot easier to negotiate than showing a loss," McCaleb said.
But analyst Stover isn't convinced Visteon will keep glass for the long haul. It may be better off fixing it to where it turns a profit and then trying to sell it in a couple of years when the economy improves and the merger and acquisition market rebounds, he said.
But Pestillo may take a different road. Long known for his ability to smooth relations with the UAW, Pestillo hinted at his commitment to maintaining labor peace.
He said: "The issue becomes, the people are cooperating with you trying to find a way to do something. And the extent to which you ignore that, you've got another 20,000 who decide you're not worth cooperating with - and you get your head back in the sand."