The ultimatum is clear: Either the 3,000 men and women here who make the mighty 300-horsepower engine and powertrain of the Mack truck agree to deep cuts in pay and benefits, or Mack will begin buying its parts elsewhere, eliminating perhaps 1,000 of their jobs -- or possibly all of them.
The choice is even more ominous 175 miles northeast at Mack Trucks' outdated assembly plant in Allentown, Pa.: Unless the 2,000 workers accept similar cutbacks, Mack will rule out Pennsylvania and build its new high-technology truck plant in another state, most likely down south. If that happens, the engine plant here also may close.
Hardball economics has come home to Hagerstown, confronting this northwestern Maryland community with the possible loss of the largest employer in Washington County, and unleashing fear and anger among a proud work force that is a casualty of increased foreign competition and a slumping truck market that has been shrunk by trucking deregulation.
These forces have set off a tense three-way struggle involving the company, the Detroit-based United Auto Workers and the local UAW affiliates that is reaching a climax in both Hagerstown and Allentown after weeks of closed-door negotiations. Mack has set a deadline of today for UAW to agree to an estimated $65 million worth of concessions before the company announces whether it will stay in the region when it builds its new facility to replace the 1926-vintage Allentown plant.
A decision on how many jobs might be eliminated at Hagerstown is expected shortly after that. The workers' dilemma here is further complicated because local union members appear willing to accept concessions, but the national UAW -- which also must agree -- is more resistant because it fears a domino effect.
If the union gives Mack a substantial break now, midway through a three-year contract, then competing firms employing more than 50,000 other UAW members in trucking and related industries will demand deep cuts for those workers, according to UAW officials.
Sources said the company is seeking cuts of $4 an hour in pay and benefits, coupled with other cost-savings such as eliminating many work rules and speeding up production.
The UAW yesterday made what it called an "innovative" last-ditch counter-proposal in which Mack workers essentially would pay for building a new factory and modernizing Hagerstown. By diverting about $1 an hour of workers' wages into a building fund and agreeing to productivity improvements, the union said it could save Mack $80 million annually -- without pay cuts.
Mack officials, who previously expressed skepticism about such UAW offers, had no immediate reaction but said they would issue a statement by midnight tonight.
"We are all caught in the middle . . . . The company is pushing us to the wall," said Blake Chaney, 50, a 25-year veteran who said Mack appears to be gambling that workers will be afraid to fight concessions. "It's like a card game. You make your bet, and you dare the other guy to call it or not."
But it's no game to Mack's chief executive, John B. Curcio, who said the realities of intensified global competition and declining demand for heavy trucks have forced him to lay the company's cards open on the table: Either the company dramatically cuts its $23-an-hour labor costs or its growing field of lower-wage competitors will push Mack off the road.
Mack Trucks' corporate symbol, the pugnacious bulldog, and its popular advertising slogan, "Built Like a Mack Truck," have long been synonymous with American-made industrial might. Mack was the only remaining U.S. truck builder that made virtually all its own parts for the 33,000-pound truck bodies, right down to the shiny bulldog ornaments adorning the hood of every Mack truck.
But times change, and Mack Trucks -- now 41 percent-owned by the French auto maker Renault -- is being forced by competition to change its previous practice of building an "all-Mack" truck. Instead, it is planning to "outsource" extensively, which means it will buy many components from outside suppliers that can produce parts more cheaply.
Mack once was one of seven companies competing for the U.S. heavy-duty truck market, which peaked in 1979 with 165,000 trucks sold. But now, 14 companies, including seven new Japanese and European competitors, are vying for a smaller market. New competitive pressures of deregulation have forced the surviving trucking firms to sharply reduce their purchases of trucks and total U.S. sales were only about 125,000 last year.
