Chicago Tribune: FreightCar America says arbitration ruling will cost it $24.5 million

http://www.chicagotribune.com/business/chicago-freightcar-america-arbitration-ruling-may8,0,5540977,print.story

By James P. Miller

Tribune staff reporter

8:08 AM CDT, May 8, 2008

FreightCar America Inc. said a mediator's adverse ruling in a dispute between the Chicago company and workers represented by the United Steelworkers of America labor union will oblige the company to record a one-time first-quarter charge of up to $24.5 million.

FreightCar last year slashed its workforce at a major plant in Johnstown, Pa., and subsequently announced plans to close the plant altogether.

The steelworker union is pursuing civil claims against the company, contending that FreightCar violated federal law when it laid off about 180 employees, allegedly to prevent them from qualifying either for special pension or regular pension benefits.

FreightCar said today that the union has been pursuing a grievance, contending that the workforce cuts last year violated a collective bargaining agreement between the steelworkers and the company.

The dispute, FreightCar said, "involves the interpretation of language regarding the classification of employees' years of service and the company';s obligations to employees based on their years of service.

The arbitrator's ruling was in favor of the steelworkers' claims, and as a result, the railcar manufacturer said Thursday, FreightCar will record a charge of between $20 million and $24.5 million. That hit will reduce earnings per share by from $1.11 to $1.32, the company said.

FreightCar has already publicly reported unaudited first-quarter results, with net earnings of $1.1 million, or 10 cents a share, not including the set-aside required by the arbitrator's ruling.

"We are disappointed with the ruling and the arbitrator's interpretation" of the contract language, said President and Chief Executive Officer Chris Ragot. The company, which Ragot said had acted in good faith, intends now "to put this situation behind us and move ahead with out long-term plans and growth strategies."

jpmiller@tribune.com