HomeMy WebLinkAbout11-03-12 Community & Economic Development Community and Economic Development Committee
2005 South Bend Common Council
The November 3, 2005,meeting of the Community and Economic Development Committee was
called to order by its Chairperson, Council Member Ann Puzzello at 4:00 p.m. in the Council
Informal Meeting Room.
Persons in attendance included Council Members Puzzello and Rouse; Citizen Member Martha
Lewis, Community and Economic Development Executive Director Sharon Kendall, Ed Fain,
Brent Kuhn, Mitchell W. Wilson, Tedd Schaffer and Kathleen Cekanski-Farrand, Council
Attorney.
Council Member Puzzello noted that Committee is composed of Council Members Kuspa,Kelly,
Kirsits and herself, and that there was not a quorum present. She stated that the members would
hear a presentation from representatives of Federal-Mogul Powertrain, Inc. with regard to
compliance with their Statement of Benefits Form CF-1.
The Council Attorney noted that the Committee will take no formal action this afternoon. They
will listen to information provided and ask questions of the representatives. She suggested that
another committee be called to discuss all companies that have been required to explain their
CF-1 forms and make a determination if there were circumstances being their control that
resulted in non-compliance.
Council Member Puzzello then called for representatives from Federal-Mogul Powertrain,Inc. to
address the committee. She noted that those present have copies of the five (5) reports dated
June 16, 2006 from Tedd Schaffer of the Community and Economic Development Department
addressing "Compliance with Statement of Benefit Reviews" as well as the corresponding five
(5)CF-1 forms(copies attached).
Mr. Ed Fain, Plan Manager; Mr. Brent Kuhn, Plant Controller; and Mr. Mitchell W. Wilson,
CMI introduced themselves and provided a 3-page handout to the committee (copy attached).
They noted that the letter sent by the Office of the City Clerk ended up in their dead letter office
since it was addressed to an individual who is no longer with their company. They voiced
appreciation for the opportunity to address the committee. They then reviewed their handout,
noting that currently they have 506 full-time employees.
They noted that Federal Mogul plant in South Bend began in 1987 with a 260,000 square foot
facility which provides the following services: foundry,machining,finishing and assembly. The
manufacture OEM pistons and assemblies and are a NA piston prototype center. Their primary
customers are General Motors,Ford,Nissan,and Kawasaki.
They reviewed in detail the page summarizing shipment, sales, annual price reductions,
headcount, payroll & benefits, capital spending, gross property tax, abatement and net property
tax for calendar years 2000 through the present, and projected data for calendar years 2006,
2007, and 2008.
November 3,2005 Community and Economic Development Committee Meeting Minutes -Page 1 of 3-
well as job training programs. They noted that they also have a facility in Frankfort, Indiana,
where the tax rate is one -half (1/2) that of South Bend's.
Council Member Rouse noted that South Bend's tax rate is 24th out of 1,995 taxing entities in
Indiana.
Council Member Puzzello thanked the representatives for Federal Mogul for their presentation.
There being no further business to come before the Council, the meeting was adjourned by
Council Member Puzzello at 4:43 p.m.
Respectfully submitted,
Council Member Ann Puzzello, Chairperson
Community and Economic Development Committee
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Attachments
November 3, 2005 Community and Economic Development Committee Meeting Minutes -Page 3 of 3-
They noted that their company is a 24/7 operation. Lines 8 and 9 were added in calendar year
2002 and 2003. In 2004 they added line 10 and closed their operations in the State of Georgia.
This year the vast majority of their services have been for Ford and GM (90 %) and they are 10%
below budget projections this year.
In response to a question from Council Member Rouse, they noted that all pistons are made in
South Bend. The LaGrange, Georgia operation provided services to Briggs & Stratton at "low
cost or no cost"; with that operation now taking place in China. The automation line however
was moved to South Bend with the small engine line moving to China.
Council Member Puzzello noted that overall Federal Mogul has spend more dollars on new
equipment then originally projected, however their projected employment numbers have not
been met.
The Federal Mogul representatives noted now they have much more complex pistons. GM has
decided to out - source more. Many of their items are "passed through" and cannot be marked up.
Council Member Rouse noted that raw material and labor costs have gone up.
The Federal Mogul representatives noted that wage increase have averaged 3 -31/2% each year
with medical benefits rising by 10 %. Annual price reductions often result in 2 -21/2%
contractually, resulting in $1 million to $3 million reductions. Prices have deteriorated due to
market conditions. They noted that Ford and GM have a right to resource, however when GM
asked them for a 40% reduction and they responded with a 30% reduction, Federal Mogul lost
the business and GM went elsewhere. They noted that if you do not value your employees, you
will not be able to retain them, and they focus on retaining their workforce.
In response to a question from Council Member Puzzello, the Federal Mogul representatives
noted that production improvements have included automation and that they have not laid off
any employees, but focused on attrition instead. In late 2007, they anticipate providing services
to Chrysler- Daimler.
In response to Council Member Rouse's question, the Federal Mogul representatives stated that
they are in a "tough global economy ". They noted that in Mexico, where wages are $4.00 per
hour and that the real threat is China where wages are $1.00 per hour. They must focus on
productivity with the same level of personnel. Their overall goal is to stay here.
In response to a question from Ms. Kendall, the Federal Mogul representatives stated that the
quality from China is unknown and that the quality in Mexico rivals that in South Bend. Mexico
has more employees and less productivity.
The Federal Mogul representatives noted that they talk daily with Toyota on research and
development items in the interest of trying to spread their base. Their current average payroll in
$30 million and an additional $30 million are spent in Indiana with various vendors.
In response to a question from Council Member Rouse, the Federal Mogul representatives stated
that a technology park would be beneficial, and that there needs to be tech education locally as
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