When Vice President Joe Biden visited St. Cloud earlier this year, he promised that $8 billion from the economic stimulus package would help cities buy transit buses and create new green jobs quickly. But New Flyer, the bus manufacturer poised to benefit from stimulus money, will lay off more than 300 people by the end of the year.
"Make no mistake, New Flyer wants to be and New Flyer will be part of the solution," said Paul Soubry, New Flyer president and chief executive officer, speaking to Vice President Biden at the company's St. Cloud plant in March.
At the time, Soubry said the Winnipeg-based company was betting on the federal stimulus package to help turn tentative bus orders into firm orders, and grow jobs.
"New Flyer will continue to invest in our people," he said. "This facility is really spectacular. We have a tremendous mix of technicians, skills trade people, engineers, logistics professionals, leadership, management team, and we plan to add more jobs in America."
But instead of hiring, New Flyer is laying off people.
In early June, the company confirmed two bus orders from transit authorities in Chicago and Philadelphia using stimulus money. But for the Chicago Transit Authority, the stimulus money wasn't enough to pay for an order of 140 diesel electric hybrid buses.
Soubry told investors last month that the federal stimulus money awarded to his Chicago client only covered capital projects. This week, Soubry told those same investors that the delayed bus order forced New Flyer to make cuts.
"So as a result, we advised our union leadership and our employees yesterday across our sites that the companies will reduce unionized workforce by approximately 270 positions," he said. "Those positions are spread across our Winnipeg, Manitoba, Crookston and St. Cloud, Minnesota sites."
New Flyer will also eliminate 50 salaried positions across its three sites, with most of them at its Canadian plant. Many of the layoffs will take place immediately, with the rest by the end of the year.
The company plans to shut down all plants during the last two weeks of the year to limit layoffs. They'll lose six production days and will continue to have a skeleton crew. For the rest of the year, workers will build an average of 36 buses a week, down from 50.
St. Cloud Mayor Dave Kleis said the layoffs are troubling.
"We are very concerned with unemployment with the last figures we have," Kleis said. "We are close to 8 percent unemployment and even any unemployment is significant if you are the individual or the family, so we are very concerned about that."
Kleis said New Flyer leaders have assured him that Chicago is the only bus order that didn't materialize.
This is the second recent setback for the company. Late last year, leaders revealed to investors that the company made a design error on a major bus order which affected production and delivery in 2009.
A New Flyer employee told MPR News earlier this summer that employees at the St. Cloud plant had been working overtime the past few months to fix the error. The employee said some workers at the Crookston plant made the buses for this order too heavy.
King Banaian, an economics professor at St. Cloud State University, said manufacturers like New Flyer depend heavily on the timing of receiving orders, so even one setback has a great impact.
"Any type of large item like this, which requires many workers just to produce one unit, it's going to be very vulnerable in that way," Banaian said. "One change in order has a significant impact on how that business operates."
Banaian said this type of setback is not unusual, and it doesn't indicate major problems for the company.
New Flyer leaders say the Chicago Transit Authority plans to buy the 140 buses as soon as it secures the money. Once that happens, the company will re-evaluate whether to hire more employees.