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In the corporate world, this is great news. Arctic Cat CEO Christopher A. Twomey's written statement to the press and his workers:
Christopher A. Twomey, Arctic Cat chairman and CEO, announced in a written press release that the closure made good business sense for the company and "is in good keeping with our strong commitment to enhance operational efficiency."
"By providing this long notice, we expect that most of these employees will be able to find other employment either in the Madison area, where current employment opportunities seem strong, or at another Arctic Cat facility," Twomey said in the press release.
How considerate. The company will save a million dollars a year in operating costs (that's 11K per worker). Meanwhile, Arctic Cat shares closed up yesterday by 0.15. (Why is Wall Street's optimism always inversely proportional to workers' optimism?)
Arctic Cat already has a buyer for its Madison facility: our own Rosebud Manufacturing has finally given in to pressure from the city fathers and will move its operation out of downtown to the industrial park by spring. Thank goodness Arctic Cat won't be burdened with Madison property or workers any more.
One minor annoyance: Lake Area Improvement Corporation director Dwaine Chapel said he learned about the plant closing last week but couldn't say anything due to confidentiality agreements [see Chuck Clement, "Arctic Cat Closing Local Plant," Madison Daily Leader, 2007.09.27, p.1]. I know contracts are contracts and laws are laws, but it doesn't seem right that an economic development official should be more beholden to corporations leaving town than to his own neighbors who might want to start looking for work as soon as possible. Confidentiality agreements are nothing but trouble for the common person.
Obviously, this is a rotten situation for Madison's Arctic Cat workers and the local economy. LAIC's Chapel assures us that his organization is ready to help with money -- not for the workers themselves, but for area businesses that hire them. Chapel asserts that other businesses are looking to expand, offering as many as 125-150 new jobs in the Colman-Madison-Howard metroplex.
We hope everyone involved can find good jobs and not take a financial hit. We also hope our leaders will consider the following questions raised by the Arctic Cat plant closing:
- Why does Madison keep losing manufacturers? Rosco left in 2003, taking about 100 jobs out of Madison. May & Scofield closed in 2005, after a peak employment of 103 in 2001.
- Can Madison (and the state) afford its strategy of trying to attract more big manufacturers? After the Rosco and May & Scofield closings, state and local government handed out over $150,000 (see here and here; I welcome correction from better sources) to businesses to encourage them to hire the laid-off workers. Help from the state is fine, but if businesses have to get a government handout to hire local people, something must be wrong with our market fundamentals. How many more big plant closings can we absorb? Is there any other business model that might prove more sustainable?
- If South Dakota has the best tax climate in the nation, why aren't we keeping these manufacturers? Rosco moved to North Carolina, which has a corporate and individual income taxes. May & Scofield moved to Mexico, which has a corporate income tax of 35% plus compulsory profit-sharing (again, I'll take corrections and updates on Mexican tax law... and yes, May & Scofield's probably found labor in Mexico even cheaper than ours). Arctic Cat is consolidating its manufacturing at its 1500-worker plant in Thief River Falls, Minnesota, which has corporate and individual income taxes. Now sure, you could say it only makes sense for Arctic Cat to consolidate to the much larger facility, but then you have to ask: how is that factory able to survive in Minnesota's supposedly awful tax climate in the first place? Hmm... maybe "No Taxes" isn't such an effective economic development slogan after all.
- Might we do better to focus our economic development efforts on growing local businesses? Importing big out-of-state manufacturers leaves us at the mercy of corporations whose ultimate commitment is to the bottom line, not the community. If a corporation is willing to move to Madison from Peoria or Poughkeepsie, it'll be just as willing to leave Madison for Tuscon or Timbuktu the moment a chance for one or two percent more profit presents itself. Investing in homegrown entrepreneurs may not promise the immediate big numbers -- CT@DSU is looking at start-ups with one, two, maybe five employees, not 100 -- but they build our economy on the knowledge and skills of people who are in Lake County for reasons bigger and more heartfelt than the desire to make a quick buck.
Manufacturing plants will come and go. Manufacturing directors are always looking for a lower unit cost and product lines change. What you want are corporate headquarters. They don't move around as much and are not as affected by market changes.
