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Advanced Glassfiber: OK from court to cut wages, benefits

A ruling by the bankruptcy court overseeing Advanced Glassfiber Yarns LLC“s Chapter 11 case allows the company to withdraw from a collective bargaining agreement with its salaried staff, according to…

A ruling by the bankruptcy court overseeing Advanced Glassfiber Yarns LLC“s Chapter 11 case allows the company to withdraw from a collective bargaining agreement with its salaried staff, according to court papers. The 9 January 2004 ruling in the U.S. Bankruptcy Court in Wilmington, Delaware, lets Advanced Glassfiber discard the agreement signed 18 months ago and impose wage and benefit cuts. The court overruled objections to the contract changes by Teamsters Local Union No. 86, which sought to keep the contract. Advanced Glassfiber will now be able to cut wages at its Aiken, South Carolina, plant by 12%, reduce paid vacations by 25% and cut active employee health-care costs by 13%. Advanced Glassfiber also won the right to change retiree benefits being paid to former Teamsters union employees. Union lawyers said they were “unpersuaded” by Advanced Glassfiber“s claims that salary and benefit costs at the Aiken plant are expected to reach USD 23.7 million for the year, or 33% of its operating budget, and put the future of the plant at risk if not reduced. In court papers the union accused company executives, as well as the firm“s senior lenders, of failing to explore other cost-cutting measures at the plant before asking the union for the USD 6.2 million in concessions. The union also cited a USD 2.5 million retention program for about 40 senior and midlevel managers and the imbalance between cuts sought in Advanced Glassfiber“s sister plant in Huntingdon, Pennsylvania, as further evidence that the reductions and cost cuttings would unfairly hit employees at the Aiken plant if approved by the court. Advanced Glassfiber said its turnaround plan, which could be finalized at a 23 January 2004 confirmation hearing will only be supported by its major creditors if it is able to cut operating costs at the 400-employee Aiken plant. Lending agent Wachovia N.A. filed papers with the court on 29 October 2003, which questioned the feasability of the financial assumptions in the company“s turnaround plan if Advanced Glassfiber is unable to obtain the concessions and retirement modifications or reach an agreement with its unions. Advanced Glassfiber makes and supplies glass yarns to customers in Latin America, Asia, Canada, Europe and the U.S. The company said a significant global economic downturn and inventory correction in the electronics market lead to its Chapter 11 petition. The company filed for Chapter 11 protection on 31 October 2002, listing assets of USD 194.1 million and debts of USD 409 million. When the company filed for bankruptcy, it employed 1,205 people. Since then, it has furloughed 350 workers at three manufacturing plants, in Aiken; South Hill, Virginia; and Huntingdon, court papers said.

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