A Navistar representative said it is “unfathomable” that the City of Tulsa, Oklahoma, appears unwilling to negotiate new lease terms for the company’s school bus production facility. Meanwhile, the city accuses Navistar of stonewalling.
As part of a revitalization effort, the city seeks to raise the lease by $28 million over the next decade. The existing lease charges only $1 annually, in return for Navistar investing in improvements. In a press release issued on Tuesday, the company said it has invested over $140 million into the plant over the past two decades, including more than $48 million over the past 5 years.
The now mile-long, 1-million-square-foot plant normally produces about 75 vehicles a day and employs 1,600 workers, which Navistar said exceeds initial expectations by 33 percent. The company added that it spends $750 million annually with vendors and suppliers and supports more than 100 local businesses.
“We would like to get this matter resolved so we can stay in Tulsa,” commented Phil Christman, president of operations for Navistar, in a statement issued on Tuesday. “We have a great workforce, and despite the current tough economic conditions, we are continuing to operate, and we have plans for growth. The potential loss of 1,600 jobs in the current economic environment makes no sense.”
Navistar added that negotiations have so far not disrupted plant work schedules. However, the COVID-19 outbreak caused supply chain issues, which temporarily closed the facility last week. But plant manager Rodney Tharp told School Transportation News on Wednesday, the production began again on Monday, though vehicle output is down to 68 vehicles a week.
More than the money, the main sticking point is the city demanding a list of over five-dozen repairs. Navistar agrees with some, such as new roofing. The company said it has already finished 70 percent of the roof and has capital projects scheduled to address the remaining sections.
Tharp added that the company invests $1.5 million a year to simply maintain the facility.
“We work hard to make this place safe,” he commented, adding that IC Bus exceeds all OSHA regulations. “We are befuddled at the timeline to get [repairs] done immediately, when no one has said anything previously.”
Navistar moved the bulk of its school bus operations to Tulsa in 1999. At the time known as AmTran, the company signed the 40-year lease on Jan. 1 of that year to inhabit an abandoned U.S. Air Force bomber plant that is located on the southeast end of Tulsa International Airport. New school buses began rolling off the line by the end of 2000. Fabrication continued at the company’s Conway, Arkansas, plant for another decade, but today all manufacturing is performed in Tulsa.
But in January, Navistar received a letter notifying it of the city’s intent to terminate the lease agreement, effective Feb. 14. It cited a Nov. 14 notification that Navistar was in default and had 30 days to remedy the situation. Michelle Brooks, a spokeswoman for the city, told School Transportation News that a notice of eviction has not been issued, and the city doesn’t intend to issue one.
“It has been our intent from the beginning to terminate the existing lease and negotiate a new lease,” she said on Wednesday. “We have never had an intent to not pursue a new lease, or to ultimately issue a Notice of Eviction.”
However, plant workers see the city using maintenance deficiencies as an excuse to raise the rent.
“For several years, this was a giant building in disrepair. There were no jobs, no economic activity. It was an albatross on the city,” he commented. “Why 20 years into a 40-year deal can one party tear up a contract?”
Regardless, both sides entered a “standstill agreement” in February to initiate good-faith negotiations for a new or amended lease, including a plan to address what the city termed as “past due maintenance.”
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Among the city’s demands are the installation of six new freight elevators in 30 days, despite Navistar’s assertion that IC Bus has no foreseeable expectation of using them. But a 250-page independent analysis conducted by Cincinnati-based architectural and constructional engineering firm Cyntergy last November notes that the existing elevators are not ADA compliant.
Tharp pointed out that the elevators access an area of the plant with no parts or employees. Navistar said that if or when the plant needs to use those elevators, it will pay to install new ones.
“There is so much agreement on this [repair] list. It’s what we don’t agree on,” he added. “It is unfathomable to us we can’t close this gap.”
Cyntergy engineers also reported that Navistar’s plant appears to have deferred maintenance issues involving the parking lot paving, storm drainage, and age of mechanical and electrical equipment. The firm identified falling debris hazards in the building’s mezzanine and recommended that Navistar perform an arc flash analysis to evaluate electrical equipment and power systems as well as add emergency exit lighting and signage.
The city is calling on Navistar to unclog those blocked drains, repave all parking lots rather than patch them, replace 1,000 light fixtures in parking lots with LEDs, install new carpeting and ceiling tiles, and paint and upgrade the building’s exterior.
Navistar responded that it already has scheduled maintenance and patching of the parking lots. It said it also retrofit and installed high-efficiency lighting throughout the plant several years ago, and those fixtures are less than halfway through their expected lifecycle.
The new facility negotiations arose in December 2017, when the city council adopted the AIM Plan, short for “Add Jobs and Grow the Workforce.” It seeks to revitalize the former Air Force Plant3 and industrial land surrounding the airport. As a result, the city said American Airlines committed a $550 million investment in its Tulsa maintenance base. Spirit AeroSystems, which shares the facility space with IC Bus, invested $80 million.
The city said Navistar has had over a year and a half to pledge similar improvements. On Oct. 29, 2018, the city presented IC Bus plant leadership with a $16 million investment proposal to address critical electrical repairs, which the city said a Navistar consultant identified over a year earlier. The city said plant leadership acknowledged during that meeting “maintenance disparities and lack of a capital plan to address,” according to city documents. Among these necessary repairs were an “extremely aged and obsolete” electrical infrastructure and substation decks that “are in poor shape and posing a significant risk to production if a failure occurs.”
Mayor G.T. Bynum issued a statement on Tuesday that a Navistar public relations campaign, savetulsajobs.com, launched this week “grossly mischaracterizes” ongoing negotiations between the two sides to politicize them.
“My response: The citizens of Tulsa will not be played for suckers,” he added. “I remain confident we can identify common ground to secure jobs and properly maintain this facility. We’ve done so with great success during my time as mayor with other tenants, and I see no reason why this case would be any different.”
Tharp took exception to the mayor’s comments.
“I’m not a politician. I’m a plant manager of a large group of people that care about each other, that care about the product we build, and that care about safety,” he responded. “These folks are scared by thinking they are going to get evicted, when our landlord sends us a letter saying, hey, we are terminating your lease. We felt obliged to give them an opportunity to feel like they have a voice.”