Union Loses Appeal Over Closure of Auto Plant

CHICAGO (CN) - An auto parts manufacturer did not violate the terms of a collective bargaining agreement when it closed a plant in central Illinois and moved production to a nonunionized factory in Kentucky, the 7th Circuit ruled.

ZF Boge Elastmetall, a company that produces rubber and metal brushing, operated two factories - one in Paris, Illinois, the other in Hebron, Kentucky. Approximately 150 workers at the Paris plant were represented by United Auto Workers Local 2343.

In 2007, ZF Boge began studying the consolidation of its operations into one plant. Union members greed to make several concessions which company management suggested would "position [the Paris] plant so that it has the best chance of being chosen to remain open and viable in the long term." These included a pension freeze and biweekly payroll.

The union did not leave empty-handed, however, securing more generous 401(k) provisions and the addition of five employees to the bargaining unit.

On June 20, 2007, ZF Boge announced that it would close its Kentucky facility and keep the Paris plant open. Equipment and orders were transferred and the Kentucky plant workforce shrunk by roughly 30 percent.

But in February 2008, negotiation of a new CBA broke down and Paris union employees went on strike. Though the strike soon ended, ZF Boge decided to close the Paris plant and consolidate to Kentucky.

The Paris plant closed in 2009.

United Autoworkers filed suit seeking damages and a court order to reopen the Paris plant.

Illinois federal Judge Michael McCuskey granted summary judgment for ZF Boge, finding that the company's obligations to the Union ended with the expiration of the CBA in April 2008.

The Chicago-based appeals court affirmed the decision.

"Here, the union and its members did not receive a right to some future benefit unfulfilled during the term of the contract," wrote Judge Kenneth Ripple. "Rather, they provided ZF Boge with the concessions in exchange for the benefit of the bargain that they received within the mid-term Agreement's term: The decision to close the Hebron facility and to leave the Paris facility open was made, and the execution of that decision was undertaken. The result was an additional year of survivability at the Paris facility."

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