Every workday since 1961, thousands of Mack workers from five states have converged on the plant here, drawn to the best-paying blue-collar jobs in the region: $13 to $14 an hour and generous benefits to run the 2,100 machines that produce one of America's most well-known industrial marvels. They work in a bustling 1.5 million-square-foot complex so huge that supervisors ride bicycles to monitor the engine assembly line.
Workers here are accustomed to the boom-and-bust cycles of truck sales that have caused the layoff of 1,500 people in recent years, and they have already been forced during lean years to take wage and benefit concessions to keep their jobs. But now, many believe they are confronting something altogether different in the likely permanent loss of jobs.
"If Mack leaves, or even a portion of it, it will be very, very serious for us," said Washington County Commissioner Richard E. Roulette. "Our grocery stores, our clothing stores, they depend in large part on the Mack dollar." State and county government officials are prepared to offer inducements to keep Mack, he said, but the company has declined to meet "because this is strictly a labor-management issue."
"Mack is Hagerstown," said David Cole, the company's manager of community relations. "Everybody is very concerned, but unfortunately there is not much we can tell them yet . . . . It's enough to give you ulcers."
Cole, a 26-year employe, said, "I grew up with a lot of these men, and from what I hear, most of them would give up concessions to keep their jobs. But the situation is more complicated than that" because of the potential conflict between the local and the national UAW.
UAW officials argue that Mack can realize much of its needed savings through better management, including layoffs of unnecessary supervisors, and through more modest union concessions to improve productivity. Company officials said they have already cut 2,800 of 6,000 management jobs in the last five years and further cuts must come from the union.
Curcio, 51, the son of a Pennsylvania coal miner who now heads a $2 billion-a-year enterprise, said the upcoming moves are painful but necessary if the company is to survive "in a changing world." Mack has linked its survival to an $80 million investment in an ultramodern robotic truck plant, which Curcio said must operate considerably below current labor costs in order to profit.
North Carolina -- where Mack opened a small nonunion parts plant recently with labor costs roughly $10 an hour below those of Allentown -- is considered a leading prospect for the new plant. If the new plant is built in the south, Hagerstown engines would no longer be a three-hour drive from the main plant and would likely close, sources said.
As a Pennsylvania native, Curcio said he is pained by the prospect of leaving the Northeast in search of cheaper labor.
"My father worked 14-hour days in the coal mines and was a labor organizer for John L. Lewis (the United Mine Workers union president), and I know the anguish these things cause" for workers and their families, Curcio said.
But UAW officials contend that Mack has shown callousness to those families by attempting to force rather than negotiate cost-savings. UAW Vice President William Casstevens, in a letter to Allentown workers last month, said Mack was using "dangerous, vicious and greedy tactics."
Neither the company nor the UAW would discuss the details of the negotiations.
The bulldogs are everywhere at Mack. A two-story-high bulldog looks down from the facade of the Allentown headquarters, while a bulldog statue guards the entrance. Visitors are tagged with bulldog lapel pins, and Curcio, sitting for a rare interview, wears a bulldog sweater and bulldog tie-pin. His office is a veritable kennel for bulldog statuettes and portraits.
Like Curcio, many Mack workers proudly display their company loyalty. They spend up to $60,000 a year in Hagerstown alone buying bulldog mementos at a company store that sells Mack bulldog shirts, hats, watches, pens, ashtrays and even golfballs adorned with the ubiquitous canine. Many also proudly wear the emblem of their 1 million-member union, through which they have negotiated pay raises that have made them the envy of their neighbors.
"We are proud of Mack. We are proud of the work we do . . . . We're proud of the union, too," said Gary Little, a 52-year-old machinist who sports a Mack wristwatch. "What worries me is that outsourcing means giving up Mack quality."
The company contends outsourcing will not reduce quality because all its parts must still meet Mack standards.
Little sees hard times ahead for himself and coworkers, but hopes that his son, Curt, 28, a laid-off Mack worker, will fare better. Little encouraged his son to go back to college to study computers. "I told him that he had better go off and find something else for himself, because there may not be much here," he said.