Kenworth Truck Co. will lay off up to 430 workers at its Renton plant in mid-January because of a significant downturn in truck sales caused by a worsening economy.
A top union official who has negotiated contracts for the workers expressed concern Friday that the jobs may never return to the plant.
The layoffs are “absolutely ridiculous,” said Don Hursey, directing business representative of the International Association of Machinists and Aerospace Workers, District Lodge 160.
He said Friday that 329 union workers received layoff notices and 92 non-bargaining employees were notified. The latter group includes managers and supervisors and some lower-level employees who aren’t represented by a union.
Hursey said 66 union employees will remain at the plant, building two off-road vehicles a day that are so massive they can’t go on highways.
He said about 85 percent of the workers at the plant are represented by a union.
Hursey called the workers at the plant the best in the nation. And, he said, “we have the fewest labor problems here.”
Hursey suspects the company may move the work done at the Renton plant to its plant in Ohio because of delivery costs. He said he has been told by the company that most truck orders come from the East Coast and the Midwest. Getting trucks to those customers from Renton, he was told, adds about $5,000 to the cost of each truck.
Officially, the company is announcing a decline in the rate at which it builds its trucks each day at Renton, not a number of layoffs. The company has not announced any changes at its plants in Ohio and in Montreal, Canada.
Kenworth is a division of Bellevue-based Paccar. Jeff Parietti, a Paccar spokesman, said Friday said the company will increase its build rate when market conditions and the economy improve.
“We look forward to getting employees back to work when the economy improves,” he said.
Hursey, with the union, said he was told jobs would return if sales and the economy picked up. But, he said he believes sales have to build to the point where they would offset the $5,000 delivery cost, too.
“If they don’t need the capacity, it sounds to me like they won’t build trucks here,” Hursey said.
The number of truck sales by all manufacturers in the United States and Canada has declined in recent years. In 2008, sales are projected at 150,000, down from 176,000 in 2007 and from 322,000 in 2006.
One bright spot on the horizon is the production of a Kenworth truck powered by liquified natural gas. There has been talk the truck would be built in Renton. However, Parietti said Friday the company is still evaluating where it will build the truck.
Full production of what’s known as the new Kenworth T800 Liquefied Natural Gas (LNG) truck was expected to begin in 2009. The truck is attractive to buyers because its emissions are lower than diesel and it’s about $1 a gallon cheaper than diesel, according to the company.
Parietti wouldn’t say how many T800s the company planned to build.
Sixty-day layoff notices were sent to employees late this week, as required by federal law. The early notices give the employees time to find other jobs, with the help of the state Employment Security Department and WorkSource.
The 430 figure is based on the number of 60-day WARN notes the company sent to the state office.
Sheryl Hutchison, an agency spokeswoman, said the state has scheduled meetings for Nov. 19 to help workers understand the process for applying for unemployment benefits and other benefits. The layoffs are effective Jan. 19.
WARN notices, so named for the federal Worker Adjustment and Retraining Notification Act, are typically required when there is a mass layoff at a company. The notice is also sent to unions, such agencies as Hutchison’s and to local governments, in this case, Renton.
In the Kenworth notice, the layoffs are listed as permanent, Hutchison said, but that doesn’t mean they will always be permanent. She also referred to the possibility that Kenworth’s T800 truck could be built in Renton.
The state will work with WorkSource, which has an office in Renton, to help workers find other employment. Despite the economic hard times, she said that highly skilled workers may not have trouble finding work again.
The company has gone through such layoffs in previous economic downturns.
The 430 layoffs, although hard on the individual workers, should not have a significant impact on city tax revenues, according to Alex Pietsch, the administrator of the Economic Development and Neighborhoods Department.
Like Boeing airplane sales, the Kenworth truck sales don’t generate a sales tax.
In all, the city has about 45,000 workers, so the Kenworth number is relatively small, he said.