ReplyDeleteFind or grow companies that need to be close to DSU.
Let's find out if the financial incentives Madison offered Arctic Cat to move here 15 years ago have now expired. Has Arctic Cat paid back any 3% loans either Madison or the State made to them? Were they given property tax abatements to move here and have those expired. We haven't had snow for about 6 years, so I doubt that the snow had much to do with them leaving. Strictly corporate decision based on profit and costs, not weather. Let's put out real assets to work and attract some calling centers or small credit card operations that seem to stay and grow, and utilize our clear-speaking employees in their customer service centers. In Sioux Falls, people are earning $26,000 to $38,000 working for the credit card operations like Citibank, Wells Fargo, Premier Bankcard and others. Not huge money, but a person has clean hands and a strong back at the end of the day. And they stay and grow in their community!
ReplyDeleteRegardless of the reason there's one conflicting argument in the company's decision to leave. CEO Twomey said this was a hard decision for the company to make because of the people who worked there and the families affected. Yet, Arctic Cat is offering no compensation to its employees when they are done. The company feels the notice given for the plant's closing is enough of a benefit.
ReplyDeleteArctic Cat Plant Closing – Sept. 26, 2007
ReplyDeleteAt the Sept. 26, 2007 2:30 pm Arctic Cat, Inc. Madison plant meeting, the Vice President of Manufacturing and the Director of Human Resources explained Arctic Cat’s position
regarding severance pay. At the meeting, the Arctic Cat, Vice President of Manufacturing when asked about any sort of severance checks made this comment. "Your 60 day notice is your Severance".
Did I miss something? It doesn't compute. The Federal and South Dakota Labor Law for Plant Shut downs, including mass layoffs of employees, called Workers Adjustment and Retraining Notification Act is a Federal Law. It is the Law! Madison employees are getting no severance, except unused vacation time, which they have been using up for going home early due to lack of work. Arctic Cat employees have to work during their severance pay (WARN Law) period. Is the new way for corporations to cut costs?
Madison employees with a length of service from several months to fifteen years get "no unused sick time for which they were supposed to accumulate 2 weeks per year or 2080 hours worked. As well, when a question was asked about the usual May 15, 2008 profit sharing checks to employees, which are “always” distributed on May 15th of the year, for the previous production year’s employees reward. The employees were told, “company policy states all employees must be current employees”, even though this is a mass employee layoff at the completion of the production year, the dislocated workers, all 89 of them, get zero.
Madison employees are shut off from the company health insurance coverage at termination unless they elect a COBRA rate, which ranges from $881a month for family coverage to $1,056 a month.
Arctic Cat is Self Insurance and can not cut a break to employees they are escorting to the exit door?
Next Dwaine Chapel of the Madison Lake Area Improvement Council admitted that just the disappearance of Arctic Cat, will cost the community of Madison $2.9 million Dollars a year for lost payroll, not to include the payroll taxes the City of Madison would get through payment of Arctic Cat's payroll. This blow to the economy will have a domino effect on Madison’s small businesses and will cause further layoffs.
This announcement included the statement by Arctic Cat employees who wish to transfer to Thief River Falls could do so. This was the news media spin. The real truth is those who might want to transfer to the Arctic Cat Thief River Falls, MN plant would be subject to the following stipulations.
a. Pass a Drug Test
b. They must be qualified for the position applied for by filling out an internal job application.
c. They must be willing to relocate
d. They must pass a physical
Now, anybody with any common sense would concede most of the employees, first, would never dream of leaving their roots here in Madison, SD under these conditions.
Finally, the most insulting statements were made both by Arctic Cat representatives, and by the SD Dept. of Labor representative, as well. They claimed there are 150 jobs available in Colman, Madison, and Howard, SD. This is a span of about 46 miles with Madison between them. This is laughable. Many jobs are minimum wage and no benefits to jobs requiring College Degrees in Computer Science. You decide for yourself at: www.sdjobs.org. You can count the jobs by choosing Search by county, Lake. Imagine yourself picking one of those posted for your future. This is the real manner in which Arctic Cat, Inc. has left their loyal employees to this day from Sept. 26, 2007.
