Closing the Valve

TRW, corporate citizen, burns the bridge on its way out of Cleveland.

Spy Game
Signs of the times: UAW's John Reichbaum gets his message out. - Walter  Novak
Signs of the times: UAW's John Reichbaum gets his message out.
The Joseph T. Gorman reception was a soiree torn from the pages of a Tom Wolfe novel. Gorman had retired as CEO and chairman of TRW, and the evening in September was his moment to be toasted by the brighter stars of Cleveland.

A photo spread in Inside Business showed Gorman mingling with Browns chief Carmen Policy, Indians owner Larry Dolan, and Bishop Anthony Pilla. Federal judges, college presidents, politicians, and CEOs populated the crowd. Governor Bob Taft sent a videotape lauding Gorman's business acumen, his generosity as a corporate citizen, and his steadfast commitment to Cleveland's workforce.

But those workers were not on the guest list. Had they been invited, they likely would have brought picket signs, like the one that reads "TRW: Totally Replaced Workforce."

Employees at the Cleveland Valve Plant don't subscribe to TRW's image as a "corporate citizen" or to the notion that their boss is a "civic leader." From the view on the factory floor, TRW has no use for a city with $16-an-hour workers and rigid labor rules.

Moreover, there's no champagne popping at the plant on East 185th Street, where employees are sleepwalking through jobs they've appreciated for decades -- jobs that will cease when the plant closes next summer. "It's like working in a funeral home," reports John Wooten. "It's morbid."

Thirty-three years ago, when Wooten began as a dye grinder at TRW, the company had about 15,000 employees in Northeast Ohio, where it was born in 1901. Decades of growth were halted by the auto and energy slumps of the early 1980s. TRW expanded its production in the burgeoning aerospace and computer technology markets, but its automotive parts division -- anchored by Cleveland plants -- began downsizing. TRW sold two factories in Northeast Ohio and laid off thousands of workers.

Even in a shrinking auto market, the thousand or so employees at the valve plant survived the cuts. Workers considered it a credit to their productivity and to the quality of their engine valves. "We made 'em better than anyone else in the world," brags John Reichbaum, president of United Auto Workers Local 2400, the union that represents the hourly workers in TRW's Cleveland factories.

Gorman took the helm in 1988. The promotion of a local guy who had risen through company ranks seemed to cement Cleveland's position as the capital of TRW.

But that optimism vanished by the early '90s, when a recession brought on declining profits and more layoffs. This time, the valve plant would not be immune. Nearly half of the workforce received pink slips. Those who remained watched as equipment was wheeled off the floor to plants in Tennessee, Pennsylvania, and elsewhere.

At the same time downsizing diminished Cleveland, TRW was building dozens of plants in places like Brazil, Mexico, and Eastern Europe. It appeared TRW would remain in the automotive parts business, but it would use foreign labor to build those parts.

In 1995, Jack Stinnett arrived on what was supposed to be a grim mission: the phasing out of the valve plant. He confessed as much to union officials.

Desperate, the union sought ways to cut costs and improve productivity -- whatever it took to save jobs. Stinnett listened, politicians joined the cause, and TRW received a $14 million tax abatement from Cleveland and a $4 million loan from the state. For the first time in a long time, there was reinvestment in the plant. Morale soared. Profits turned upward. It would be called the "Miracle on East 185th."

But it wasn't to last. Stinnett, for all his progress, was demoted. He left TRW and now runs a construction crane company in Milwaukee. (He refused to comment on his former employer.)

With his departure, the union believes TRW embarked on a campaign to kill the valve plant.

"I'm not saying they mismanaged it, because they knew what they were doing," Reichbaum says. "They designed it to fail, managed it to fail."

It's a counterintuitive thesis, but it's the only one that makes sense to the union. If Stinnett's tenure proved there was profit to milk from the valve plant, workers claimed, his forced departure proved the company didn't believe in its hometown workers -- that it was scheming for a way to justify deserting Cleveland for foreign production, where labor is cheap and environmental rules are lax.

