ROCHESTER, N.Y. - In 1978, more than 4,000 workers cranked out car parts at a General Motors factory considered the top blue-collar employer in this upstate New York city rich with such well-known corporate icons as Xerox and Kodak.
Nearly 25 years later, the former Delco plant in Rochester is on its second new owner in less than 10 years - Valeo SA of Paris - and in turmoil, another GM castoff battling for survival.
Valeo Electrical Systems Inc., the subsidiary that runs the plant, filed for Chapter 11 bankruptcy reorganization in December. Management wants wage and benefit cuts. Up to three-quarters of the workers could lose their jobs.
A union local that includes 2,130 active members votes Sunday, May 5, on whether to rewrite a history-making eight-year contract that assures top-notch benefits and job security through 2008. Details of the proposed deal are being kept secret for now, but the union may have little choice other than to OK the pact, since Valeo could ask the bankruptcy court just to throw out the old contract.
Valeo is not alone in its pain. A host of auto suppliers are struggling with the financial hangover of ambitious expansion plans and pricey acquisitions from the late 1990s. Encouraged by automakers, suppliers were trying to "go global" as fast as they could. But integrating the myriad pieces of new empires, especially as the industry's economics spiraled downward, proved more difficult than many had anticipated.
By the end of 2005, if Valeo leaders have their way, the Rochester factory could employ fewer than 600 hourly workers producing only windshield wiper systems. The 1.6-million-square-foot plant, which now makes wipers, motors and airflow systems, would occupy just a third of its existing manufacturing space.
Today's situation is a U-turn from 1998, when Valeo bought the operation from ITT Industries Inc. as part of a $1.7 billion deal at the height of the industry's acquisition frenzy. It gave Valeo a foothold in the United States with the Big 3.
While auto sales soared to record heights in 1999 and 2000, Valeo poured millions into cleaning up the Rochester plant, implemented its own production system and locked in a long-term labor contract.
Those decisions looked like strategic mistakes in 2001 as auto sales slowed and automakers pushed for big price cuts. Valeo now says the electrical subsidiary can't survive with workers who earn an average of $39 an hour in wages and benefits.
"This plant was not on top of the world to begin with," said David Cole, longtime industry observer and director of the Center for Automotive Research in Ann Arbor, Mich. Fold in brutal price pressure and the failure to integrate the business properly, and "there's blood on the floor. That's just the way it is, and this is sort of one scene in the unfolding drama of the entire restructuring of the entire industry."