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UNION CONTRACT AT SNYDER TANK CONTAINS NOVEL SAFEGUARDS

Buffalo has seen it happen before -- a big, out-of-town company buys a locally owned manufacturer, takes its customers, then moves production to a lower-cost area.

Snyder Tank Corp. in Hamburg is trying to write a different ending to the script.

After being bought by a larger maker of fuel tanks last year, the company's 120 union workers recently approved a contract that cuts labor costs in return for novel safeguards concerning the plant's future.

"We're investing in our job security -- and if the security isn't there, we get our investment back," said Edward McGowan, president of United Auto Workers Local 55.

The family-owned company was bought last year for an undisclosed sum by the Schwitzer division of Kuhlman Corp., based in Savannah, Ga. The deal made Schwitzer the dominant North American supplier of truck fuel tanks, which it produces chiefly in Michigan.

Snyder has about 150 jobs in Hamburg, plus plants in Springfield, Ohio, and Chester, S.C. Its sales total $50 million a year.

Under the new contract between Snyder and the UAW, production workers give up about $1.50 an hour in benefits. But instead of disappearing into the corporation's coffers, the savings are credited in what's called a "severance escrow account." If Schwitzer closes the Hamburg plant, it must pay the savings back to workers who lose their jobs.

"It's something we hope to never collect on," said James Hougle, chairman of the union bargaining committee.

Equally important in safeguarding Snyder's production jobs is a customer base guarantee. The contract assures that Hamburg will continue to supply
fuel tanks for Snyder's two main customers, a Navistar plant in Chatham, Ont., and a Mack Truck plant near Allentown, Pa.

"We've seen where the guys did give something up, and the plant closed anyhow," said John H. Coleman, Snyder vice president and general manager. "They wanted assurances."

The safeguards are a novel approach to a problem that many area companies and unions are facing together, said Mary Helenbrook, Western District Director for the state Employment Relations Board.

"In this area, and (with) the climate that we've had, I think unions have developed a lot of good business sense about what it takes to keep a corporation in Buffalo," Ms. Helenbrook said, "while being able to walk that fine line and protect their members, too."

In one negotiation that she mediated, the employer agreed to keep track of cost-of-living adjustments that workers gave up, on the understanding that the money would be paid out if the company could afford it down the road.

At Quebecor Printing in Depew, a contract completed last year promises investments in specific printing presses, she said. The company completed a long-term agreement that includes all eight of its unions, providing zero-strike insurance that helps the printer win new business.

Frequently, it is "internal" competition with a corporation's other production sites that brings management and union leaders together to preserve jobs at a Western New York factory, Ms. Helenbrook said.

At Snyder Tank, the union's concession narrows the approximately 20 percent labor-cost gap with Schwitzer's other plants without cutting into base wages, Coleman said. The reduction in Snyder's $20 hourly labor cost comes chiefly through benefits like vacation pay.

Nevertheless, the package was a difficult sell, McGowan said. Members rejected it on a first vote before reconsidering and passing it with 75 percent approval March 19. The previous contract expired Jan. 31.

Besides preserving jobs, the agreement will save a system of productivity-based bonuses that evolved over the past 12 years, the company and union said. The incentives have helped the company achieve a production rate of 1.3 labor hours per tank, 35 percent faster than the industry norm, Coleman said. The company's annual sales rose from $15 million to $50 million during the period, as its productivity helped it win contracts -- despite the area's higher taxes and labor costs.

The incentives helped the small company draw on the talent of its work force for productivity-enhancing breakthroughs, Coleman said. For example, a maintenance worker developed a laser sighting device that allows welders to join two halves of tank in a straight line, time after time.

The Snyder family sold the business in part because of a $2 million investment necessary to develop the company's promising technology for fuel tanks that hold liquid natural gas instead of diesel fuel, Coleman said.

Now, with Schwitzer's capital backing, the new tanks may become a significant source of new jobs at Snyder in the future, as federal environmental regulations and incentives speed the trucking industry's shift toward the clean-burning fuel, Coleman said.

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