The union points out that, after Stinnett left, its cries for new machinery were ignored. Antiquated equipment churned out faulty valves. Most galling of all, supervisors ordered those valves shipped anyway, employees claim. Quality dipped, and contracts with automakers were not renewed.

Workers insist such gaffes could never have occurred under an old system, whereby 30 years on the line earned a promotion to supervisor. With the late '90s came a new -- and, as workers see it, misguided -- generation of managers who were hired for their experience at other companies or for their college degrees. "Yuppie son of a bitch" is how one employee describes his supervisor.

"They had people there who were running operations that were productive," says Joe Wieczorek, a 29-year vet. "They had quality parts. They had people who had 25 years' experience -- 15 as supervisors -- and they just let them go, right out of the blue."

Adds Reichbaum: "It just seems that they purposely put managers in there who didn't know what they were doing. You have a guy who's a plant manager of a valve plant that has no clue how to make valves."

Jay McCaffrey, TRW spokesman, calls that claim "absurd." He asserts that declining productivity at the plant and a corresponding drop in valve quality cost the company millions in lost revenue.

Cleveland State finance professor Ken Borokhavich concurs. "It may have looked like they were deliberately trying to tank the plant, but that makes no sense," he said. "No company loses money on purpose."

As the '90s wore on, even optimistic workers feared layoffs. Morale was abysmal, and the union was besieged by grievances its members filed against supervisors. Each year, additional millions were lost.

At the same time, TRW continued to buy and build new plants in places like Poland and Thailand. A new plant hadn't been built in Cleveland since 1962.

In late 1999, Reichbaum penned a desperate letter to Gorman, informing him that corporate decisions "have left people confused, dazed, uncertain about their future, and angry at TRW." He invited Gorman to speak to workers, to tell them directly what his intentions were for the plant. Gorman did not respond. (He also declined Scene's request for an interview.)

But while Gorman was cutting back his own company's investment in Cleveland, he was also serving as chairman of Cleveland Tomorrow, a group of CEOs from the region's biggest companies that attempts to lure corporate investment here. Last year, the group was concerned by the lack of modern, skilled jobs in Cleveland.

"We are not participating in any significant way in the new economy, and we've got to find ways to do that," Gorman told The Plain Dealer.

Reichbaum pounced on this, firing off a letter to the newspaper. He pointed out that TRW was slowing down valve production, which would cost 50 to 100 jobs. And though the company had plenty of new-economy jobs in aerospace and computers, that wing of the company was in California, and it wasn't moving. "So forgive me for snickering when TRW's chairman calls for job creation in Greater Cleveland," Reichbaum concluded. "He should practice what he preaches."

By this time, however, TRW's future in Cleveland was doomed. A $6.5 billion purchase of British aerospace firm LucasVarity had saddled TRW with massive debt. A downturn in the auto industry only amplified the losses already occurring at the valve plant. TRW was selling factories abroad in frantic hope of generating positive cash flow.

The company acknowledged its dire straits and put the valve plant up for sale. But a factory with an embittered workforce and sliding revenues is not a hot commodity.

Another corporate landmark -- company headquarters in Lyndhurst -- seemed in greater peril.

As part of its divestiture efforts following the LucasVarity purchase, TRW sought a rezoning of 67 acres around its headquarters, so that it could be sold to a shopping center developer for around $150 million. The money would stabilize cash-flow problems that came with LucasVarity -- without giving up income lost by selling factories.

Lyndhurst voters would decide the rezoning. In the weeks before the election, Gorman openly discussed leaving if the vote was negative.

"I don't want that to be viewed as a threat," Gorman told The Plain Dealer. "But it's a reality someone will have to face down the road. One could imagine selling the headquarters itself."