What is your opinion? Do you think the Madison employees are whining over nothing? How would you feel to have 60 days to plant out your future, find another job, sell your house, give notice to your landlord, and tell your family you can no longer afford health insurance.
Argus Leader Newspaper: Arctic Cat Plant Closing Comment PUBLISHED: September 28, 2007
ReplyDeleteMadison will lose 89 jobs and $2.9 million in payroll as all-terrain vehicle and snowmobile maker Arctic Cat phases out its plant during the next five months.
"It's going to hit the area hard," said Dwaine Chapel, executive director of the Lake Area Improvement Corporation, who was present for the announcement Wednesday afternoon. "It was difficult to see. You could see in the faces the anguish."
Most workers will be gone after the first phase of cuts in late November. The plant will close in mid-February after 15 years of operation. About 55 of the 89 Madison positions will be absorbed by the Arctic Cat's main manufacturing plant in Thief River Falls, Minn., which employs 1,500 people.
Madison's painting, welding and subassembly plant means $2.9 million in payroll to the area. The company said the consolidation will save it $1 million annually long-term. "The last five to 10 years of poor snow conditions have affected the whole industry, not just Arctic Cat," plant manager Gary Flynn said Thursday in explaining the decision.
Flynn described the employees as numb, shocked and hurt. A few already have quit.
The workers will be offered help finding jobs in the area and were invited to apply at the Minnesota plant. Flynn said he's been swamped with employees interested in transferring. Chapel doubts many will move. "I would anticipate that no more than half a dozen would go, and that would probably be upper management," he said. "That's a difficult transition."
Those who stay should find jobs, if not at the same pay. Chapel said the LAIC has identified 125 to 150 job openings within 20 miles of Madison. Arctic Cat chairman and chief executive officer Christopher Twomey said in a news release that the company is keeping its employees in mind during the consolidation. "By providing this long notice, we expect that most of these employees will be able to find other employment" either with the same company or in the same area, Twomey said.
Tom Sand has worked for Arctic Cat as a welder for six and a half years. He said he's received more time off than usual lately because there's been no work to do, but the announcement surprised him. "I was pretty upset at the meeting," he said. "I got to live with it, but I don't like the decision." Picking up his family and moving to Minnesota is unrealistic, he said, so he's begun looking for work in and around Madison. So far, he's been disappointed
with the pay."There are a couple of options, but nowhere near what I was making," Sand said.
The plant manager said the decision to sell was made in the past two weeks. Already, the LAIC has agreed to buy the building and sell it to another Madison company. Rosebud Manufacturing Co. will begin moving in as Arctic Cat moves out. The cabinet maker has been in business since 1965 but is scattered in several locations. Rosebud President Don Grayson said he'll add at least 15 new employees with the goal of serving more commercial and specialty customers. "We've been trying to expand here for a while," Grayson said. Arctic Cat stock went up 11 cents Thursday to finish at 16.70.
The above is a "Re-Print" from public record from the September 28, 2007 Sioux Falls Argus Leader news article regarding the announced transfer of the Arctic Cat, Inc. building and property to Rosebud manufacturing.
I'm perplexed I must stay, and I "am still" anonymous for now, as well. What really has me bothered is the cliche' from The United States government to the countries surrounding Iraq and other countries, who harbor terrorists: "You are either with us (for us) or you are against us, (for the terrorists). It is simple language.
What I simply have a problem with, Arctic Cat (or any company with a $2.9 million payroll) approaches you with a proposal to sell their building, property, and $2,900,000.00 worth of payroll not counting payroll taxes and the resulting affect on peoples lives, and you assist in a business transaction between Arctic Cat (seller) and the city of Madison, LAIC, representing Rosebud Mfg (buyer). A decidision is made for a price for this Arctic Cat property and land adjoining it.
So what is this magic formula to negotiate a selling / buying price between the two parties. As Director of The LAIC do you think, well, for example, Arctic Cat has ownership of a spec building, an office addition, and a few adjoining acres of land surrounding it. Let's be generous. Let's assume the area of the land is five acres.
