Published: May 08, 2008 11:03 pm            

Ruling costs FreightCar

FreightCar America Inc. announced Thursday that it will incur a one-time charge of up to $24.5 million as the result of an arbitrator’s ruling earlier this week.

The ruling stemmed from a grievance filed against the company in April 2007 by the United Steelworkers union.

The union’s complaint resulted from the company’s decision to lay off about half of its union work force at the Johnstown plant between April and August of 2007.

Language in the union’s contract guarantees that employees with 20 or more years of service will have the opportunity to work and be compensated for at least 40 hours per week throughout the duration of the agreement.

The contract will expire Thursday.

According to a press release issued by the union, the arbitrator’s decision affects about 225 of the nearly 400 workers who were employed at the plant in Franklin Borough.

The company has cut all but a handful of workers at the plant and in December announced it would close the facility.

“The award is clearly a victory for our members and their families,” John DeFazio, USW District 10 director, said in a statement. “When an employer ignores our contract, we must act to enforce it.”

The company disputed the language of the contract. FreightCar disagreed with the interpretation of how years of service should be counted and its obligation to employees based on their tenure with the company.

“We are disappointed with the ruling and the arbitrator’s interpretation of the language in the 2005 collective bargaining agreement,” Chris Ragot, president and chief executive officer, said in a prepared statement. “Our decision to close the Johnstown plant was very carefully considered and was determined to be in the best interests of the company and its shareholders.

“We believe that we acted fairly to our employees and in good faith, and that our decision was necessary for us to remain competitive in this challenging economic environment and build a more efficient and cost-effective production footprint,” Ragot said.

“We aim to put this situation behind us and move ahead with our long-term plans and growth strategies.”

        

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