Pain spreads beyond Detroit: Nissan offers employee buyouts

April Wortham

Automotive News | August 4, 2008 - 12:01 am EST

ENLARGE

Workers in Japanese automakers’ U.S. plants, including Nissan’s factory in Smyrna, Tenn., shown, generally have been spared employee reductions — until now.

Japanese carmakers have staked their reputations on shielding U.S. workers from bumps in the marketplace. Yet there was Nissan last week looking a lot like one of those downsizing Detroit 3 companies.

Nissan offered to buy out about 1,200 hourly and salaried employees at its Tennessee factories, blaming slow sales of full-sized pickups and SUVs. The offer was out of character for a Japanese automaker — and much different from the way Toyota has dealt with the same grim market conditions.

Nissan’s voluntary buyouts will span three years and cut the Tennessee work force by 18 percent. Lump-sum payments of up to $125,000 have been offered to technicians and salaried employees at its Smyrna assembly and nearby Decherd powertrain plants. The Smyrna plant also will eliminate night-shift truck production effective Aug. 11.

So is it the end of an era in Japanese employee relations?

"This is an important symbolic moment," says labor expert Harley Shaiken, a professor at the University of California-Berkeley.

Shaiken says the cuts underscore the severity of the current auto crisis and show that transplant manufacturers are not immune from the same problems that plague Detroit.

"Even though these buyouts are far smaller than what’s taking place with the Detroit 3, for the Nissan worker there’s the sense of ‘How much are we getting and what does that mean?’ " he said.

‘They’re afraid’

Said Mike O’Rourke, president of UAW Local 1853 in Spring Hill, Tenn.: "In their employee meeting, one of the employees said, ‘If we don’t go, are you going to reduce our wages?’ And management wouldn’t answer. I think you and I both know the answer to that question."

Workers at the Smyrna plant have twice voted down the UAW, in 1989 and in 2001. In the 1990s, the UAW abandoned two other efforts to organize the Smyrna plant because of lack of support.

"As a union member, contractually, I know what my rights are," said O’Rourke. "Unfortunately, at Nissan, they don’t know what the bottom is. And they’re afraid."

O’Rourke said the UAW has organizers at Nissan’s Smyrna and Decherd factories.

Local 1853 is an amalgamated union that represents 5,200 workers at GM’s Spring Hill factory (formerly Saturn) and Johnson Controls Inc.’s factory in Columbia, Tenn.

Says Shaiken: "Does it give the union an opening? Yes. Is that opening likely to be realized in a big way anytime soon? Probably not."

Nissan sold 116,129 U.S.-built trucks in the United States from January through July, down 35.4 percent from the same period of 2007.

This isn’t the first time Nissan has pared its U.S. work force as a result of softening sales. In March 2007, about 775 workers at the two Tennessee plants took voluntary buyouts of $45,000 cash, plus $500 for each year worked.

The Smyrna factory employs about 5,500 hourly and salaried workers producing the Frontier pickup, Xterra SUV, Maxima sedan, Pathfinder SUV and Altima sedan, coupe and hybrid. The Decherd factory, with about 1,100 employees, supplies four-, six- and eight-cylinder engines to the Smyrna factory and Nissan’s Canton, Miss., assembly plant.

The buyouts last year went largely unnoticed by the industry. Nissan has never laid off workers in its North American factories.

"They’re not the first set of buyouts for Nissan, and they’re not layoffs," Shaiken said, "but they are an indicator that tough economic times affect all automakers."

Nissan says the buyouts won’t affect workers at its Canton factory, where production is more heavily weighted toward trucks than at Smryna. In June, Nissan dropped one of two shifts from Canton’s Titan pickup and Armada SUV line. A third shift of Altima production will be added in Canton next month.

Nissan plans to discontinue making the Titan in Canton in 2011 when Chrysler will begin making Nissan-badged trucks in Mexico.

Nissan also plans to discontinue building the Quest minivan and Infiniti QX56 in Canton and assemble light commercial vehicles there instead beginning in 2010.

Nissan North America Inc. spokesman Fred Standish said that the attrition rate at Canton makes buyouts there unnecessary for now. Preparations for manufacturing light commercial vehicles are under way, he said.

Toyota: Train and improve

Nissan isn’t the only one suffering. Last month, Toyota Motor Corp. said it will suspend production of the full-sized Tundra pickup and Sequoia SUV for three months beginning in August.

But rather than offer buyouts or lay off workers at the San Antonio and Princeton, Ind., factories where the Tundra and Sequoia are made, Toyota will use the downtime to train workers and improve operations.

"We have a long-term view, about the Tundra especially," says Mike Goss, spokesman for Toyota Motor Engineering & Manufacturing North America Inc. "So we don’t want to make knee-jerk decisions that we might regret later. We want to weather the storm the best we can. We think we can come out of this as stronger plants."

Toyota’s approach shows that, as the world’s largest automaker by sales, it can afford to remain focused on growth and volumes, says George Magliano, director of automotive industry research for North America New York forecasting company Global Insight.

Nissan, on the other hand, recalls being on the brink of bankruptcy less than a decade ago, Magliano says.

"Obviously the first response with Nissan is to tighten the ship," he said. "They have to make sure that they never return to where they came from."