Now use simple arithmetic, you divide $2,900,000.00 by 5 for the cost of the land to Rosebud Mfg. as the buyer. My question is: Did Arctic Cat, Inc. pay the City of Madison $600,000 to LAIC or to Mr. Grayson. After all, this is what the land was worth to the city of Madison with an Arctic Cat ownership for only one year.
I'm just wondering how do you place an arbitrary value on good, loyal employees within the city of Madison, who have done nothing wrong, and then you help or you are aware of the transactions, and then you just sit on all this information while people's lives and their children's lives are going to be affected by this arithmetic, "forever", how much is too much? What I mean is, aren't there developers, realtors, who would just love the opportunity to make the commission on the sale of such property between two parties. I'm sorry, but how did this happen? It is a slap in the face to the good people within Lake County, the citizens of the City of Madison, and the loyal employees with a tenure of up to fifteen years of a Minnesota based company called Arctic Cat. Maybe this is all a mis-understanding. The transactions were between LAIC and a company called "Arctic Cut" . . .
a. for cut and run
b. for cut corporate losses at "any" expense
c. for cutting monetary severances, from employees you have already labeled publicly as loyal to you.
d. for cutting from these employees, any hope of a share of the companies profits for this production year, even knowing these employees helped you to the very end of production.
e. for cutting the truth from Madison and the state of South Dakota, about these so-called offers to transfer to Thief River, an internal memorandum states that each employee qualified for transferral will be reimbursed as follows:
1. $750 dollars for truck moving expenses, (for household goods) plus $30 day for travel, gas, and meals up to $30 per day.
2. 2 Weeks paid temporary living expenses and meal expenses ($30 day), once qualified employees relocate to Thief River Falls, Mn. By the way, receipts must be submitted.
The above is conditional:
a. Reimburse to Arctic Cat for resignation within one year: 100% reimbursement
b. Resignation from Arctic Cat within the second year will cost transferred employeed 50% reimbursement.
Are the above reimbursements meant to coerce Madison plant employees to transfer to Thief River Falls, Mn., or is this company memo meant to "discourage" them from transferring to Thief River Falls, Mn, you decide?
Did Arctic Cat, Inc. Manage to Dodge the Proverbial Bullet? Suggestions:
ReplyDeleteContact mail@sugarlaw.com
Ph: 1-313-962-6540
Speak with: Attorney for Detroit, Michigan's Guild Law Center for Economic and Social Justice
Expansion of Warn Labor Layoff Notice Law
19 October 2007—
This week, the House Education and Labor Committee, on a party-line vote
of 26 to 18, passed a sweeping expansion of the Worker Adjustment and
Retraining Notification Act (WARN), which currently requires 60 days
advance notice to employees who lose their jobs because of mass layoffs
and plant closings. Among other things, H.R. 3796 would:
"increase the required notice to 90 days";
require notice any time 25 or more employees (including part-timers) are
laid off at a worksite within a 30 day period (and often within a 90-
day period);
"doubling the current back pay" remedy; and
requiring direct notice to unionized employees instead of just the
union.
In addition, the bill would increase COBRA rights for Trade Adjustment
Assistance-eligible workers 55 or older with at least ten years of service
by continuing their COBRA rights until they become eligible for Medicare
or obtain other health insurance coverage. The Committee eliminated a
provision in the bill that would have also required WARN notice whenever
100 employees are laid off at several different sites of an employer. HR
Policy sent a letter to the Committee objecting to the changes, pointing
out that by lowering the triggers the bill ignores the "fundamental
purpose" of the law which is to address large-scale job losses. The bill
will be combined with a larger TAA reauthorization measure, which is
expected to be considered by the full House within the next few weeks.
Links: H.R. 3796 as Reported | HR Policy Letter | Committee Press Release
Issue: Labor Law/Labor Relations Staff Contact: Dan Yager
Note date of passage of law. An Arctic Cat's date of termination was changed by H.R. from actual, Nov. 16, 2007 to Nov. 19, 2007, Why? Look at effective date of Law Change for your Clue !!
Still anonymous, still for South Dakota, still for City of Madison,
and leaning torwards Polaris Snowmobile, ATV products and S.D. ban on Arctic Cat products.
Of course, this is my opinion ...
You Decide !