TRW's campaign literature was more explicit: "Losing [the rezoning vote] means Lyndhurst could lose TRW and $1 million in income tax," read one flier. The company spent nearly a million dollars campaigning for the issue -- an amount unheard of in a city with just 14,000 residents. Every household received its own videotape touting the development, to be called Legacy Village. As a final appeal, TRW promised to give the city $1 million for government and schools.

The rezoning narrowly passed.

"They threatened the citizens," says former Lyndhurst Councilman Robert Goble, who opposed the rezoning.

For all the talk of voting to save TRW, however, few expect it to remain in Lyndhurst for more than five years. Goble believes TRW's Legacy Village is a way for the company to make money on the way out of town. "You can't tell me that there weren't discussions of that nature."

The workers at the valve plant contend they were treated with the same duplicity.

In March, when executives met with the union and area politicians, the company assured all that there were no plans to sell or close the plant.

The words were of small consolation to workers who had long since lost faith in the company's promises. Though Gorman was retiring, he had chosen David Cote, a General Electric executive, as his successor. A disciple of GE's infamous "Neutron" Jack Welch, Cote was not expected to remain loyal to American jobs.

Even so, the union tried to win him over, inviting him to take the 15-minute drive from Lyndhurst to East 185th for a tour of the valve plant. He refused. He did attend the opening ceremonies for a TRW plant in Thailand, however.

Cote told business magazines "We make too much stuff" and openly professed a preference for the company's aerospace work, centered in California.

A struggling auto market only worsened TRW's finances. The plant will lose $9 million in 2001. When union reps were called to a meeting October 17, they hoped to hear only about layoffs. Instead, they were told the plant was closing. About 500 workers would be jobless.

Though politicians at every level promised to shepherd TRW through its slump, as they had in 1995, the company did not consult with them before announcing the closure. The response was furious.

Mayor Mike White said TRW showed "absolutely no regard for the city of Cleveland, its residents, or the company's own employees." Congressman Sherrod Brown, whose district includes TRW's Aurora plant, said that "companies like TRW are continuing to abandon communities that have been good to them. When push comes to shove, there's no loyalty. There's a bottom line."

None, however, was as inspired as City Council President Mike Polensek, who grew up near the valve plant and maintained a close interest in its health.

"They've come to symbolize everything that is evil and wrong, because we gave them everything they wanted here . . . and this is how we're repaid."

He's now plotting revenge.

"If they think they're going to walk out of Cleveland without taking a hit, I've got news for you: They're going to wear it on their chins," rages Polensek. "They should be pariahs for what they have done in Cleveland."

Ask about the company's charity work or Gorman's chairmanship of Cleveland Tomorrow, and Polensek grows even angrier. "What a crock of horseshit! When it comes time to put their money where their mouth is, where are they? Mexico."

But TRW's McCaffrey patiently explains that the closure was inevitable, given the dismal state of the auto industry and the high cost of Cleveland production.

Though the company says the work done at the East 185th plant will be picked up by plants in Pennsylvania and Tennessee, the union and politicians believe that, since those plants also employ union labor, the jobs will eventually move to another country. The company has plants in 35 countries and five continents.

McCaffrey says there are no plans to move the office, but others predict it will happen within two years. Even Lyndhurst Councilman Patrick Ward, a TRW ally who rallied support for a "yes" vote on Legacy Village, has accepted that reality.

With TRW's taxes accounting for 16 percent of Lyndhurst's general fund, he prays it will remain, but admits that big companies aren't influenced by nostalgia.

"The fact that they're part of the fabric of Cleveland is a darn good reason for them to stay. But there's no such thing as deep allegiance, not in today's corporate culture."

Nearly 400 are still employed at the corporate headquarters in Lyndhurst, but a Virginia economic developer confirmed last week that TRW was considering relocating there.

"There's nothing to that rumor," says McCaffrey.

This statement elicits a dry chuckle from Reichbaum. "Sure, you can believe that. They always do what they say."

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